Savvy savers could boost their pots by over £12,000 thanks to a major tax cut set to be announced in the Spring Budget.
Chancellor Jeremy Hunt is expected to reduce National Insurance for workers by two percentage points, which would mean a person on the average UK salary of £34,963 would save £447.86 a year.
This comes after a prevous two percentage points cut in the tax in the Autumn Statement, with the two reductions providing a combined saving of around £900 a year for the average earner.
Daniel Harrison, CEO of True Potential, urged people to consider investing their tax savings. He told Express.co.uk: “This will come as a welcome relief to millions who have been under incredible cost pressures over the last two years.
“To make the most of this, savers should consider investing the £900 if they can, as this sum would grow to £12,674.31 by 2034 assuming a relatively conservative six percent return.”
Despite the expected tax cut, Britons have seen their tax bils increase significantly in recent years.
Rachael Griffin, tax and financial planning expert at Quilter, said: “While a cut in taxes will for some be a needed boost, it hardly turns the dial much considering we are dealing with a historic tax burden at present.
“However, it will certainly be a crowd pleaser with someone earning £30,000 a year being around £58 better off a month if you also take into account the national insurance cuts in the Autumn Statement.
“However, many people don’t understand how National Insurance works and a cut to income tax would have been easier for all to understand but crucially much more expensive.”
Other experts have called for more tax policy changes in the Budget. Sam Dewes, tax partner at HW Fisher, said: “The Chancellor should consider increasing the basic rate band, personal allowance, or personal savings allowance.
“More people are starting to understand fiscal drag and the impact it is having. For example, the number of taxpayers paying 40 percent income tax has increased by more than 40 percent in the past three years.
“This includes individuals working in professions where they would not expect to be subject to a higher rate of tax.
“Increasing the allowances would ensure that fewer people are dragged into the requirement to submit tax returns at a time when HMRC are already struggling to deal with this administrative burden.”
Upping the personal allowance could also provide welcome tax relief for pensioners. Claire Trott, divisional director of Retirement and Holistic Planning, told Express.co.uk: “The frozen personal allowance of £12,570 will soon mean that more and more pensioners will be forced to pay additional tax or be pushed into doing a tax return.
“State pensions are paid gross and if they have private pension income then the tax paid on these will be adjusted to take account of any of the personal allowance used by the state pension payments.
“So, any increase in the state pension, although welcome, will have less impact on those who are receiving other pension payments from their hard saved income through their lifetimes because it will just mean more of that income is taxed, or even push them into a higher rate of taxation.
“It seems right that this should be increased in line with wages to ensure we are not penalising individuals year after year for increasing their income and driving growth.”
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