Tax Freedom for individual taxpayers is two days later in 2015
Taxpayers in the UK are working two days longer on average in 2015 before they start earning for themselves, the Association of Chartered Certified Accountants (ACCA) has stated.
Research by Adam Smith Institute has found tax freedom day is two full days later than last year. Tax freedom is calculated as the date taxpayers stop paying taxes and start earning for themselves. This tax freedom day fall on 31 May in 2015.
The tax freedom day has been increasing steadily over the years. Due to the overly complicated tax system in the UK and the numerous indirect taxes that exist, UK tax payers are paying more and more to the government, even after five years of increases in personal allowances.
Chas Roy-Chowdhury, Head of Taxation at the ACCA said: ‘The rises in the personal allowance have created a huge amount of fiscal drag. More and more people are being caught in the 40% tax bracket. At the end of the 1980s only 500,000 people were paying the higher rate of tax, now that is more than four million people. So despite all the Government hype on increasing the personal allowance we are actually two full days worse off this year before our income is ours to keep.
‘Despite large cuts to the public sector the government is needing more and more money to keep public services going, a bill that has to be paid for by all UK taxpayers. Individuals are well within their rights to take steps to legally reduce their tax burden. ISAs are the perfect example of one method they can use.’
Other steps include:
Claiming all benefits and allowances: Taxpayers’ money is ploughed into a wide variety of state benefits so make sure the state is giving you what you are owed.
Use gift aid: As a UK taxpayer you are entitled to claim gift aid for any charitable donations, so that the charity receives the full donations tax free. Higher rate taxpayers can claim the difference between the higher rate of tax and the basic rate on the total value of the donation.
Check tax codes: Be tax aware and make sure your tax code is correct. Some people may be paying too much tax – without knowing it. If a tax code is incorrect, the wrong amount of tax and deductions will be made.
Consult a chartered certified accountant: Tax is confusing, so when it becomes too complex always consult a chartered certified accountant.