Britons are routinely forgetting to take simple tax-cutting steps or to reclaim tax that has been wrongly deducted from their savings, according to Independent Financial Advice Promotion (Ifap). In total, we could be paying £300m more in tax than we should.
One of the most under-explored means of reducing tax is for couples to transfer non-employment income between themselves. If they did this, Ifap points out, £224m would be saved among the 1.6 million non-taxpaying partners in higher-income households.
"With individuals being taxed on pensions, interest from banks, dividends from shares and income from property, there are many different sources of income that can be shared between a couple to avoid paying unnecessary tax," said David Elms, chief executive of Ifap.
While interest earned on savings is automatically taxed at 20 per cent, people whose incomes are not high enough to breach their personal income tax allowance (currently £5,225 a year if you're under 65) can claim the money back. But too few do, said Mr Elms.
"It is easy to reclaim any taxes that have been deducted inaccurately, by filling out an R85 form. Overpaid tax can be reclaimed from Revenue & Customs for up to five years previously, so it isn't too late if you think you have been paying too much."Reuse content