Britons are collectively set to pay a record £10 billion more tax than they need to this year.
The average person will pay £191 in unnecessary tax during 2009 because they have failed to take advantage of the various tax breaks and credits that are available, according to research done by a financial advice website.
Unbiased.co.uk said the total Britons will waste through poor financial planning is £700 million more than in 2008, and the highest level since it first began its Tax Action campaign 17 years ago.
Research carried out by the group found 81% of people had done nothing to reduce the amount of tax they paid during the past year, despite the economic downturn hitting many people’s finances.
Although cash Isa rates have almost halved since last year, there are still reasonable deals on the market, see this week’s Which? Best Buy cash Isas.
Since the money’s tax-free up to the £3,600 limit, it’s even more important to take advantage of the allowance.
David Elms, the Unbiased group’s chief executive said: ‘With individuals and families forced to tighten their belts this year, it is alarming how little people are doing to take advantage of the tax incentives, reliefs and credits available to them, and to avoid being hit by fines for basic mistakes.
‘We estimate that each UK taxpayer will waste an average of over £191 in tax payments this year, although this sum varies greatly based on their personal situation and financial circumstances.’
Britons waste a massive £4.24 billion each year through failing to take up tax credits to which they are entitled, while a further £2.24 billion is needless handed over to the tax man through poor inheritance tax planning.
Around £503 million is thrown away by people who complete self-assessment tax returns, while £309 million is needlessly paid through capital gains tax when people sell assets.
But Britons are also wasting money through failing to take relatively simple steps, with £349 million of tax overpaid each year because people have not made the most of their personal allowances and £144 million is wasted because people do not hold their savings in a tax-free Isa.
Which? Money Email
Subscribe to the Which? Money Email for independently reviewed Best Buys and impartial expert advice plus the latest money news and money saving tips.
For daily consumer news, subscribe to the Which? news RSS feed here.
If you have an older web browser you may need to copy and paste this link into your newsreader: http://www.which.co.uk/feeds/reviews/news.xml .
Find out more about RSS in the Which? guide to news feeds.