Isa inertia costs Britons over 263 million in unnecessary tax payments
Almost 3 million people hold equities but don’t hold them in a tax-efficient ISA wrapper
- Visit Unbiased.co.uk to see how YOU could save tax -
With a few months left to make full use of this year’s ISA allowance, research by Unbiased.co.uk,the professional advice website shows that Britons are wasting over 263 million in tax by not putting their savings and investments into a tax-efficient savings account.
Unbiased.co.uk’sresearch shows that 165 million is being paid out in unnecessary tax a result of savings which belong to individuals that do not make use of their cash ISA allowance and 98 million from shareholders who do not transfer their holdings into an equity ISA. April 5th 2009 is the deadline for individuals to contribute up to their annual limit (3,600 for cash ISAs; 7,200 for equity ISAs) for this tax year. After this date, any unused 2008/2009 ISA allowances will be lost.
David Elms, Chief Executive of Unbiased.co.uk commented: “Especially in the current environment where interest rates are low, it is important that people don’t pay unnecessary money to the taxman. Savers should use the next few months to make sure they have made full use of their annual ISA allowance. Once you have missed the April 5th deadline, you will lose your tax-efficient ISA savings allowance for the 2008/ 2009 tax year. We hope that if savings rates continue to decline more consumers will be looking into how they can make their money work harder for them by saving in a tax efficient way.”
These figures have been calculated as a result of Unbiased.co.uk’s annual TaxAction* campaign, now in its sixteenth year, which highlights the 9.3bn in unnecessary tax paid by UK savers this year.
Where the nation is wasting the most tax
| 2008/09 tax year | Total amount wasted |
|
| million |
|
|
|
1 | Tax & personal allowances | 474 |
2 | ISAs | 263 |
3 | Gilts/National Savings | 155 |
4 | Capital Gains tax | 264 |
5 | Charities and gifts | 936 |
6 | Pensions tax | 726 |
7 | Inheritance tax | 1,922 |
8 | Late self assessment penalties | 479 |
9 | Share Incentive Plans | 184 |
10 | Tax Credits | 3,656 |
11 | Child Trust Funds | 242 |
Total | 9,301 |
Elms concluded, “You may already consult an accountant for tax advice, but to ensure you’re managing your personal finances as tax efficiently as possible, an independent financial adviser may offer some invaluable help.”
To help people take control of their finances Unbiased.co.uk offers an online guide to reducing tax waste as well as tips to reducing tax waste and an online tax wastage calculator. For online information and details of local IFAs, visit Unbiased.co.uk
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.
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.
ENDS
For further information on Unbiased.co.uk, the professional advice website please contact:
David Elms / Richard Winder | Anna Schirmer/Jennifer Comerford/ Anna Moulds |
Unbiased.co.uk | Lansons Communications |
020 7833 3131 | 020 7294 3682 |
Notes to Editors
Unbiased.co.uk, the professional advice website
Unbiased.co.uk is the free and confidential UK-wide search service matching consumers with the most appropriate local professional advisers for their needs. In 2008, Unbiased.co.uk fulfilled over half a million searches for local, professional advice.
The portal currently houses three professional advice searches: ‘Find an independent financial adviser’, ‘Find a mortgage adviser’, and (soon to launch) ‘Find a solicitor’. These searches enable consumers to find relevant professional advisers by postcode, area of specialism, qualification and payment method.
IFA Promotion, the organisation behind Unbiased.co.uk, is now in its 20th year, and was originally set up to promote the benefits of independent financial advice to the consumer.
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