Brits benefit from £27bn in tax relief incentives but warned trend is slowing
Brits benefited form tax incentives to the tune of £27bn last year, but a warning has been aired about the trend slowing.
Numerous schemes are available to savers and investors, with the biggest gains being income tax relief on pension contributions, at a staggering £22.5bn, while relief on ISAs reached £3.7bn.
However, the figures from Bowmore Financial Planning, based on HMRC data from the year ending March 2021, shows the trend is slowing.
It suggests money saved through tax release is increasing by only one per cent in each of the last two years, while there has been fewer incentives released by the government to encourage it.
There have also been cuts made in the last few years further eating into tax savings, with the UK reducing the amount high earners can contribution to pension funds, leading to a £400m drop off in value in relief claimed in the last year.
Bowmore also changed the criteria for a number of investment schemes reducing opportunities to use tax relief.
Bowmore Financial Planning’s managing director Gill Millen, said: “Making the most of the tax reliefs available is a very powerful way to make your savings and investments work harder.”
“The consistent chipping away at tax reliefs undermines the attractiveness of saving and investing. It risks deterring individuals from saving enough for their retirement, which could have a detrimental long-term impact on their finances.”
“Any decision by individuals on where to save or invest should be made with careful consideration. Tax reliefs are a great way to maximise savings, but they should be secondary to an individuals’ overall saving or investment strategy.”