Tax is a good thing – our money keeps the country running. But paying too much tax is not a good thing. Every year, UK taxpayers give away several billion pounds more than they need to. In 2015 the figure is expected to be around £4.9 billion.
The government creates many legitimate opportunities for you to reduce the amount you pay in tax. However, you may not be aware of them all, or you may be unsure of how to take advantage of them – or like many people, you may have known but simply not done anything.
Tax is a complex area, and becomes more so if you run a business or have several sources of income. Numerous factors will affect the amount of tax you should pay each year, including your job, savings and personal circumstances. But for many of us, fear of paying too little tax (and the possibly consequences) means we often end up paying too much.
The most common areas where we tend to waste tax are:
- Savings (e.g. by not using or under-using cash ISAs)
- Retirement planning (e.g. by failing to make sufficient payments into pensions)
- Inheritance tax (e.g. by not planning ahead)
- Capital gains tax (e.g. by not holding stocks and shares in an ISA)
- Not seeking professional help from an accountant and/or financial adviser