TAX SAVING TIPS - AVOID WASTING TAX
According to IFA Promotion in 2007 eight out of ten adults in the UK will pay unnecessary tax to the tune of a staggering £8 billion, or about £185 per person. The same findings show that despite Inheritance Tax (IHT) being the most resented tax more than £1.5 billion was lost to IHT in the last tax year.
Personal tax contributions have risen a staggering 367% in the past 20 years to an estimated £149 billion in 2007. However, there are several areas of your finances that you can check to make sure you are minimising your tax burden.
- IF YOU HAVE ASSETS OVER £285,000: Plan your inheritance - an extra £1.5 billion 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: Use up your annual ISA allowance - £382 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 ARE ELIGIBLE: Claim your tax credits - £2.3 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 FILL IN A TAX RETURN: Sort out your self-assessment - £463 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 - £546 million goes begging each year, £322 million through non-taxpayers failing to claim tax back on banks and building society savings accounts, and a further £224 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 SAVE: Top up your pension pot - £739 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 - £171 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 - £510 million could be saved in this way.
- IF YOU GIVE TO CHARITY: £1 billion 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 - £125 million in tax could be saved in their first year of existence.
Check now to see how much tax you may be wasting! Click here and complete the simple Tax Waste Calculator. (a new window will open, to return to our site simply close the window.)
For further details on how we can help you save tax contact us or ring us now on 0845 00 66 231.
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