UK adults waste 5.7billion in tax: Regional stats now available
31 million adults resent rising tax burden, yet three quarters admit to doing nothing to reduce the amount they pay
We waste 132 each a year in tax, then gripe about the TV licence
Visit www.taketaxaction.co.uk to see how you could save tax
Nine out of ten of UK adults, more than 43 million people, will waste a staggering 5.7 billion this year in unnecessary tax that’s an average 132 per taxpayer. And despite a massive 31 million people saying they resent their rising tax bills, three quarters admit taking no action to limit the amount they pay. These are the top findings of the twelfth annual TaxAction* investigation, commissioned by IFA Promotion, on behalf of the UK’s independent financial advisers.
IFA Promotion’s research** also reveals that, alongside petrol duty and inheritance tax, the 116 TV license fee is one of the top three taxes we most resent paying. This despite the fact that we will each waste more than this in unnecessary tax payments and squandered tax breaks.
David Elms, Chief Executive of IFA Promotion, said, “Overall tax waste is up a staggering fifty per cent on last year, in part due to more onus falling on the individual to claim tax credits and sort out their tax affairs. Yet the vast majority of people say they resent paying more tax, and most admit to taking no action to cut their bills.
“We’re urging people to look at some first steps they can take to chip away at this mountain of waste, from filling in simple forms to seizing any tax breaks, credits or reliefs that are rightfully theirs. Discussing your financial planning situation with a local independent financial adviser should also help cut your waste. ”
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Together we waste enough money to create a new millionaire every day for the next fifteen years [see p4]. And reducing the amount of tax you pay can cost nothing and take very little effort. Here are eight simple ways to start saving tax:
IF YOU SAVE: Use up your annual ISA allowance - 108 million in tax could be avoided by sheltering investments in ISAs, or moving savings from an ordinary deposit or savings account to an ISA. Also consider a Friendly Society savings account or products from National Savings & Investments as additional tax-efficient savings options.
- IF YOU FILL IN A TAX RETURN: Sort out your self-assessment - 412 million waste could be wiped out by all forms arriving present and correct by the 31st January deadline. In 2003 the 874,880 people whose self-assessment forms were received after the deadline incurred a penalty of 100; further penalties and errors made up the balance of tax wasted in this way.
- ALL TAXPAYERS: Maximise your personal tax allowances - 443 million goes begging each year , 315 million through non-taxpayers failing to claim tax back on banks and building society savings accounts, and a further 128 million by taxpayers not transferring savings accounts to non-taxpaying spouses, if appropriate, so that the tax liability on the savings is lower, or none.
- IF YOU HAVE ASSETS OVER 255,000: Plan your inheritance - an extra 1,213 million could go to chosen heirs by planning properly to avoid inheritance tax liabilities. This is lost through not writing life assurance policies in trust, not thinking about inheritance tax allowances and, worst of all, by not making a will at all.
- IF YOU SAVE: Top up your pension pot - 683 million could be spared by optimising contributions to personal or company pension schemes, or making Additional Voluntary Contributions.
- IF YOUR EMPLOYER OFFERS AN EMPLOYEE SHARE PLAN: Take advantage of it - 158 million is up for grabs for the 750,000 staff currently in Profit Related Pay schemes.
- IF YOU HAVE CAPITAL GAINS: Use your allowance efficiently , perhaps by transferring assets between spouses to make the most of the lower rate taxpayer - 230 million could be saved in this way .
- IF YOU GIVE TO CHARITY: 359 million more could go to good causes by using tax-efficient means of charitable giving, ie using a deed of covenant, Gift Aid or payroll giving.
Elms continued, “Whilst on average we waste 132 each, higher rate taxpayers will often be looking at far larger sums. We get worked up about stealth taxes, but this is a ‘self-tax’ caused by poorly planned finances a tax we can easily stamp out.”
IFA Promotion’s TaxAction research also showed:
- Over 50s most resent their increasing tax burden, and resent paying petrol duty and the TV license most.
- Under 30s resent paying income tax more than any other age group.
- People aren’t getting more active on tax as they get older, despite the potential waste often being much larger.
- Inheritance tax and stamp duty are bigger concerns for those living in London, but a quarter (24%) of Londoners don’t mind their rising tax burden (14% for the UK).
Elms concluded, “No one likes paying tax, so why pay more than you need to? We’re sure people would rather be saving this extra each year, or putting it to use elsewhere than simply watching it disappear. We’re urging people to take tax action now and sitting down with an IFA is a great place to start.”
As a first step to stamping out this waste, people can visit IFA Promotion’s dedicated website at www.taketaxaction.co.uk . The site contains tips on how to save tax, an online tax wastage calculator, and a guide to saving tax, packed full of useful information. People can also find details of local IFAs on the site or by calling 0800 085 3250.
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For further information please contact:
David Elms Liz Willder / Richard Winder Chief Executive, IFA Promotion Ltd Lansons Communications 020 7833 3131 / david@ifap.org.uk 020 7490 8828 / lizw@lansons.com
* TaxAction 2004 was produced for IFA Promotion by RAKM, and is partly based on a specially commissioned analysis of Inland Revenue data, combined with other sources such as the Family Resource Survey.
** Consumer research conducted for IFA Promotion by YouGov, using a sample of 2,245 people from 3rd - 5th February 2004
With 5.7 billion you could...
You could wallpaper both sides of the Great Wall of China 7 times over
Buy enough petrol to drive a Mini to the Sun and back 7081 times
Make 38 Harry Potter films
Lennox Lewis would have to fight Mike Tyson 325 times
Rent a video for every person in the UK every month for 2 years
Create a millionaire every day for the next 15 years
Buy enough tickets for the opening and closing ceremonies of the 2004 Olympics to fill the stadium 25 times
With 132 you could...
Buy four years’ worth of teabags! (Based on using 5 a day)
Return flights for 2 adults to Nice (127.10)
1 day sailing experience (119)
Go hang-gliding for a day (129)
Buy a Grande Latte every day for 2 months (131.15)
Buy an official StarWars Lightsaber (125)
Buy 23 day passes for the London Underground (128.80)
For expert comment or case studies from over 200 media-friendly IFAs, journalists should call IFA Promotion’s Media Services hotline on 020 7294 3682 or search online in ‘Media Services’ at www.unbiased.co.uk
1. Independent Financial Adviser Promotion
IFA Promotion was established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents over 10,000 firms of independent financial advisers across the UK and is sponsored by 26 leading financial institutions. In 2003, over 330,000 consumers and businesses used IFA Promotion to find local independent financial advice.
IFA Promotion believes Independent financial advice should be:
- Affordable. The option to take independent financial advice should be available, by right, to all - not just the wealthiest in society.
- Convenient. IFAs should be available in the location of the consumer’s choice, wherever they live in the UK.
- Transparent. It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.
2. Independent Financial Adviser Promotion’s sponsors
AXA | National Savings & Investments |
Bright Grey | Norwich Union Life |
BUPA | Old Mutual Asset Managers |
Canada Life | Prudential |
Children’s Mutual | Scottish Equitable Plc |
Clerical Medical Investment Group | Scottish Life |
Eagle Star | Scottish Mutual Assurance Plc |
Friends Provident | Scottish Provident |
GE Life | Scottish Widows Plc |
GMAC Residential Funding | Selestia |
INVESCO Fund Managers Ltd | Standard Life Assurance Company |
Legal & General | Skandia UK Group |
Mortgage Express | Zurich Life Assurance Company |