UK taxpayers have today worked enough since 1 January 2016 to effectively clear their annual tax bill and start earning for themselves.
The 154 days it has taken to pay off tax bills – as an average across all UK tax rates - is four days later than 2015’s ‘tax freedom day’, although it’s still a way off figures from 1980-1985, when tax freedom day didn’t come about until mid-June.
But while tax freedom day is effectively meaningless - you still need to pay your taxes - it is a timely reminder to get your personal finances in order, especially your pension.
Steve Lowe, director at Just Retirement says: “In the first twelve months of the new [pension freedom] rules HM Treasury received a £900m windfall, £200m more than it had planned for, as people rushed to exercise their new freedoms and were hit with a bigger tax bill than expected.
“Yet with just a little planning unnecessary tax bills can be avoided by spreading out withdrawals. People should speak to the government’s free and impartial guidance service Pension Wise to find out more about how to get the most from their pension savings, it might save you money.”
- For more info on pensions and PensionWise see Pension freedoms: what's happened since April? and My PensionWise experience.
One of the easiest ways to shelter your money from tax is with an Isa, which can store cash or stocks and shares income. This tax year, funds are protected up to £15,240.
Many are also not making the most of their tax free allowances, see Eight easy ways to boost your income.