UK's Tax Waste Mountain Grows to £9.3 Billion

§        16 years on since the campaign began and tax wastage at highest ever level

§        Over 34 million UK adults are dissatisfied with the current tax system, but 82% admit to doing nothing to reduce their tax payments

§        The amount lost to IHT increases to more than £1.9 billion despite a fifth (20%) of the population naming perceived “death taxes” as the most resented

§        One in three UK adults would ask the Chancellor to change the current income tax system

§        Visit www.unbiased.co.uk/taketaxaction to see how YOU could save tax

UK adults will waste almost £9.3 billion in unnecessary tax in 2008, according to the latest TaxAction report from Unbiased.co.uk. The report, which is now in its 16^th year, shows that the amount wasted in tax payments will increase by almost £1.4 billion compared to 2007 to the highest ever since Unbiased.co.uk’s campaign began. More alarmingly, 82% of Brits admit to doing nothing to reduce their overall tax burden.

The TaxAction report from Unbiased.co.uk, the Find an Independent Financial Adviser Search shows that unnecessary Inheritance Tax (IHT) payments is set to rise by over £360 million in 2008, to a predicted total waste of over £1.9 billion. This is despite IHT being named the most resented tax by one in five UK adults (20%).

When asked which one message Brits would send to the Chancellor of the Exchequer, almost a third (31%) would opt for changes to the current income tax system. A maybe surprising message as Unbiased.co.uk’s TaxAction report shows that £474 million will be wasted in 2008 on personal tax allowances. 

David Elms, Chief Executive of Unbiased.co.uk comments, “Our TaxAction report is now in its 16^th year but the message remains the same – UK taxpayers are wasting record sums in unnecessary tax payments. And our report shows that 2008 will be no different. We estimate that each UK tax payer will waste an average of over £290 in tax payments this year.

“We have seen a lot of talk about stealth taxes and IHT but our figures prove that it hasn’t changed the way people deal with this tax and too much money is still being wasted – and practically gifted to the taxman. A somewhat surprising result, given the large amount of people who are dissatisfied with the current tax system.

	Error	Avoidable	Total
	£m	£m	£m
Greater London	474	782	1256
Rest of South East	418	896	1314
East Anglia	282	579	861
South West	247	563	810
Wales	145	312	457
East Midlands	224	474	698
West Midlands	274	539	813
North West	352	495	847
Yorks/Humberside	269	519	788
North	130	241	371
Scotland	263	547	810
Northern Ireland	94	165	259
Totals (rounded)	3,170	6,112	9,282

 

Note:   figures may not always add up to the totals owing to the effect of rounding of underlying amounts and percentages

Source:  RAKM for IFA Promotion

Tax doesn’t have to be taxing – Here are 10 basic ways to claw back some of the waste:

• 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 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 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 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.

• ALL TAXPAYERS: 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 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 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 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 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 yearof existence.

David Elms concluded, “With more and more people feeling the pinch in the current financial climate it is surprising just how much we are willing to throw away in wasted tax payments. While tax can be a confusing topic, help is at hand.  Through www.unbiased.co.uk/taketaxaction  a local IFA can help you discover where you can make significant savings on your tax burden.”

As a first step to stamping out this waste, visit Unbiased.co.uk’s dedicated website at www.unbiased.co.uk/taketaxaction.  The site 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 on the site or by calling 0800 085 3250.

-ends-

TaxAction 2008 report produced for IFA Promotion by RAKM, based on a specially commissioned analysis of Inland Revenue and a range of other official data sources.

Additional research conducted online by Opinium Research LLP among a sample of 3,048 UK adults between 7^th and 14^th February 2008.  Data has been weighted to nationally representative criteria

 

For further information please contact:

 

David Elms	Andy Smith/Jonathon Grove
Chief Executive	Lansons Communications
Unbiased.co.uk	020 7294 3682
020 7833 3131

 

For expert comment or case studies from over 200 media-friendly IFAs, journalists should call Unbiased.co.uk’s Media Services hotline on

020 7294 3682 or search online at www.unbiased.co.uk/media

 

1.      Independent Financial Adviser Promotion

Unbiased.co.uk is the consumer brand of IFA Promotion, the organisation established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents around 9,000 firms of independent financial advisers across the UK, incorporating over 17,000 registered individuals. These individuals hold over 22,000 incremental qualifications which are each individually verified by the awarding body. IFA Promotion welcomes the prominent display of incremental qualifications and further developments into the credentials of independent financial advice. 

 

IFA Promotion is sponsored by 28 leading financial institutions, and in the past 12 months, over 575,000 consumers and businesses used unbiased.co.uk to find local independent financial advice.

IFA Promotion believes Independent financial advice should be:

• Affordable. The option to take independent financial advice should be available, by right, to all- not just the wealthiest in society.

• Convenient. IFAs should be available in the location of the consumer’s choice, wherever they live in the UK.

• Transparent. It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.

  2.      Independent Financial Adviser Promotion’s sponsors

  Abbey for Intermediaries	Lincoln Financial Group
  Aberdeen Asset Management	Lutine Assurance Services
  AEGON Scottish Equitable Plc	National Savings & Investments
  Alliance Trust	New Star Investment Funds
  AXA Life	Norwich Union Life
  Bright Grey	Prudential
  Canada Life Ltd	Scottish Life
  The Children’s Mutual	Scottish Life International
  Clerical Medical Investment	Scottish Widows Plc
  Defaqto	Skandia UK Group
  Friends Provident	Standard Life Assurance Company
  The Hartford	Tomorrow
  Invesco Perpetual	Unum
  Legal & General	Zurich Intermediary Group

   

  Registered Office: IFA Promotion Ltd, 90 St. Vincent Street, Glasgow G2 5UB. Registered in Scotland: No. 114606

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