According to calculations from the Adam Smith Institute last week, the average UK tax payer will hand HMRC everything they have earned in the first five months of this year and then spend the last seven months of the year working for themself.

Tax Freedom Day has been calculated since the mid-1960s and this year falls one day later than it did last year. This can be taken as an interesting fact or a bit of a warning for all those who work hard for their income or are enjoying their retirement, but still have tax to pay.

Having spent 25 years in the financial planning profession I have met many who focus on driving the best return possible from their savings and investments, spending a great deal of time researching investment funds, shares and other opportunities to generate returns.

However, for me this is only one side of the savings and investment coin and it is the other side that is given much less attention. That is where my reference to Tax Freedom Day comes in; the management of your tax position and your chosen investments can have a hugely significant effect on the value of your returns over time. What I mean by this is why strive for an 8% return if you are being taxed 40% on the proceeds? Why not aim for 7% with no tax liability at all?

Most investors are aware of their personal allowance for income tax purposes, the fact they have an annual exemption for capital gains tax purposes and the ability to put savings in a tax efficient wrapper like an Individual Savings Account (ISA) each year etc.

The two key questions this leads to are: how many people make full use of them? And how many are aware of how they can be used in combination to give the best tax result?

By choosing the right tax wrapper for your investments, understanding the tax implications for you at the start as well as inside the wrapper while invested, taking the benefits at the right time and using the best combination of allowances and exemptions, it is possible to achieve a far better result than just choosing a great performing fund.

I recently looked at some figures to try to illustrate this. From a portfolio of four of the most common investment wrappers that people own/use, it is possible to produce an income in excess of £100,000 per year, with a tax liability of less than 1.5%.

It is important to think about your own tax liability, what you pay on your income and savings and ask the question – am I making the most of what I can do to minimise this?

Andy Zanelli is head of retirement planning at AXA Wealth