Britons Losing a Total of 9.3 Billion in Tax Wastage, 1.9 Billion of this through Inheritance Tax
- UK tax payers waste more on IHT payments than any other tax
- Britons say the so called “death tax” is their fourth most resented tax
- However, four in five people (82%) have not taken any steps to reduce their overall tax payments
UK taxpayers are wasting millions of pounds due to poor IHT planning according to annual research* by Unbiased.co.uk, the website promoting the benefits of independent financial advice. The research shows that the overall amount of unnecessary inheritance tax payments totaled 1.9 billion last year. The amount of wasted IHT payments has risen by 24 per cent compared to the previous year, 2007 equalling an increase of nearly 370 million.
Lack of IHT provision represents the biggest tax wastage in the UK and despite the housing market in crisis; this trend looks set to continue with more properties now valued at more than the current IHT nil rate threshold of 312,000 than ever before. Unbiased.co.uk’s research is part of its annual campaign, TaxAction, which aims to encourage people to think sensibly about how to avoid wasting money through paying unnecessary tax. The research shows that the main cause of “death tax” wastage is the inclusion in personal estates of the proceeds of life assurance policies, which if written in trust, would not be subject to inheritance tax.
Unbiased.co.uk’s research also shows that IHT is the fourth most resented tax amongst the British public, beaten to the top spot by fuel duty, council tax and TV license fee. Despite this dislike, four in five people (82 per cent) in the UK admit to not having taken any steps over the last twelve months to reduce their tax burden**.
The fastest way to tackle the amount of money wasted on unnecessary tax payments is by searching for an independent financial adviser in your area who specialises in giving tax planning advice.
David Elms, Chief Executive of Unbiased.co.uk, commented; “Our research shows that people are throwing away a whopping amount of money on unnecessary inheritance tax payments. IHT liability is paid by beneficiaries, often at a time when they are grieving over the loss of a loved one. Without advanced tax planning, increasing amounts of IHT will fall into the hands of the tax man. It is crucial that people see an independent financial adviser to discuss their tax liabilities remembering that it is legal to mitigate inheritance tax. An IFA will ensure that all advice provided is appropriate for their client’s personal and family financial situation.”
With this in mind, Unbiased.co.uk has produced a brochure which explains what exactly Inheritance Tax is and how to minimise your liability. To download a free copy of the brochure and find details of local independent financial advisers (IFAs) who can advise on your IHT options, visit www.unbiased.co.uk/taketaxaction . Details of local IFAs are also available by going to Unbiased.co.uk.
-ends-
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.
* 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.
** IFAP Taxation Survey 2008, UK Nationally representative sample of 3,048 adults conducted online by Opinium Research LLP between 7th and 14th Feb 2008
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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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.
PLEASE NOTE: We have now discontinued the consumer hotline and so consumers seeking an IFA should visit www.unbiased.co.uk
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, helps create over 7,500 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 now the online gateway between consumers researching their financial advice options online 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 525,000 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
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Clerical Medical Investment | Scottish Life International |
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Legal & General | Zurich Intermediary Group |
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