The great tax giveaway!

11 Mar 2013

  • £4.6 billion: the overall total of tax set to go to waste this year by UK taxpayers
  • £153: the average amount of unnecessary tax per UK taxpayer in 2013
  • 30%: the proportion of the tax waste mountain from unused ISA allowances
  • 25: days left to take advantage of this year’s ISA season
  • 68%: of British taxpayers haven’t done anything to reduce the amount of tax they pay
  • 21st year: the 2013 Tax Action research  is coming of age

The latest figures released from the 2013 Tax Action research1 reveal that UK taxpayers are set to gift a whopping £4.6 billion in unnecessary tax to the taxman this year. Now in its 21st year, the 2013 Tax Action research looks at four key areas of tax waste: Individual Savings Accounts (ISAs), not making the most of tax relief on pension contributions, Capital Gains Tax (CGT) and Inheritance Tax (IHT). 

The overall tax waste mountain translates into £153 on average2 being wasted per individual taxpayer, but despite that figure,’s latest poll shows that 7 in 10 (68%) people state they haven’t done anything this year to tackle their individual tax waste figure.3 

Drilling into 2013 the tax waste mountain

To take a look at our Tax Action 2013 Infographic which drills into the consumer tax waste mountain.


Snapshot of ISA wastage:

  • Savers set to lose out on £1.4 billion by not being ISA efficient
  • £1.3 billion: wasted through tax inefficiency when it comes to cash ISA savings
  • £62 million: wasted by not holding investments within a stocks and shares ISA
  • 25: days left to make the most of the 2012/13 ISA season

Use your ISA allowance before 5th April

The 2013 Tax Action research shows that savers could be losing out on £1.3 billion of extra money by not making use of cash ISAs this year, instead putting their money in savings accounts where any interest generated is taxable.  The £1.3 billion potential extra money includes £311 million estimated tax payable on interest earned, which could be avoided by utilising ISAs, as well as around £984 million additional interest which could be earned from the better average rates available on ISA accounts. 4 

Following the same formula, the research also reveals that a further £1.3 million is being wasted.  The research is based on an extra 145,000 Junior ISAs that could be opened and the average interest rate they could be earning, revealing that at the basic rate of tax £1.3 million is being wasted by those eligible to subscribe, which could be avoided by utilising ISAs. 

But taxpayers are also missing out on tax breaks available with stocks and shares ISAs – 1.6 million UK households keep stocks and shares outside an ISA at the moment.  If they converted these into the average stocks and shares ISA investment of £5,483 per household, the additional tax benefit could amount to £62 million.


Snapshot of pension relief waste:

  • Nearly 4.3 million:  number of adults currently in employment but not paying into a pension and who are likely to consider contributing
  • £2.6 billion: amount of tax allowance that taxpayers who do not currently contribute to a pension could benefit from if they saved into a pension
  • £150 million: rise in pension waste from unused pension tax allowance from 2012 Tax Action research. 

Make the most of your pension contributions

The research shows that nearly 4.3 million people (not currently paying into a pension but who would potentially consider it) are currently leaving £2.6 billion of income tax relief on pension contributions unused5.

The latest HMRC figures show the average pension contribution made by individuals per year is £3,010.  Based on this level of contribution, employees could boost their pension pot by as much as £602 each and £2.6 billion collectively, simply by taking advantage of tax relief on pension contributions, and this is just for basic rate payers.  Anyone paying towards a pension receives tax relief on their pension savings at 20% and up to 40% or 50% according to the rate at which they pay tax.  The tax relief on pension contributions is even more important if you are a higher rate taxpayer where the onus is on you to claim back the additional tax relief owed to you. 


Snapshot of CGT waste:

  • £171 million: wasted in unnecessaryCGT payments
  • £10,600: CGT free allowance available to each tax payer in the tax year 2012/2013
  • £38 million: rise in CGT waste from 2012

Take Tax Action to reduce your CGT bill:

UK taxpayers could be wasting as much as £171 million in unnecessary capital gains tax (CGT) payments this tax year, by not making use of tax efficient strategies and allowances available to them.  CGT is a charge that arises from the disposal of assets that have increased in value.  This tax does not apply on the sale of your primary residence or your car, but gains made on the sale of shares or buy-to-let properties as well as some other kinds of assets are taxable.  Each UK taxpayer has an annual CGT free allowance, which for the 2012/2013 tax year currently stands at £10,600.  Any gain above the allowance is charged at 18% for lower and 28% for higher rate tax payers.

Figures from the 2013 Tax Action research show one of the main areas of CGT waste occurs as a result of people not using ISAs to shelter their investments from any tax liabilities.  The ‘disposal’ (i.e. a sale or gifting) of stocks and shares outside ISAs is usually liable for CGT and any gains made will count towards your annual CGT allowance.   


Snapshot of IHT waste:

  • £24 million: rise in inheritance tax waste from 2012
  • £472 million: amount of money wasted in inheritance tax by individuals not placing life protection policies ‘under trust’

Careful tax planning could save £472 million in inheritance tax

In order to avoid losing money in inheritance tax, individuals taking out life protection specifically to provide for their heirs should consider placing their policy ‘under trust’, thereby removing the asset from the estate.  This will ensure the payout goes to the person, or people intended, rather than the taxman - not placing it under trust could reduce a £100,000 life insurance payout by as much as £40,000 if an individual’s total estate is worth more than £325,000, the current inheritance tax-threshold for individuals.

Karen Barrett comments: “The message is clear – take time to understand your tax position, make the most of tax reliefs and allowances available to you and ensure that you are being as tax efficient as possible.  Tax is an area where seeking professional advice can really make a huge difference to your pocket.  Taxpayers looking to reduce their tax liability should look to enlist the help of a tax specialist.

“A financial adviser specialising in tax advice or an accountant can advise you and help you mitigate your tax liabilities, by helping you make use of available reliefs and put in place sensible tax planning steps.  For a free and confidential search for a financial adviser or accountant, go to” 

Tracy Ebdon-Poole, Chief Executive of TaxCalc says: “Tax can be one of the most complex and confusing areas to navigate and our report clearly shows that as a nation we are struggling to be as tax efficient as we could be.  While the way tax impacts on our lives will differ from situation to situation, it is important that everyone takes ‘tax action’ and checks whether there are any areas where they could improve their tax efficiency.

“Our easy-to-use software is designed to support advisers and their clients. We passionately believe in helping people take control of their tax affairs and ensuring they pay only what they owe.”


Notes to editors:

  1. 2013 Tax Action research has been carried out by Opinium Research on behalf of and TaxCalc
  2. Based on the average number of taxpayers, according to HMRC: This calculation is based on the overall amount of tax wasted across different groups of taxpayers, and while not every single taxpayer is affected in the same way, the average amount of £153 has been provided to show how much could be wasted across the UK population.
  3. The web poll asked: Have you taken any steps in the last 12 months to reduce the amount of tax you pay? 68% said no. (base;127 consumers visiting between 5 March – 11 March 2013)
    1. The wastage figure is based on an extra 43 million ISAs that could be opened using the maximum cash ISA allowance and current eligibility criteria and the additional interest generated by a cash ISA compared to a standard deposit account. 
    2. Based on desk research by Opinium Research: 4,284,100 adults in the UK are currently in employment and not contributing towards a pension however, simply based on their age and earnings, are very likely considering contributing towards a pension. Multiplying those 4.3 million adults with the annual income tax savings of £602, results in a total avoidable waste of £2,579,028,200 or £2.6 billion.

For more information contact:

Anna Schirmer/ Emily Falla/ Maddy Morgan Williams, Lansons Communications: 020 7294 3682

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About TaxCalc

Winners of the Software Satisfaction Awards for the last 5 years running (2008, 2009, 2010, 2011, and 2012), TaxCalc is the UK's leading brand of Self Assessment Tax software.

TaxCalc believe that creating award-winning software takes more than a team of technical minds.  They believe passionately in developing software products that are simple to use, beautifully designed and offer exceptional value for money.

Their UK-based Support Team are on–hand to offer free telephone and email support if required.  They are constantly seeking to improve their software and release free feature-rich updates throughout year.  All of their products are available for purchase and download from the website  They have always believed in making their prices transparent, with no hidden extras.  TaxCalc offers straightforward, affordable, customer-centred and comprehensive tax and accountancy software.  Whether you’re a professional or an individual, TaxCalc works for you. 

TaxCalc's Secure Internet Filing confirms instantly that the return has been received by HMRC, that the data has been captured and that the calculations agree.  Tax refunds, if they are due, are also paid more quickly if the return is filed online.

For more information about TaxCalc contact:   Tracy Ebdon-Poole / Alex Rado: 0118 936 4800

Category: Tax action Tagged: Tax Relief

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