Contractors may want to take the advice of the Nationwide and use their ISA tax relief allowance for this year before it runs out.
After all, why not use a tax avoidance method that definitely is legal?
The end of the tax year is drawing closer for people who want to deposit the maximum £10,200 in a tax free ISA. The director of savings and investments at Nationwide, Robin Bailey, said that somebody who had invested the maximum in April last year would have seen that investment grow to up to £11,077 now.
He continued by saying that people are still confused about ISAs and therefore they do not take full advantage of the tax benefit on offer. Nationwide estimates that cash ISAs are saving consumers more than £680 million every year in tax which is a substantial saving. But there is still a need for better education on the benefits of ISAs to help consumers save even more, he added.
The UK is no longer a nation of savers if the latest report from Scottish Widows is to be believed. More than 33% of adults saved absolutely nothing last year, a 16% rise from the previous year.
The study investigated the savings habits of specific groups and found that 31% of those earning between £20,000 and £30,000 did not put any money into savings. Of those who did save, 56% saved 5% or less from their salary. 72% of those who did not save said that high living costs prevented them saving.
People aged between 45 and 54 are having the biggest problem saving with 40% saying they were not able to save anything last year. 33% of young adults between 18 and 24 were also unable to put any money away.
Ian McGowan from Scottish Widows said that an increasing number of people do not understand the benefits of saving even a small amount. Even though it is not practical at the moment to save large amounts, it is important that the UK savings culture is not lost completely, he concluded.
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