Mr Taxman, have pounds 5.5bn
Through ignorance, laziness or bewilderment, British taxpayers hand huge amounts of money to the Revenue each year. Nic Cicutti finds the leaks
Wednesday 29 January 1997
Meanwhile, in the build-up to the general election, the Labour and Conservative parties are accusing each other of secret plans to increase the taxes we pay.
Robert Browne-Clayton, chief executive at IFAP, says: "It is still too early to say what effect the general election will have, but it is clear that higher taxation is likely, no matter which party is in power.
"The amount of money paid unnecessarily to the Inland Revenue each year is staggering. Taxpayers must get their financial affairs in order before they start paying more."
The amount we waste amounts to about pounds 158 per person per year, according to IFAP's survey, carried out on its behalf by Mintel, the research organisation.
Mintel analysed data supplied by the Inland Revenue's own Personal Income Survey to arrive at its own assessment of how much unnecessary tax is paid.
Up to pounds 1.04bn is wasted by taxpayers with long-term bank and building society accounts who do not have Tessas and 5.3 million non-taxpayers who have not registered to receive gross interest;
Some pounds 867m is wasted in inheritance tax because we do not plan ahead and use a combination of tax avoidance measures to minimise our bills;
More than pounds 870m is wasted by not paying company bonuses through profit- related pay schemes, at least until 1998, when they are due to peter out over a two-year period;
A further pounds 767m is shelled out by unit and investment trust holders - and many shareholders - who do not make full use of their personal equity plan allowances. Peps allow savers to roll up profits on investments free of capital gains and income taxes;
Up to 1.4 million people, including many married couples, "mislay" an additional pounds 607m, simply by failing to claim their allowances where only one person is working;
Higher-rate taxpayers who are members of company pension schemes waste pounds 419m by not making the best use of their pension top-ups, called additional voluntary contributions (AVCs) or free-standing AVCs;
Unnecessary capital gains taxes paid by small shareholders who do not use their exemptions properly, or fail to use their CGT-exempt Peps, cost pounds 318m;
A combination of Inland Revenue error and interest and penalties incurred for late payment of tax cost up to pounds 215m;
Almost pounds 160m is paid into endowment policies by savers who do not have a friendly society policy, which would be tax-exempt up to pounds 25 a month. Higher-rate taxpayers who buy life assurance but do not use tax relief by linking it to a personal pension contribute to this amount;
Charity donations that are not made through Gift Aid, the tax-free vehicle introduced by the Government in 1987, add a further pounds 119m, while the final pounds 97m comes from investors who opt for National Savings products or gilts but fail to reclaim tax they are entitled to or choose the wrong product.
Mintel also looked at self-assessment, a reform to be introduced by the Inland Revenue in April this year. Potential pitfalls of the system include the heavy penalties likely to be levied if taxpayers fail to fill in their forms correctly and on time.
Mintel looked at a trial carried out by the Inland Revenue in Leicester in 1995, where a significant proportion of the forms were sent in late or contained errors. Based on the Leicester sample, Mintel estimates the additional unnecessary costs to be borne by the taxpayer could reach pounds 1.4bn. This is disputed by the Inland Revenue, which argues that its system has been refined in the light of the trials and is now among the simplest and easiest to understand in the worldn
For a list of three IFA Promotion-backed independent financial advisers near your home or place of work, call 0117 971 1177. However, remember that the advisers are not screened for their tax expertise. Be sure to ask them what their qualifications are.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Liam Neeson's Downton dreams
Thriller is set in the secret world of British espionage
Bomber jacket worn by Mary Berry sells out within an hour
- 1 Scottish independence results live: Reunited kingdom - Scotland gives a clear 'No' in historic referendum
- 2 Scottish referendum results: David Cameron set to unveil major devolution of powers to England
- 3 iOS 8 is full of shiny new features - but it's terrible news for app developers
- 4 Scottish independence: Tory revolt against 'devo max' grows as Rail Minister Claire Perry joins
- 5 Hitler’s former food taster reveals the horrors of the Wolf’s Lair
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
Portuguese academic says British are 'filthy, violent and drunk'
iJobs Money & Business
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...
To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...
Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...
Day In a Page
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000