The UK taxpayer is currently wasting approximately £12.6 billion in tax inefficiencies according to a new report by financial website unbiased.co.uk.
If there any small crumb of comfort to be had, it’s that this figure is marginally down on the record high of last year. Other than that, the news is not so good. The report, the Tax Action Report, claims that Britons are squandering billions of pounds on unnecessary tax payments every year: this equates to £421 wasted by every tax payer in the current financial year. This year’s figure alone is sufficient to pay for the whole of London 2012 and still have over £3 billion in loose change. To compound matters even further, unbiased.co.uk maintains that over the course of the last decade, the UK tax payer has shelled out an astonishing £88.6 billion on unnecessary tax payments.
So what is going on?
The nub of the problem seems to be that the majority of tax payers in the country do not spend enough time ensuring that their tax affairs are run efficiently.
Few, if any, consult an accountant for advice, and are therefore paying out money for which there is no justification.
According to Chief Executive of unbiased.co.uk, Karen Barrett, British taxpayers really do need to seek out expert help and advice to ensure that they are not paying out money unnecessarily.
The report highlights the fact that 85% of British taxpayers haven’t taken any steps to reduce the amount of tax they are paying, and have never sought expert advice through an accountant or tax planner. So, how is this tax inefficiency calculated?
- £7.26 billion is wasted by not claiming income-related tax credits.
- £2.45 billion is wasted by not claiming tax relief on pension contributions.
- £997 million is wasted by not claiming tax relief on charitable contributions.
- £448 million is wasted on inheritance tax.
- £403 million is wasted by not making use of ISAs.
- £401 million is wasted by those not claiming child benefit.
- £307 million is wasted on fines for filing late .
- £133 million is wasted on unnecessary capital gains tax payments.
- £118 million is wasted by failing to use employee share schemes.
- £83 million is wasted on unnecessary income tax and not fully utilising personal tax-free allowances.
So what does this tell us about the state of the UK? What sort of lessons do we need to learn as small business owners and taxpayers? The moral of the story is clear: don’t pay out unnecessary money. Pay your dues by all means, but don’t pay more than you have to. For the very best advice on tax efficiency, then speak to a qualified accountant or a tax planner.