Are you paying too much tax?Posted on: 14 April 2008 by Gareth Hargreaves
As the UK's tax waste mountain grows, our advice will ensure you don't throw your money away.
UK adults wasted almost £9.3 billion in unnecessary tax in 2008, with each tax payer wasting an average of over £290 in tax payments.
82 per cent of Brits admit to doing nothing to reduce their overall tax burden, despite many feeling the pinch in the current financial climate. The latest TaxAction report from Unbiased.co.uk, which is now in its 17th year, shows that the amount wasted in tax payments will increase by almost £1.4 billion compared to 2007, to the highest ever level since the campaign began.
The report shows that in 2008 £474 million waswasted on personal tax allowances, and unnecessary Inheritance Tax (IHT) payments are set to rise by over £360 million, to a predicted total waste of over £1.9 billion.
Here are 10 basic ways to claw back some of the waste:
Maximise your personal tax allowances - £474 million goes begging each year, £330 million through non-taxpayers failing to claim tax back on banks and building society savings accounts, and a further £144 million by taxpayers not transferring savings accounts to non-taxpaying spouses, if appropriate, so that the tax liability on the savings is lower, or none.
If You Save
Use up your annual ISA allowance - £263 million in tax could be avoided by sheltering investments in ISAs, or moving savings from an ordinary deposit or savings account to an ISA. Also consider a Friendly Society savings account or products from National Savings & Investments as tax-efficient savings options.
If You Save Towards A Pension
Top up your pension pot - £726 million could be spared by optimising contributions to personal or company pension schemes, or making Additional Voluntary Contributions.
If You Have Assets Over £300,000
Plan your inheritance - an extra £1.9 billion could go to chosen heirs by planning properly to avoid IHT liabilities. IHT is often lost through not writing life assurance policies in trust, not thinking about inheritance tax allowances and, worst of all, by not making a will at all.
If You Have Capital Gains
Use your allowance efficiently, perhaps by transferring assets between spouses to make the most of both of your CGT allowances - £264 million could be saved in this way.
If Your Employer Offers An Employee Share Plan
Take advantage of it - £184 million is up for grabs for the estimated 600,000 staff currently in Profit Related Pay schemes.
If You Fill In A Tax Return
Sort out your self-assessment - £479 million waste could be wiped out by all forms arriving present and correct by the 31st January deadline. Self-assessment forms received after the deadline incur penalties of £100; further penalties and errors make up the balance of tax wasted in this way.
If You Are Eligible
Claim your tax credits - £3.7 billion of 'free money' is up for grabs from HMRC and the DWP, in the form of Pension Credits, Child Tax Credits and Working Family Tax credits.
If You Give To Charity
£936 million more could go to good causes by using tax-efficient means of charitable giving, i.e. using a deed of covenant, Gift Aid or payroll giving.
If Your Child Or Grandchild Is Eligible For A Child Trust Fund
Avoid waste by using up the tax free saving potential - £242 million in tax could be saved in their first year of existence.
www.unbiased.co.uk/taketaxaction contains tips on how to save tax, an online tax wastage calculator, and a guide to saving tax.
You can also find details of local IFAs here who can help you discover where you could make savings on your tax burden.
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