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UK taxpayers waste £4bn

Britons are wasting £4bn in unnecessary tax, according to IFA Promotion&#39s 10th annual Tax Action report.

The survey, carried out by independent research agency Mintel, shows that nine out of 10 adults pay more tax than necessary through financial inertia or lack of understanding of the tax regime.

The figure of £4bn is down by 30 per cent from £5.7bn last year. Mintel believes this is the result of the reduced number of tax breaks available, such as Tessas and the married couples&#39 allowance. The fall is also attributed to recent stockmarket and interest rate falls rather than any substantial increase in people&#39s tax efficiency.

IFAP is publishing a free guide to tax efficiency, explaining the steps that can be taken to reduce tax in the areas of investment, earnings, inheritance, charitable donations, pensions and capital gains.

The research shows that £253m could be saved by more effective use of Isa allowances, while up to £1bn is being paid in inheritance tax that could be avoided through planning.

Consumers are also failing to maximise their personal allowances for savings, with £315m being lost by non-taxpayers failing to claim tax back on bank and building society savings accounts. A further £90m is lost by taxpayers not transferring savings accounts to non-taxpaying spouses.

IFAP chief executive David Elms says: “Most of us would not willingly give the taxman hundreds of pounds of our hard earned money but this is just what is happening. People need to step back and see if they are being tax-efficient and, if not, take action to streamline their finances.”

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