NI taxpayers working two days longer to pay tax in 2015
Taxpayers across the UK including Northern Ireland are working two days longer on average in 2015 than in 2014 before they stop paying taxes and start earning for themselves, warns ACCA (the Association of Chartered Certified Accountants). Tax freedom day – calculated annually by the Adam Smith Institute – falls on 30 May this year as opposed to 28 May in 2014.
The date at which tax freedom day arrives has been steadily rising and the overly complicated nature of the UK tax system – especially with the sheer number of indirect taxes that exist – means households are now left with less money and are paying more to the government. This is despite five years of raises in personal allowance.
Chas Roy-Chowdhury, ACCA head of taxation 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 your 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. If you think there is a problem with your tax code, contact HMRC.
Consult a chartered certified accountant: Tax is confusing, so when it becomes too complex always consult a chartered certified accountant.