Taxing tax rules sees savers miss out - Savings - News - Moneyfacts

News

Taxing tax rules sees savers miss out

Taxing tax rules sees savers miss out

Category: Savings

Updated: 13/11/2009
First Published: 13/11/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
A lack of understanding of the UK tax system could mean people are needlessly gifting money to the taxman, simply because their savings and investments are not tax efficient.

New research from Fidelity International suggests high levels of tax illiteracy exist throughout the nation, with an estimated 33 million UK tax payers admitting to being confused about tax.

Over one in seven (15%) said they did not know which tax band they were currently in. Meanwhile, confusion reigned amongst those that did claim to know their band, with over a quarter (26%) of people with taxable income in excess of £50,000 believing they only pay a basic rate of tax.

It is thought such misconceptions could be the reason why much of the population fails to make the most of the tax efficient savings products available to them.

By sheltering savings in a tax efficient wrapper such as an ISA, making regular pensions contributions and making the most of capital gains tax allowances, people in all tax brackets can shelter a significant amount from the taxman.

Yet almost two in five (38%) of those surveyed said they had taken no action to make themselves more tax efficient, while a quarter believed there was nothing they could do to reduce their tax liability.

Only 15% of the nation was found to have made use of tax efficient savings and investment wrappers to help reduce their tax burden.

"By planning our savings and investment wisely, we can make them more tax efficient," said Paul Kennedy, Head of Tax and Trust Planning at Fidelity International. "Tax efficient simply means arranging things in a way so that we keep the tax on our savings and investments to a minimum...and that means more for us and less for the taxman."

Find the best savings account for you - compare savings accounts

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Savings being used as a festive financial buffer

Good news from RCI Bank UK – its latest research shows that many of us are saving more than we were a year ago, but the question is, will you be dipping into that buffer to cover the cost of Christmas?

6 of the best easy access savings accounts

Easy-access savings accounts are as simple as they sound – they allow you to access your money whenever you need it, without having to give advance notice, and they also allow you to pay into them at any time. Here are six of the best.

Start saving for Christmas… 2017!

Christmas is just around the corner and our annual festive splurging is starting to step up, but are you prepared? It may be too late to start saving for this year’s festive spend, but it’s never too early to start for next year’s!
 
Close