Good news! You’ve almost finished paying your tax for the year
- 23 May 2014
UK taxpayers have nearly finished paying off the taxman this year and actually paid less than last year.
Tax Freedom Day, as calculated by the Adam Smith Institute, falls on 28 May and is the day when taxpayers stop paying the government taxes and the money they earn starts to go into their pockets.
The day is two days earlier than last year meaning taxpayers are paying less tax, although the Association of Chartered Certified Accountants (ACCA) said individuals could be forgiven for failing to notice.
Chas Roy-Chowdhury, head of taxation at ACCA, said while reductions in tax were welcome it was still too difficult for households to understand how much tax they are paying.
‘On paper, it is good news that taxpayers get back two days’ worth of tax compared to 2013,’ he said. ‘However, it’s almost irrelevant to households when Tax Freedom Day falls. It is actually very difficult for taxpayers to notice whether they are paying more or less tax.
‘There could be less tax coming out your monthly pay because of the increase in the personal allowance, but your total tax bill might be larger from indirect and other taxes. Will UK taxpayers notice the extra two days when they earn money for themselves rather than the chancellor? I very much doubt it.’
While the government has introduced measures to cut tax bills for households, including increasing the personal allowance to £10,500 next year, meaning earnings up to this amount do not suffer income tax, Roy-Chowdhury said families could make their money work harder.
ISAs: if you are saving make sure you do so in the most tax-efficient way. From 1 July individuals can save up to £15,000 in the New ISA (NISA) and any returns or interest made are tax-free.
Claim allowances and benefits: some benefits have been cut but plenty of reliefs still go unclaimed, such as income-related benefits and failure to save into a pension means pensions tax relief isn’t used.
Gift Aid: if making charitable donations, make sure to tick the ‘gift aid’ box so the charity gets the donation tax free.
Check tax codes: people rarely check their tax codes and could be paying too much tax as a result. If you think there is a problem with your tax code you will have to contact the tax office to change it but talk to the payroll office of your employer which may be able to help.
- Car insurance premiums start to rise as fake whiplash claims continue to plague insurers
- Lenders cut mortgage rates to record lows
- Pensioners could be hit with 45% tax charge shock when new freedoms kick-in
- Disappointment as Government's Pensioner Bonds will not pay monthly income
- Tesco chairman steps down as group confirms it actually overestimated its half year profits by £263m
- Lloyds expected to axe 9,000 jobs over the coming three years as part of strategic review
- GSK is a "buy", but pharmaceuticals still under pressure says Share Centre
- Is the bull market in shares now under threat?
- As Junior ISAs mark their third birthday, Child Trust Fund savers need to weigh-up their options
- Equity market volatility: A simple correction or the beginnings of a bear market?