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    Darren Beddard    Group moderator
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    Britons losing a Total of £9.3 Billion in Tax wastage
    Britons Losing a Total of £9.3 Billion in Tax Wastage, £1.9 Billion of this through Inheritance Tax
    UK tax payers waste more on IHT payments than any other tax
    Britons say the so called “death tax” is their fourth most resented tax
    However, four in five people (82%) have not taken any steps to reduce their overall tax payments
    UK taxpayers are wasting millions of pounds due to poor IHT planning according to annual research* by Unbiased.co.uk, the website promoting the benefits of independent financial advice. The research shows that the overall amount of unnecessary inheritance tax payments totaled £1.9 billion last year. The amount of wasted IHT payments has risen by 24 per cent compared to the previous year, 2007 equalling an increase of nearly £370 million.

    Lack of IHT provision represents the biggest tax wastage in the UK and despite the housing market in crisis; this trend looks set to continue with more properties now valued at more than the current IHT nil rate threshold of £312,000 than ever before. Unbiased.co.uk’s research is part of its annual campaign, TaxAction, which aims to encourage people to think sensibly about how to avoid wasting money through paying unnecessary tax. The research shows that the main cause of “death tax” wastage is the inclusion in personal estates of the proceeds of life assurance policies, which if written in trust, would not be subject to inheritance tax.

    research also shows that IHT is the fourth most resented tax amongst the British public, beaten to the top spot by fuel duty, council tax and TV license fee. Despite this dislike, four in five people (82 per cent) in the UK admit to not having taken any steps over the last twelve months to reduce their tax burden**.

    The fastest way to tackle the amount of money wasted on unnecessary tax payments is by searching for an independent financial adviser in your area who specialises in giving tax planning advice.

    people are throwing away a whopping amount of money on unnecessary inheritance tax payments. IHT liability is paid by beneficiaries, often at a time when they are grieving over the loss of a loved one. Without advanced tax planning, increasing amounts of IHT will fall into the hands of the tax man. It is crucial that people see an independent financial adviser to discuss their tax liabilities remembering that it is legal to mitigate inheritance tax. An IFA will ensure that all advice provided is appropriate for their client’s personal and family financial situation.”


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

    IF YOU HAVE ASSETS OVER £312,000: 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: 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.

    * 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.

    ** IFAP Taxation Survey 2008, UK Nationally representative sample of 3,048 adults conducted online by Opinium Research LLP between 7th and 14th Feb 2008
    • 18 Dec 2008, 1:07 pm