Unbiased Highlights £1.3bn IHT Overpayment
Chronic tax inefficiency is resulting in the taxman being gifted £13.5bn, according to new findings.
In the latest Tax Action Report by unbiased.co.uk, which gives a top level view of UK tax wastage but also delves in to specific area of tax such as tax credits, ISAs, inheritance tax and self assessment. It also explores how much tax people could have avoided paying by using better tax planning.
An estimated £1.3bn of additional inheritance tax (IHT) was paid through error or lack of basic tax planning.
Most mistakes were made in claims for tax credits as people failed to claim £8.5bn worth of child benefit, child tax credits, working and pension credits.
The majority of respondents (88%) said they had done nothing in the last 12 months to reduce the amount of tax they pay – up 2% from 2010.
Nearly half (45%) said they believed they were as tax efficient as possible, but the report’s findings showed that 28% were unaware of how they could be more tax efficient, while one in ten said they were ‘clueless’ as to why they had failed to take steps to reduce their tax liability.
The Tax Action report shows that London and the South East is the UK’s tax waste capital, with over £3.5bn squandered - £1.7bn in London alone. Tax payers in Northern Ireland were most tax-efficient, losing only £379m.