Here’s why taxpayers are still losing money unnecessarily:
The average employee saves £2,840 a year, gaining £568 of tax relief in the process. Around 3.4 million adults are currently in employment but not paying into a pension. If these people made the same average contribution, they would collectively save an extra £1.9 billion in tax.
The UK could have saved around £595 million more through some simple estate planning. For many families, this could be achieved by the simple measure of ensuring that life insurance pays into trust, not into the deceased’s estate.
Savings and investments
A more efficient use of cash ISAs and stocks & shares ISAs could save respectively £134 million and £208 million by sheltering the interest from income tax and the growth from capital gains tax.
Why aren’t we doing more?
We asked UK adults how much they thought about their tax bill and whether they took any measures to reduce it. Here are some of the most revealing responses:
- 47 per cent believe they can’t pay any less tax than they do now
- 15 per cent say they’ve already taken all possible measures
- only 18 per cent say they have taken any action in the last year to reduce their tax bill
- 22 per cent say they simply haven’t thought about it.
These figures show the level of tax awareness actually going down – last year 45 per cent believed they couldn’t pay any less tax, and 26 per cent said they had taken tax action in the last year. Yet the UK has become more tax-efficient, whether people realise it or not – it’s just that we can and should be doing so much more.
How to be tax efficient
Being tax efficient is not about avoiding anything – it simply means making full use of the allowances that have been provided for you. To get fully up to speed on these, and find out all the ways in which you could make use of them, talk to a financial adviser or an accountant. You can find one using our search here.