|Lawyers and other people who pay professional subscriptions are due income tax back.|
Recently we have begun to see things through a different perspective. We should not be happy to receive a tax refund and if we ever owe money to the Inland Revenue we should be happy. The reason behind this thinking is that if we are due a tax refund, it means that we have unnecessarily paid tax throughout the year and have effectively given the government an interest free loan for 12 months.
Imagine if you are given a tax refund of two thousand pounds. If this two thousand pounds was put into an instant access savings account for year at 5% it would have returned a gross amount of 100 pounds. Therefore the cost to us of having the tax refund is 100 pounds.
Let me put it another way, how would you feel about this: You give me 100 pounds out of your wages each month, and in a year’s time I will give you one thousand, two hundred pounds. It doesn’t sound as attractive now does it?
The opposite is true also; we should be happy when we owe the government tax. It means that they have given us an interest free loan! This thinking might help put a sugar coating on any tax payments you might have to make.