We'll hand over around £12.6bn unnecessarily to the tax authorities this year, writes Simon Read.
That's because many of us fail to use tax allowances, such as tax-free Individual Savings Accounts. You can shelter up to £10,680 in an ISA before 6 April this year, although the allowance falls to half that – £5,340 – if you don't want a stocks and shares ISA, just a cash ISA.
Each taxpayer is set to waste an average of £421 in tax in 2012, according to the financial advice website unbaised.co.uk.
The biggest area of tax wastage is through tax credits. Because people don't claim their allowances – such as tax credits, working tax credits or pension credits – some £7.26bn is lost to the Chancellor, George Osborne, right, each year. Meanwhile, failure to make use of tax relief on pension contributions wastes more than £2.45bn.
Charity supporters also miss a trick when giving to good causes. Failure to use the tax-efficient Gift Aid scheme means almost £1bn of extra cash goes to the Treasury rather than chosen charities.
Other areas where poor tax planning means handing over millions to the Government include inheritance tax – where an extra £448m is lost – and child benefit, where the total is £401m. Many are also failing to make use of their annual capital gains tax allowance of £10,600 a year.
Karen Barrett, chief executive of unbiased.co.uk said: "Tax affects pretty much everyone, and with an average of £421 up for grabs for each taxpayer, we should take some time and effort to ensure that we are being as tax efficient as possible."Reuse content