UK Taxpayers Grossly Overpaying Their Tax

April 18, 2011 Taxation in UK

UK TAxation.A lack of knowledge of applicable tax regulations is leading UK taxpayers to routinely overpay their obligations, with nearly GBP 13.5 billion “wasted” every year.

According to new research published on April 18th by Unbiased, a UK based financial advice website, UK taxpayers are unhappy with the levels of taxes that are being levied, but at the same time, research shows that nearly 88 percent of people have taken no action in the last year to legally optimize their obligations, with 28 percent of individuals not knowing how to plan their tax liabilities.

Every year UK taxpayers are set to lose a total of GBP 13.5 billion by overpaying their taxes or not taking advantage of all the tax credits available to them. Of the payment total, nearly GBP 8.5 billion is overpaid every year simply not claiming child benefits, child tax credits, working tax credits and pension credits.

According to survey conducted earlier this year, inheritance tax was among the top five categories of taxes that UK taxpayers wish to see abolished. It was reported in the newly published research that despite their opposition to the tax, Britons are losing approximately GBP 1.3 billion per year to inadequate planning of inheritance tax obligations. A significant portion of the unnecessary tax liability arises from life insurance proceeds being unprotected from taxation. The wasteful payments are expected to rise in the next three years, with the threshold for the tax has been frozen by the government at GBP 325 000 for the next four years.

Photo by milena mihaylova