British taxpayers are handing over £12.6bn a year more in tax to HMRC than they need to, according to new research. That’s £421 per taxpayer in 2012.
The new research, by financial adviser website Unbiased.co.uk, shows that unclaimed tax credits account for £7.26bn of the overpayments. Over the past ten years, taxpayers have collectively overpaid by £88.6bn.
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Despite the high amounts of unclaimed tax credits and reliefs, 85% of people haven’t done anything in the past 12 months to reduce the amount of tax they pay.
Of those, half believe they are already being as tax efficient as possible. Around a quarter (27%) 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.
Tax overpayments and wasted state benefits
The table below shows how the headline £12.6bn wastage figure breaks down into individual tax areas.
|The top 10 tax areas where UK taxpayers lose out the most|
|Area of tax wastage||Amount of wastage|
|Income-related tax credits||£7.26bn|
|Tax relief on pension contributions||£2.45bn|
|Tax relief on charity donations||£997m|
|Savings on inheritance tax (IHT)||£448m|
|Making use of ISAs||£403m|
|Penalties for late filing of tax return||£307m|
|Savings on capital gains tax (CGT)||£133m|
|Making use of employee share schemes||£118m|
|Income tax and personal allowances||£83m|