Brits are paying billions of pounds in tax savings that could instead go towards their savings accounts every year. According to unbiased.co.uk, Brits make £13.5 billion a year in unnecessary tax payments and 88 per cent of consumers are not doing anything to try and remedy this situation. The company, which provides listings for independent financial advisors, mortgage advisors and solicitors, is urging people to take more control of how much money they pay in tax, which could help boost their savings, in recognition of Tax Freedom Day.
According to unbiased.co.uk, the average Brit is paying £440 more in tax than they need to. Tax Freedom Day is the point in the year at which the average Brit has paid off all their tax for the year. This year, it falls on May 30th, three days later than last year. This means in effect that five-twelfths of the typical Brits' annual salary will go to the government this year. Put another way, adults will need to work 149 days before they are earning money for themselves instead of the nation's coffers.
With so much avoidable money being lost in tax, it is unsurprising that recent statistics from ING Direct indicate that the savings balance of the average Brit fell by £100 in the last quarter, to just £1,783. In the past two years, the financial services provider estimates that typical savings have fallen by 12 per cent.
In order to cut down on the amount they lose in tax, consumers could consider the following steps:
– Taking out an individual savings account (ISA) which allows them to deposit up to £5,340 a year and earn tax-free interest. A further £5,340 can be put tax-free into a stocks and shares ISA.
– Making sure to claim any tax credits for which you are eligible, including child benefit, child tax credits, working tax credits and pension credits
– Using tax planning to avoid paying out large amounts in inheritance tax if you receive a windfall following the death of a family member.