The Financial Times recently conducted a survey of 2,000 UK adults to establish reactions to income tax increases effective 6th April 2010. Effective income tax rates will increase to as much as 60% for those with total taxable income of £100,000 or more.

Key points of the research:

• 33% of those aged between 18-34 would consider using salary sacrifice to reduce their tax bill
• 25% of those polled would consider using salary sacrifice (29% of males)
• 86% admit to doing nothing to reduce their tax burden
• 30% have cut down on spending to prepare for a drop in net income
• £9bn is set to be wasted in unnecessary tax payments by Britons this year

EBS is currently running tax clinics which educate employees about the changes and the options they have to reduce their impact.

One of the most effective planning tools is the payment of pension contributions where effective tax reliefs of up to 65% can be achieved whilst higher-rate relief remains (individual earning £112,950 paying via salary sacrifice) .

The FT also ran an article entitled: ‘Pension relief: Use it or Lose It’ speculating on the possible withdrawal of higher-rate relief on pension contributions as a consequence of Wednesday’s Budget.

To arrange a Tax Clinic, to review your current Salary Sacrifice arrangements or for more details of this research please get in touch before it’s too late!

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