TaxAction - London
21 March 2002
TaxAction - London
5 MILLION LONDONERS PAY NEARLY 500 MILLION A YEAR IN UNNECESSARY TAX
Nearly 90% of Londoners pay more tax than they have to through financial inertia or lack of understanding of the country’s taxation regime.
These are the findings of IFA Promotion’s tenth annual TaxAction investigation*, conducted by independent research agency, Mintel, on behalf of UK independent financial advisers, continuing the “War on Wasted Tax”.
On average, each of the 5 million Londoners will waste £99 this year in unnecessary payments. Incredibly across the UK this swells the taxman’s coffers to the tune of £4billion.
“Most of us wouldn’t willingly gift the taxman hundreds of pounds of our hard earned money, but in many cases this is just what’s happening”, said David Elms of IFA Promotion. “People need to step back and see if they’re being as tax-efficient as they could be and, if not, take action to streamline their finances.”
In many cases it could take very little effort to reduce the tax you pay – and would cost nothing. For example, just two minutes spent filling in an R85 form would save 5.1 million people on low incomes (non-taxpayers) an average of £62 per head (£90 million in total); and sticking to the 31st January deadline for self -assessment tax forms would prevent over 800,000 of us incurring a fine of £100.
Elms commented “ It’s often simple to start plugging these tax gaps, for instance, if you’re a non-taxpayer but have savings, just ask for a form at your bank or building society. For help with filling in a self -assessment form, see an accountant. And for broader issues to do with financial planning, such as sheltered savings in an ISA, then going to see an IFA is a simple first step.”
Here are eight simple steps to start saving tax: (shows national figures)
· IF YOU SAVE: Use up your annual ISA allowance - £253 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 an additional tax-free savings option.
· IF YOU FILL IN A TAX RETURN: Sort out your self-assessment – £365 million waste could be wiped out by all forms arriving present and correct by the 31st January deadline. In 2001 the 808,000 people whose self-assessment forms were received after the deadline incurred a penalty of £100; further penalties and errors made up the balance of tax wasted in this way.
· ALL TAXPAYERS: Maximise your personal tax allowances - £405 million goes begging each year, £315 million through non-taxpayers failing to claim tax back on banks and building society savings accounts, and a further £90 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 HAVE ASSETS OVER £242,000: Plan your inheritance – an extra £1,017 million could go to chosen heirs by planning properly to avoid inheritance tax liabilities. This is 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: Top up your pension pot - £508 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 - £528 million is up for grabs for the 1.6 million 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 the lower rate taxpayer - £351 million could be saved in this way.
· IF YOU GIVE TO CHARITY: £372 million more could go to good causes by using tax-efficient means of charitable giving, ie using a deed of covenant, Gift Aid or payroll giving
Here’s how Greater London stacks up against the other regions:
Table 1: Tax waste per regionBase: adults
|
|
Tax wasters in region |
% of population that waste tax |
Waste per taxpayer |
|
|
M |
% |
£ |
|
Totals |
|
|
|
|
|
|
|
|
| Greater London |
5.0 |
87.5 |
99 |
| South East |
6.4 |
91.5 |
123 |
|
East Anglia |
3.6 |
90.5 |
43 |
|
South West |
3.9 |
87.5 |
79 |
|
Wales |
2.1 |
88.0 |
81 |
|
East Midlands |
2.9 |
87.3 |
99 |
|
West Midlands |
3.8 |
88.2 |
102 |
|
North West |
4.3 |
83.7 |
102 |
|
Yorks/Humberside |
3.6 |
86.8 |
98 |
|
North |
2.2 |
86.9 |
98 |
|
Scotland |
3.7 |
89.0 |
96 |
|
Northern Ireland |
1.2 |
88.6 |
82 |
Note: sums are quoted with precision but there is some rounding of underlying amounts and percentages which renders them approximate; they may not always add to totals due to the effect of this rounding.
Source: RAKM/Mintel for IFA Promotion
“There’s no excuse for this huge and needless waste,” concludes Elms. “People need to take control of their finances – the first step towards doing this would be to go and see an independent financial adviser.”
To help people take control of their finances, IFA Promotion is offering a FREE guide to tax-efficiency. For your copy and details of four local IFAs, call the hotline on 0800 085 3250 or visit www.unbiased.co.uk
-ends-
|
For further information, please contact: | ||
|
James Sharp |
or |
Richard Winder /Liz Willder |
|
Regional officer |
Lansons Communications | |
|
Independent Financial Adviser Promotion |
Tel: 020 7294 3641 / 3677 | |
|
Tel: 07866 490 880 | ||
1. Independent Financial Adviser Promotion
Independent Financial Adviser Promotion Ltd. was established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents nearly 10,000 firms of independent financial advisers across the UK and is sponsored by 28 leading financial institutions.
IFA Promotion’s central belief is:
“Consumers have a right to financial advice that is independent of the providers of financial products - i.e. independent financial advice.”
Furthermore independent financial advice should be:
· Affordable. The option to take independent financial advice should be available, by right, to all - not just the wealthiest in society.
· Convenient. IFAs should be available in the location of the consumer’s choice, wherever they live in the UK.
· Transparent. It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.
Independent Financial Adviser Promotion Ltd. was established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents over 10,000 firms of independent financial advisers across the UK and is sponsored by 28 leading financial institutions.
|
AXA Sun Life |
NPI |
|
Barclays Global Investors Funds |
Prudential |
|
BUPA |
Scottish Equitable Plc |
|
Canada Life |
Scottish Life |
|
Clerical Medical Investment Group |
Scottish Mutual Assurance Plc |
|
Dresdner RCM Funds (UK) Ltd. |
Scottish Provident Institution |
|
Eagle Star |
Scottish Widows Plc |
|
Family Assurance Friendly Society Ltd |
Selestia |
|
Friends Provident |
Standard Life Assurance Company |
|
INVESCO Fund Managers Ltd |
Swiss Life (UK) Plc |
|
Legal & General |
The Skandia Group of Companies |
|
National Mutual |
Tunbridge Wells Equitable Friendly Society |
|
National Savings |
Winterthur Life UK Ltd |
|
Norwich Union Life |
Zurich Life Assurance Company |
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