UK adults waste £7.6 billion in tax

Confidentially search for details of an independent financial tax advisor close to where you live or work from around 9,000 IFA locations UK-wide.

UK ADULTS WASTE £7.6 BILLION IN TAX

§        That’s £1.8 billion* more than last year, as the true impact of unclaimed tax credits hits home

§        31 million** adults resent rising tax burdens, but three quarters of us do nothing to reduce the amount we pay

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

Four out of five (82%) UK adults will waste an unnecessary £7.6 billion in tax in 2006, £1.8 billion more than in 2005*.  And despite 31 million (70%) of us claiming to resent rising tax bills, over three quarters (78%) of UK adults admit to doing nothing to help reduce the amount they pay**. The average UK adult will therefore squander £155 this year in tax. These are the top findings from the fourteenth annual TaxAction* investigation, commissioned by IFA Promotion (IFAP), on behalf of the UK’s independent financial advisers.

IFA Promotion’s study also reveals that the biggest area of tax waste (£2.9 billion*) stems from the tax credits system, overtaking inheritance tax (IHT), which has been the biggest area of waste for several years.

David Elms, Chief Executive of IFA Promotion comments, “Whether through apathy or confusion, the failure to claim tax credits is just one way we’re gifting unnecessary and vast sums of money to the taxman each year. And people can take even simpler steps to stamp out tax waste, such as non-taxpayers filling in a simple form, married couples making sure they use up both tax-free personal allowances, or people simply submitting their self-assessment forms on time.   Over the past few years, the onus for managing tax affairs has shifted increasingly to the individual, but our awareness and action is not keeping pace, and so the mountain of tax waste keeps growing.”

-more-

Together we waste enough money to create a new millionaire every day for the next 21 years. Reducing the amount of tax you pay can cost nothing and take very little effort. Here are ten simple ways to set you in the right direction*:

·         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 £275,000: 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, “Tax is no one’s friend, so why pay more than you need to? From avoiding fines and charges to claiming what’s rightfully ours, people should take action. Discussing your financial planning situation with a local IFA is a great place to start, and should help cut your waste significantly.”

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-

* TaxAction 2006 report produced for IFA Promotion by RAKM, based on a specially commissioned analysis of Inland Revenue and a range of other official data sources.

** Survey for IFA Promotion by YouGov, using a sample of 2367 people in February 2006.

For further information please contact:

David Elms                         Chloe Mann/ Richard Winder/ Holly Godden

Chief Executive                   Lansons Communications

IFA Promotion                     020 7294 3681 / 020 7294 3641/ 020 7294 3674

020 7833 3131

    For expert comment or case studies from over 200 media-friendly IFAs, journalists should call IFA Promotion’s Media Services hotline on 020 7294 3682 or search online in ‘Media Services’ at www.unbiased.co.uk

1.  Independent Financial Adviser Promotion

IFA Promotion was established in 1989 to promote the value and accessibility of independent financial advice to the public.  It represents around 9,000 firms of independent financial advisers across the UK and is sponsored by 32 leading financial institutions. In the past 12 months, over 530,000 consumers and businesses used IFA Promotion to find local independent financial advice.

IFA Promotion believes 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.

2.       Independent Financial Adviser Promotion’s sponsors

Post this article to: del.icio.us - Digg - Newsvine - Reddit - Furl - MyYahoo!

Read more press releases