Making Full Use Of Tax Entitlements

With tax rises forcing UK employees to work longer hours to cover government debt, consumers are advised to try and make their money more tax efficient, according to one accountancy specialist.

Rising government debt, which has increased by a staggering £110 billion since 1998, has resulted in significant tax and excise duties to raise funds.

HM Revenue and Customs (HMRC) revealed over the last year petroleum revenue tax has risen by 60 per cent, capital gains tax has increased 26 per cent and corporation tax is up 25 per cent.

Some 82 per cent of the money owed by the government is met by charging UK workers £130.8 billion in income tax, £72.9 billion in VAT, £41.9 billion in corporation tax and £10.9 billion in stamp duty, claims business advisors BDO Stoy Hayward.

Stephen Herring, tax partner at BDO Stoy Hayward, says it is imperative taxpayers know their tax entitlements and understand when and how they are taxed.

"Through investment in pensions and ISAs, inheritance tax planning and capital gains planning, the average UK taxpayer could save a significant amount of tax in most years."

Other suggestions include making use of tax-free savings (up to £3,000 per year in an ISA) and using up personal allowances (currently £5,035) and Mr Herring suggests transferring savings accounts and income investments into non-earning spouse's names to utilise their personal allowance.