How we could cut our tax bills by £290

Mar 24 2008 Western Mail

PEOPLE in the UK will waste a record £9.3bn in tax this year by failing to plan and take full advantage of their tax allowances, research out today shows.

The average person will hand over about £290 more to the taxman than they need to, but despite this 82% of consumers admit they are not doing anything to reduce their tax burden.

The amount being wasted is the highest since independent financial adviser website Unbiased.co.uk first began its study 16 years ago, with people also wasting £1.4bn more than in 2007.

The biggest area of waste is in unclaimed tax credits, with Britons collectively losing out on £3.7bn by failing to claim Pension Credits, Child Tax Credits and Working Family Tax Credits.

People will also collectively waste more than £1.9bn in inheritance tax (IHT), through failing to write insurance policies into trust or make the most of their IHT allowance.

Consumers could save a further £263m this year by making sure they use their annual tax-free ISA savings allowance, as well as by taking advantage of other tax-efficient savings options such as National Savings & Investments and friendly societies.

Around £474m could be clawed back from the taxman by people making full use of their personal tax allowances, with non-tax payers claiming back tax that is automatically deducted from bank and building society accounts, while others could transfer savings accounts to their non-taxpaying spouses.

A further £460m could be saved by people who complete self-assessment tax returns if they made sure their form was completed correctly and handed in to HM Revenue & Customs along with any tax they owed by the January 31 deadline.