Tax Freedom Day 2014, as calculated by free market think-tank the Adam Smith Institute, was 28 May, three days earlier than last year. The later it falls in each year, the more the public is being taxed.
However, if your income is subject to higher or additional rate of tax, you are probably not yet working for yourself. So you may need a strategy to bring your personal Tax Freedom Day forward.
Don't think that tax stops being an issue if you are retired. New analysis from Prudential shows that the average retired household pays out 30 per cent of its annual income in tax. In the 2011-2012 tax year, the average retired household paid £6,400 in tax from a gross income of £21,300.
If you have built up substantial investments then you need to get as much of these as possible into individual savings accounts (Isas). Within Isas interest on cash and income from bonds is tax-free, there is no liability to higher rates of tax on dividends and any capital gains are tax-free. Although it may not seem like a great perk when you are investing, the tax-free status of Isa income can really come into its own when you retire.
From 1 July, the Isa allowance for each individual adult will be raised to £15,000 a year, or £30,000 for a couple, so if you have plenty of investments in non-tax advantaged trading accounts, get ready to move them.
You can also use your annual capital gains allowance of £11,000 to dispose of an investment outside an Isa or pension and use the cash to fund a new Isa or pension investments.
You could also consider transferring assets held outside of Isas to a lower earning or non-tax paying spouse. This will mean they benefit from a more favourable tax treatment on any income they generate.
