Which? uses cookies to improve our sites and by continuing you agree to our cookies policy

Brits pay £12.6 billion in unnecessary tax in 2012

Unclaimed tax credits top the tax-wasting table


UK taxpayers could be overpaying £12.6bn in tax and unclaimed reliefs in 2012

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.

Take action to pay less tax

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
Child benefit  £401m
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
Total  £12.6bn

More on this…

Back to top