Darling, we need to talk, about tax
- Unbiased.co.uk reveals the Nation’s ‘message to the Chancellor’
- One in three Britons call on Alistair Darling to lower income tax
- Almost a quarter ask for a better level of state pension
With the removal of the 10pc tax band high on the government agenda, new research* from Unbiased.co.uk, the Find an Independent Financial Adviser search, shows that there are taxation issues that Brits would like to bring to the Chancellor’s attention.
When asked about what their one message to the Chancellor would be, a whopping one in three (31%) stated they wanted ask for a reduction in income tax. While 12% asked for a reduction of income tax for all, 19% were more specific and asked for a reduction of income tax specifically for the less well off.
The number of Brits wanting the Chancellor to focus on income tax is particularly high amongst the younger generations. A massive 44% of the 18-24-year-olds would choose an income tax related message for the Chancellor, compared to 40% amongst the 25-34-year-olds. This number drops significantly amongst the older generations – only one in five (19%) of the 55-64-year-olds would ask for a reduction in income tax, dropping further to only 13% amongst the 65-74-year-olds.
But it is not just income tax that the nation would like the Chancellor to pay attention to – almost one in four (23%) of Brits stated they would ask the Chancellor to provide a better level of state pension.
Imagine that you could send ONE message to the Chancellor of the Exchequer (and that it had to be polite!) what would it be? | Total |
Provide a better level of state pension | 23% |
Reduce income tax for the less well off | 19% |
Reduce income tax for everyone | 12% |
Increase pay levels for public sector workers | 6% |
Increase support for carers | 5% |
Raise the inheritance tax threshold to 750,000 | 5% |
Do not fund the 3rd generation nuclear deterrent | 5% |
Cap the Olympic budget at 4bn | 4% |
Reimburse those who lost out in the pensions crisis | 4% |
Spend more on environmental issues | 4% |
End Public Private Partnerships | 2% |
Review the Stamp Duty thresholds | 2% |
Reduce public sector borrowing | 2% |
Other | 7% |
David Elms, Chief Executive of Unbiased.co.uk comments, “Our research shows just how much of a discussion point income tax is – and that is not just for the government but also for the average Brit. In the current economic climate people are taking a much closer look at their finances to make ends meet and it is not surprising that a reduction of income tax is one of the first areas people are asking for.
“While the government debate on the 10pc income tax band is no doubt set to rumble on, it is important for people to remember that there is so much more they can do to ensure they are reducing their overall tax liability. Our TaxAction research shows that the nation as a whole is wasting a whopping 9.3bn in unnecessary tax payments, from not making use of their ISA allowance to wasting tax credits and insufficient inheritance tax planning.
“We are asking people to take TaxAction now to ensure they are not paying the government any unnecessary money in tax payments. And while tax no doubt can be a confusing topic, help is at hand. Through www.unbiased.co.uk/taketaxaction a local IFA can help you discover where you can make significant savings on your tax burden.”
Tax doesn’t have to be taxing – Here are 10 basic ways to claw back some of the waste:
- IF YOU HAVE ASSETS OVER312,000: 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 - 460 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.
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.
-ends-
* Research conducted online by Opinium Research LLP from 7th-14th Feb 2008. UK nationally representative sample of 3.048 adults.
For further information please contact:
David Elms | Anna Schirmer/Jonathon Grove |
Chief Executive | Lansons Communications |
Unbiased.co.uk | 020 7294 3682 |
020 7833 3131 |
For expert comment or case studies from over 200 media-friendly IFAs, journalists should call Unbiased.co.uk’s Media Services hotline on
020 7294 3682 or search online at www.unbiased.co.uk/media
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