242 Million In Child Trust Fund Tax Breaks Will Go To Waste In 2008
- 75% of new parents have opened a CTF account for their children since their introduction in April 2005
- About 242 million will be wasted by parents not taking advantage of the full tax breaks of their children’s Child Trust Funds in 2008
- Unbiased.co.uk urges parents to make the most of the opportunity and take action to reduce their tax!
Figures out today from Unbiased.co.uk, the website promoting the benefits of independent financial advice, show that parents will be wasting 242 million in tax breaks by not making full use of their children’s Child Trust Fund (CTF) allowance this year. This figure is almost twice the amount that parents were wasting in 2007 (125 million) by not using up this tax free saving option.
Unbiased.co.uk research estimates that three quarters (75%) of eligible children have had a CTF account opened for them. However, only a quarter (24%) of the CTF accounts opened since 2005 have recorded additional deposits, if however half of the remaining accounts received their maximum funding the amount of additional tax saving would equate to an overall tax waste saving of 242 million.
David Elms, Chief Executive of Unbiased.co.uk comments, “The government introduced Child Trust Funds as a way of helping parents plan for their children’s futures. However, our research has shown that parents are not making the most of this opportunity. Parents don’t have to pay tax on the interest earned on a CTF account and by not using their full funding allowance each year they may potentially be gifting the taxman more money than necessary.”
“Since we launched TaxAction, we have seen a steady increase in the amount of tax we throw away. This year’s report shows we waste 9.3 billion, the highest since the campaign began. People who want to reduce the amount they waste should visit an independent financial adviser who can show you how to become tax savvy with your finances.”
CTF vouchers can be claimed within the first twelve months of a child’s life and can be invested in cash or equities with a range of different risk profiles. An IFA can help you decide which product is right for you. Find one at www.unbiased.co.uk.
As a first step to stamping out this waste, visit Unbiased.co.uk’s dedicated website at www.unbiased.co.uk/taketaxaction. The site contains tips on how to save tax, an online tax wastage calculator, and a guide to saving tax. You can also find details of local IFAs on the site.
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* TaxAction 2008 report produced for IFA Promotion by RAKM, based on a specially commissioned analysis of Inland Revenue and a range of other official data sources
Tax doesn’t have to be taxing – Here are 10 basic ways** to claw back some of the waste:
- IF YOU HAVE ASSETS OVER 312,000: Plan your inheritance - an extra 1.9 billion could go to chosen heirs by planning properly to avoid IHT liabilities. IHT is often 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: Use up your annual ISA allowance - 263 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 tax-efficient savings options.
- IF YOU ARE ELIGIBLE: Claim your tax credits - 3.7 billion of ‘free money’ is up for grabs from HMRC and the DWP, in the form of Pension Credits, Child Tax Credits and Working Family Tax credits.
- IF YOU FILL IN A TAX RETURN: Sort out your self-assessment - 479 million waste could be wiped out by all forms arriving present and correct by the 31st January deadline. Self-assessment forms received after the deadline incur penalties of 100; further penalties and errors make up the balance of tax wasted in this way.
- ALL TAXPAYERS: Maximise your personal tax allowances - 474 million goes begging each year, 330 million through non-taxpayers failing to claim tax back on banks and building society savings accounts, and a further 144 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 SAVE: Top up your pension pot - 726 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 - 184 million is up for grabs for the estimated 600,000 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 both of your CGT allowances - 264 million could be saved in this way.
- IF YOU GIVE TO CHARITY: 936 million more could go to good causes by using tax-efficient means of charitable giving, i.e. using a deed of covenant, Gift Aid or payroll giving.
- IF YOUR CHILD OR GRANDCHILD IS ELIGIBLE FOR A CHILD TRUST FUND: Avoid waste by using up the tax free saving potential - 242 million in tax could be saved in their first yearof existence.
For further information please contact:
David Elms | Anna Schirmer/ Anna Moulds |
Chief Executive | Lansons Communications |
Unbiased.co.uk | 020 7294 3682 |
020 7833 3131 |
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For expert comment or case studies from over 200 media-friendly IFAs, journalists should visit www.unbiased.co.uk/bluebook to search online or call Unbiased.co.uk’s Media Services hotline on 020 7294 3682.
1. Unbiased.co.uk
Unbiased.co.uk is a not for profit organisation which promotes the benefits of Independent Financial Advice to UK consumers.
Unbiased.co.uk, which is in its 19th year, creates over 6,000 pieces of positive coverage in the consumer media each year, highlighting the importance of seeking independent financial advice across online, broadcast and print media. This positive media generation influences consumers’ behaviour and increases their awareness of the benefits of seeing an IFA.
Unbiased.co.uk is the online gateway between consumers researching their financial advice options and IFAs. Over 60 white label versions of Unbiased.co.uk’s confidential ‘Find an IFA’ service are now running on partner websites including those of media and portal money channels, product provider sponsors and other industry bodies.
Over the past 12 months, over 575,000 consumers have used Unbiased.co.uk’s ‘Find an IFA search’, or one of the white labels, to find a local IFA – and 94% of these enquiries were dealt with online.
When searching for a ‘Find an IFA’ on UK Google, around 80% of the returned links over the first five pages of search results now display either Unbiased.co.uk directly or a white label version of Unbiased.co.uk’s ‘Find an IFA’ service running on a partner website. To support this activity Unbiased.co.uk now regularly provides white label versions of its consumer guides, tools, microsites and podcasts to partner personal finance websites.
2. Unbiased.co.uk’s product provider sponsors
Abbey for Intermediaries | Lincoln Financial Group |
Aberdeen Asset Management | Lockton |
AEGON Scottish Equitable Plc | Lutine Assurance Services |
Alliance Trust | MetLife |
AXA Life | National Savings & Investments |
Bright Grey | New Star Investment Funds |
BPP | Norwich Union Life |
Canada Life Ltd | Prudential |
Cardif Pinnacle | Scottish Life |
The Children’s Mutual | Scottish Life International |
Clerical Medical Investment | Scottish Widows Plc |
Defaqto | Skandia UK Group |
Friends Provident | Standard Life Assurance Company |
The Hartford | Tomorrow |
Invesco Perpetual | Unum |
Legal & General | Zurich Intermediary Group |
Registered Office: Unbiased.co.uk is the consumer brand of IFA Promotion Ltd, 90 St. Vincent Street, Glasgow G2 5UB. Registered in Scotland: No. 114606