Britain's Big Tax Discontent How Will Darling's Plans Fare?
- Almost three in four Brits are unhappy with the current tax system
- Fuel duty remains Britain’s most hated tax
- Almost two in five Britons resent income tax the most
Despite Alistair Darling’s tax cutting measures, research* by Unbiased.co.uk, the ‘Find an IFA’ search, suggests not enough has been done to tackle Britain’s era of tax discontent. The research shows that almost three in four (72%) of Britons are currently dissatisfied with the UK’s tax system.
While the two big changes announced by Darling in today’s PBR report – a reduction in VAT and the introduction of a 45% tax rate – will go some way to soften Britain’s resentment for taxes, it may not be as popular as hoped.
While income tax and VAT both make the list of Britain’s most hated taxes, they only rank 6th and 7th respectively. The country’s most loathed tax in contrast, with a vote of 45%, is fuel duty, closely followed by council tax (42%).
Rank | Most hated taxes | % |
1 | Fuel duty | 45% |
2 | Council tax | 42% |
3 | TV license fee | 35% |
4 | Inheritance tax | 20% |
5 | Car tax/ road fund license | 18% |
6 | Income tax | 17% |
7 | VAT | 15% |
8 | Stamp duty on home purchases | 15% |
9 | VAT on other taxes | 13% |
10 | Cigarette/ tobacco tax | 13% |
David Elms, Chief Executive of Unbiased.co.uk, comments:
“Today’s announcement may go a little way to help appease the nation’s discontent with the tax system and hopefully offer some respite for cash-strapped Britons. However, Darling still hasn’t tackled the areas of tax Britons hate the most and even played a dangerous game by increasing fuel duty to make up for the VAT reduction at the pump. But while there is very little we can do on an individual basis to reduce some of the taxes we have to pay, there are lots of areas of tax liability where we can take active measures to save money.
“Our research shows that the UK as a whole is wasting over 9.3 billion in tax payments this year, whether it is by not making use of their ISA allowance, not claiming tax credits or for instance by not planning their inheritance in a tax efficient way. We would encourage everyone to seek independent financial advice in order to get help with their tax planning and avoid paying unnecessary taxes.”
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.
*Research conducted online by Opinium Research LLP from 7th-14th Feb 2008. UK nationally representative sample of 3.048 adults.
**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.
For further information please contact:
David Elms | Anna Schirmer/Jennifer Comerford/ Anna Moulds |
Chief Executive | Lansons Communications |
Unbiased.co.uk | 020 7294 3682 |
020 7833 3131 |
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