25 May 2006

Celebrate Tax Freedom Day On 3rd June

 

26 May 2006

But... take tax action and you could make merry sooner, says IFA Promotion

- Visit www.taketaxaction.co.uk to see how YOU could save tax -

Saturday 3^rd June is the date for UK taxpayers to crack open the bubbly and toast Tax Freedom Day, the theoretical point in the year at which we stop working for the government and start working for ourselves*. However, IFA Promotion, the organisation promoting the benefits of independent financial advice, is urging individuals to bring forward their own Tax Freedom Day by reducing some of the average £155 we will each waste in tax this year.

David Elms, Chief Executive of IFA Promotion commented “Tax Freedom Day serves to highlight the vast amount of money being channelled into the pockets of the taxman each year – however, as our research shows, a staggering £7.6 billion of this is unnecessary.  No one likes paying tax, so why pay more than you should?  By taking stock of your current financial situation, and becoming more tax savvy with your finances, you can bring your personal Tax Freedom Day forward and start celebrating early.”

IFA Promotion’s annual TaxAction** campaign, now in its fourteenth year, reveals that four out of five adults in the UK will waste £7.6 billion this year in unnecessary tax, that’s enough to create a new millionaire every day for the next twenty years! However, despite 31 million (70%) of us claiming to resent rising tax bills, over three quarters (78%) admit to doing nothing to help reduce the amount they pay.

By taking just a few simple steps we could stamp out this tax wastage for good:

• IF YOU ARE ELIGIBLE: Claim your tax credits - £2.9 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 SAVE: Use up your annual ISA allowance - £170 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 FILL IN A TAX RETURN: Sort out your self-assessment - £487 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 - £548 million goes begging each year, £319 million through non-taxpayers failing to claim tax back on banks and building society savings accounts, and a further £229 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 £285,000: Plan your inheritance - an extra £1.3billion 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: Top up your pension pot - £656 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 - £207 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 - £389 million could be saved in this way.
• IF YOU GIVE TO CHARITY: £808 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 - £21 million in tax could be saved in their first year of existence.

Elms concluded: “Stamping out tax waste need not be a painful task, especially with expert independent advice, and the financial rewards could be well worth it.”

As a first step to stamping out this waste, visit IFA Promotion’s dedicated website at www.taketaxaction.co.uk.  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 or by calling 0800 085 3250.

-ends-

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