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IFAP highlights £4bn tax waste

IFA Promotion is urging taxpayers to stop handing over £4bn a year to the Government through financial inertia and lack of awareness.

It has issued the warning to mark June 5, the theoretical date after which annual earnings go into our own pockets instead of to the Government in tax.

It claims that many people continue to pay tax after this date that they might otherwise have kept for themselves.

IFAP says £253m a year in tax could be avoided by sheltering investments in Isas or moving savings from an ordinary deposit account to a mini cash Isa.

A further £365m a year could be saved if all self-assessment tax returns were filled in correctly by the January 31 deadline. Last year, 808,000 people incurred a £100 penalty for sending in their self-assessment forms late.

IFAP also says people are not making the most of their personal tax allowances to the cost of £405m every year. Non-taxpayers who fail to claim back tax paid on bank and building society accounts lose out by £315m while £90m is lost by taxpayers not transferring savings to their non-taxpaying spouses.

An extra £1bn could be passed on to heirs if people planned their inheritance better and the Government would add £508m in tax relief to private pensions if people made the most of their contribution levels, claims IFAP.

Employee share plans have £528m in tax relief up for grabs and £351m could be saved on capital gains tax by transferring assets between spouses to make the most of a lower-rate taxpayer&#39s annual threshold.

Chief executive David Elms says: “This floating date of June 5 acts as a valuable reminder of just how much money is being channelled in to the Chancellor&#39s coffers. Most of us would like to be more tax-efficient. An IFA can help review all areas of financial planning.”

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