Tax deadline highlights lost opportunities for savers and investors

Millions of the UK savers and investors are set to miss out on valuable tax allowances before the end of the current financial year on 5th April, according to wealth management experts at Yorkshire Bank.

Although 5th April is a memorable date in the saving and investment calendar, official HMRC figures show that of the UK’s 23.6 million total number of ISA subscribers, more than 80% do not save their maximum allowance, meaning personal investment opportunities are lost.

According to the Office for National Statistics, the average payment into an ISA last year was just over £3,500, leading private banking experts at Yorkshire Bank to believe that UK taxpayers were missing out on £240 billion worth of tax-free savings*. 

Jon Evans, Private Banking Partner at Yorkshire Bank’s Financial Solutions Centre at the Ricoh Arena in Coventry, said: “It’s a straightforward decision; make the most out of your ISA, pensions and capital gains allowances before the 6th April, or lose this financial year’s benefits.”

• Currently individuals can invest up to £10,680 each year into an ISA which will increase to £11,280 from April 6th. Therefore, a couple could invest a maximum of £43,920 during this and the next financial year and receive no further income or capital gains tax liability

• Similarly, individuals will receive tax relief on all contributions to their pension schemes up to the maximum annual limit of £50,000

However, Jon is seeing an increasing number of investors turning to capital gains products.  Capital gains tax currently sits at 18% for basic rate taxpayers and 28% for higher rate taxpayers, with the annual exemption amount being £10,600 for most individuals.

Jon said: “If an investor places £100,000 into a Collective Investment Scheme which increases in value to £110,000 after the first year, you are allowed to take this £10,000 gain without incurring any tax liability”.

He also believes that UK population growth, combined with increased life expectancy, is a sure sign of the need for people of all ages to prepare effectively for their future. According to the Office for National Statistics, the number of people aged 60 and above is expected to increase from 14 million to 27 million by 2060.

Jon said: “With the retirement age only set to go in one direction, it is important people prepare themselves for a possible situation whereby state support during retirement may not be enough to meet their required standard of living.

“The Government is openly encouraging individuals to prepare themselves financially for retirement. The recent Budget underlined this – tipping the balance further in favour of HMRC approved tax efficient savings and investment schemes.

“Relatively simple measures, which start with sitting down and having a conversation with a financial adviser, can  ensure any investments  made now,  work as efficiently as possible.

“We all need to be more disciplined in managing our financial wellbeing and ensure that financial plans are set up in the most tax efficient manner to meet our personal objectives. With all this in mind, there has never been a better time to seek financial advice.”

Yorkshire Bank’s network of Financial Solutions Centre offers members a personalised wealth management service, tailored to individual requirements – and a dedicated wealth manager in each of its 71 centres across the UK, two of which are based in the West Midlands in Coventry and Birmingham.