Families in the UK Unaware of Tax Breaks that could Benefit Children
United Kingdome has a policy of higher taxation and upper slabs stretch to even 50% of the taxable income and in these circumstances, ACCA (the Association of Chartered Certified Accountants) has highlighted that UK citizens can save for the future of their children by applying simple tax breaks. But the problem is many of the parents are not aware of the available and possible savings on tax.
ACCA further points out that many of the families who are trying to save for the university life of their children do not even know that savings on taxes can add up to their total savings. Therefore it is highly important that these parents are made aware of these tax breaks and they end up using them.
Chas Roy-Chowdhury, head of taxation at ACCA, in a recent interview said that many businesses permit parents to take part of their salary in the form of a voucher; that can be utilised for childcare without being charged for tax. Government is also supporting this viewpoint and plans to introduce a programme under which the parents will be able to spend £2,000 per annum on child care fees without getting taxed.
Chas further said that parents normally don’t know about the benefits of investing in junior Individual Savings Accounts (ISAs). Under which parents can save up to £4,000 per annum, without its interest being charged to tax. This is one of the best ways of saving for their children’s university education as the money cannot be touched until the child reaches the age of 18.
Chas concluded by highlighting the possible benefits of transferring assets to children when parents are alive, as this will save up the possible heavy inheritance taxes on the assets if they are transferred as a result of a will. This gives a better opportunity to a child for financial security during their lives.
Further information and advice on related topic can be obtained from the employer, Money Advice Service, HMRC and ACCA members.