We are set to gift a whopping £12.6 billion in unnecessary tax to the taxman this year!
London, UK (PRWEB) March 04, 2012
Despite the ongoing strain on consumer finances, new figures released by unbiased.co.uk, the professional advice website, reveals that as a nation, we are set to gift a whopping £12.6 billion in unnecessary tax to the taxman this year. This translates into £421 being wasted per individual taxpayer!
Tax wastage through the years
Unbiased.co.uk’s annual Tax Action Report, highlights that over the last ten years alone, Brits have amassed a phenomenal tax waste mountain of £88.6 billion. 2012 represents the second highest tax wastage figure in that time, only pipped to the post by last year’s £13.5 billion waste!
Drilling into the tax waste mountain
The biggest area of tax wastage in 2012 is through tax credits, resulting in £7.26 billion being lost through people failing to claim their child tax credits, working tax credits and pension credits. Failure to make use of tax relief on pension contributions is the second biggest area of tax wastage (over £2.45 billion), followed by tax inefficient charitable donations (over £997 million).
Area of Tax Wastage £ Amount of Wastage
1 Income-related Tax Credits £7.26 billion
2 Tax relief on pension contributions £2.45 billion
3 Tax relief on charity donations £997 million
4 Savings on Inheritance Tax £448 million
5 Making use of ISAs £403 million
6 Child Benefit £401 million
7 Avoiding penalties for late filing of tax return £307 million
8 Savings on Capital Gains Tax £133 million
9 Making use of Employee Share Schemes £118 million
10 Income tax and Personal Allowances £83 million
Total £12.6 billion
Taking Tax Action!
Despite the large amount of money gifted to the taxman, 85% of all Brits state they haven’t done anything in the past 12 months to reduce the amount of tax they pay, and when looking at women only, this rises to 88%.
Of those who have not taken any steps over the past 12 months to reduce their tax liability, half (50%) believe they are already being as tax efficient as possible. Over a quarter (27%) of people don’t know how to go about being more tax efficient and 14% simply don’t know why they haven’t taken steps to reduce their tax liability.
Of the 15% of Brits who have taken steps to reduce the amount of tax they pay, two in five (40%) have changed the way they save or invest their money, while over one in five (22%) have made a specific tax efficient purchase or investment.
Karen Barrett, Chief Executive of unbiased.co.uk comments, “Looking back at the last decade and the tax wastage figures in our reports, the numbers are just as shocking now as they were then. This year marks our second highest tax wastage figure on record, only marginally falling from a record high last year.
“The message is clear – tax affects pretty much every one of us and with an average of £421 up for grabs for each taxpayer, we should take some time and effort to ensure that we are being as tax efficient as possible. Our stats show that a quarter of people who have taken steps to reduce their tax liability have done so by enlisting the advice of a professional adviser, such as an accountant or independent financial adviser.
“Tax planning can be a complex area to understand and our report clearly shows that as a nation we are struggling to be as tax efficient as we could be. The way tax impacts on our lives will differ from situation to situation but we call on everyone to ‘take tax action’ and to check whether there are any areas where they could improve their tax efficiency.
“For those looking for help, advice and guidance on their tax matters, a chat with an accountant or independent financial adviser is a good starting point. A professional adviser specialising in tax advice will be able to look at your individual circumstances and make suggestions that are tailored to you and your financial situation. For a free and confidential search for an independent financial adviser or accountant, go to http://www.unbiased.co.uk "