Revenue nets £6bn in unwanted tax

The Inland Revenue stands to receive over £5.7 billion next year in unnecessary tax payments, according to the latest research.

Independent financial advisers at Tax Action say despite the £6bn sum, nearly 75 per cent of adults have taken no action this year to reduce the amount of tax they pay.

And that's despite the fact that nearly 60 per cent of UK adults say they resent rising tax bills.

Findings from the group highlighted inheritance tax to be the most wasteful charge, with almost £1.6bn frittered away because people fail to take action to alleviate their bill.

This year, the burden of IHT is set to confront more than 35,000 people, largely because rising property prices have pushed greater numbers over the £263,000 IHT threshold.

This suggests a large number of taxpayers are not making IHT savings by leaving their estate to other members of the family, such as their children.

Evidence shows that although many couples decide to leave all their property to each other, most fail to pass on up to £263,000 of their estate during their lifetime, to their siblings.

"Failure to plan our inheritance properly is one of many ways we’re frittering away vast sums of money each year," said David Elms, chief executive of IFA Promotion.

"The onus is increasingly falling on us [the taxpayer] to manage our own tax affairs, but millions have been slow to pick up on this responsibility. This year alone, the average taxpayer will squander £133 in unused tax breaks, Revenue fines and unclaimed credits and reliefs."

The findings show that an estimated six million non-taxpayers are handing the taxman a yearly sum of £318m - simply by failing to claim back tax on bank and building society interest.

Out of those taxpayers on yearly basis, women emerged as the least 'tax-savvy,' with 82 per cent taking no action to alleviate tax, compared to 70 per cent of men.

IFA Promotion said those non-taxpayers caught by banks and building societies can fill out a simple form at their local branch which stops them paying tax on their savings.

"We're urging people to take some simple measures to minimise this mountain of waste," said Mr Elms, referring to the average loss of £133 per taxpayer.

"You can often make a big difference with very little effort, such as claiming credits and reliefs that are rightfully yours."

Other steps to reduce tax bills include, using up annual ISA allowances or using equally tax-efficient savings accounts, topping up pension pots, or even transferring savings accounts to non-tax paying spouses.

According to the figures, UK adults waste £113 million every year by failing to transfer, while late self-assessors failing to meet Inland Revenue deadlines account for a further loss of £418m.

Meanwhile, IFA said "no one likes paying tax" but with a little planning or advice, people could be enjoying the rewards from significant savings.

"Together we waste enough money to create a new millionaire every day for the next fifteen years," said the group.

"And reducing the amount of tax you pay can cost nothing and take very little effort. With a bit of care, and the advice of an IFA, people could save themselves an average £133 a year."

 

4th March 2005

Related News

Latest News

                             

NEWSLETTER SIGN UP