Today is Tax Freedom Day
Falling two days earlier than last year Tax Freedom Day is a notional date in the year when UK taxpayers will have earned enough income to pay off their annual tax burden to the state.
The date is calculated annually by the Adam Smith Institute by adding up all the taxes paid by people in the UK and dividing by their incomes, this year taking the average UK worker 148 days of earning.
But research from unbiased.co.uk, the ‘find an adviser’ search, shows Britons are still leaving themselves open to unnecessary payments to the taxman when it comes to their savings and investments.
Its annual TaxAction research shows UK taxpayers are set to gift £4.7bn this year, over £100 million more compared with 20133, by not making the most of tax reliefs available to them or not using tax-efficient savings products. This translates into an average of £161 per person.
Looking specifically at four key areas of tax – individual savings accounts (ISAs), pensions tax relief, inheritance tax (IHT) and capital gains tax (CGT) – the research shows the biggest area of tax waste is pensions, with £2.9bn set to be wasted by UK taxpayers not using the pension tax reliefs available to them. A further £1.1bn is set to be wasted in unused ISA allowances, £530 million will be wasted in IHT and £154 million in CGT.
A spokesman for unbiased.co.uk said: “Tax Freedom Day may be a notional date in the calendar but our research shows, when it comes to tax, people could be doing much more for their own financial benefit if they looked closely at their savings and investments.
“Our TaxAction figures show people are still not making the most of tax efficient savings and investment vehicles, despite tax reliefs, allowances and better rates being available to them.
“It can be easy to bury your head in the sand when it comes to tax and for many it’s a question of confidence. Our research shows only four in ten people think they’d be confident in tackling their tax burden without the help of professional advice. For those looking to make 28 May their ‘TaxAction Day’, a whole of market professional adviser is best placed to advise on responsible tax planning. They will advise you through the process, providing you with peace of mind and confidence that you are being as tax efficient as possible, ultimately reducing your tax burden. For a free and confidential search for a financial adviser or accountant, go to www.unbiased.co.uk.”