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The UK’s tax burden hold rising, upsetting a lot of individuals. Within the 2026/27 tax yr, the full tax take will attain 37% of gross home product (nationwide output). And with tax thresholds frozen, virtually two-thirds (66%) of all adults may pay earnings tax in 2028/29.
Dodging tax
Benjamin Franklin, one of many US founding fathers, remarked, “In this world, nothing can be said to be certain, except death and taxes”. Economist John Maynard Keynes later added, “The avoidance of taxes is the only intellectual pursuit that still carries any reward”.
No-one want pay a penny extra in tax than due. Whereas unlawfully avoiding fee is tax evasion, tax avoidance — minimising one’s tax invoice — is completely authorized (and extremely profitable).
High tax charges
I imagine that no authorities ought to take greater than half of any citizen’s cash in taxes. A 50% tax restrict shares the spoils evenly between people and states. But HM Treasury expenses some tax charges that I feel are wildly unfair, together with these three.
1. Cigarette-packet racket
Regardless of being a smoker, I regard tobacco as a dangerous, addictive product that needs to be phased out. Once I purchase 20 cigarettes, I pay three ‘hidden’ taxes: £7.07 obligation on every pack, plus 16.5% of the bottom value, plus worth added tax (VAT) of 20% on prime.
Collectively, these three taxes whole practically five-sixths (83%) of the worth of 20 cigs. Wow. Thus, a duty-paid packet costing £15 consists of a base price of £2.50 and taxes of £12.50. Furthermore, this unfair deal will hold getting worse, attributable to future ‘escalator’ tax charges. No surprise cigarette smuggling and counterfeiting is booming.
2. Fooled by gas
At the moment, gas obligation is 52.95p per litre of unleaded petrol or diesel, plus VAT on prime. With gas costs hovering throughout the US/Iran warfare, HM Treasury will acquire billions of kilos in further obligation. Maybe these charges needs to be minimize to ease prices for struggling British motorists?
3. Earnings-tax traps
In a 3 April article, I defined how British staff incomes between £100,000 and £125,140 pay an efficient tax fee of 62% on these earnings. This impacts maybe 1.9m British staff — together with docs working fewer hours to keep away from this punitive cost. But this ‘tax trap’ might be dodged via wage sacrifice and additional pension contributions.
ISA, I say!
The UK’s hottest tax shelters are pensions and ISAs (Particular person Financial savings Accounts). Most British adults have some pension provision, whereas 15m individuals open ISAs annually. My spouse and I take advantage of each to minimise our tax payments.
For instance, we personal shares in Normal Life (LSE: SDLF), previously often known as Phoenix Group Holdings. This FTSE 100 agency is the UK’s main supplier of long-term financial savings and funding plans. On the present share value of 745.4p, this group’s market worth is £7.5bn.
We personal this Footsie inventory for its market-beating dividend yield, presently 7.4% a yr. Although future dividends should not assured, they’ve risen steadily, reaching 55.4p for 2025. Proudly owning this share inside ISAs means no further tax on dividends, plus no capital positive aspects tax on future income from promoting.
This month, Normal Life agreed to purchase rival Aegon UK for £2bn in money and shares, gaining 3.7m clients. If this deal goes awry, then it may nicely hit future revenues, earnings, and money circulate. Even so, I’m hoping Normal’s success continues!
