Half of UK higher earners want a financial adviser to help them prepare for higher tax bills, research by Barclays Wealth has revealed.
The findings showed that while almost 57% of those with an income of over £50,000 ($61,248, €56,814) do not currently have a financial adviser, 50% of this cohort plan to use the services of an adviser now, in preparation for their higher tax bills.
With the new tax year approaching, many taxpayers will experience the results of November’s Autumn Statement, which extended the freeze on tax thresholds for basic and higher-rate income tax until April 2028, and lowered the additional rate threshold to £125,140 from £150,000.
Clare Francis, director of savings and investments at Barclays Wealth, said: “Millions of people will see their tax bills rise from next month, putting further pressure on households at a time when money is already tight for many.”
Lack of knowledge about tax
The Barclays research also identified that many higher earners are in the dark about their tax position.
It also revealed that 31% of those with an income of £125,140 and over – some of whom will be paying the additional rate for the first time – are unaware of their current tax bracket. It also found that 30% of those earning over £50,000 don’t know what their current tax bracket is.
The UK-wide survey of over 3,000 individuals earning £50,000 and upwards, highlighted disparities in understanding of tax planning too. While 65% of respondents said they felt confident about their understanding of income tax, a third (33%) of those earning between £100,000 and £125,140 do not know what the personal allowance taper is.
The research also found that over a quarter (27%) of those earning over £100,000 are unaware that HM Revenue & Customs (HMRC) requires them to complete a self-assessment tax return. Some 42% of those who will be in the 45% tax bracket from 6 April are unaware of the lowering of the threshold announced in the Autumn Budget.
Barclays also said that many are at risk of paying more tax than is necessary, as 75% of those surveyed are unaware of the benefits of using their ISA allowance. Another 75% don’t know about the advantages of increasing their workplace pension contributions and just under three quarters (74%) are unaware of the advantages of using the full personal allowance.
Francis added: “While tax may seem complex, there are a number of simple steps you can take to ensure you make use of the allowances available to each of us every year, which can help reduce the tax you pay. Things like using your ISA allowance and increasing your pension contributions can all help and over time, make a significant difference to the tax you pay.”