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UK taxpayers overpay £5bn in tax

Taxpayers in the United Kingdom are wasting around £4.9bn in unnecessary tax payments due to an absence of awareness, lack of concern or insufficient knowledge, a report suggests.


Commissioned by Prudential and financial adviser website, the 2015 Tax Action report said that people’s frequent failure to make use of the allowances across ISAs, pensions, capital gains tax and inheritance tax, has led to billions being paid out needlessly.
The research indicates that 75% of taxpayers have done nothing to reduce their tax bill in the past year.
Tax specialist at Prudential, Les Cameron, said: “Tax planning requires triple vision – a focus on the best tax efficient return for your savings while invested alongside the tax position when you put your money in and get it back out again. Get the balance right and you’ll not have to pay unnecessary tax now or in the future.
“Using a professional financial adviser will help provide clarity in finding the most tax efficient way for you to invest your money over the longer-term.”
Industry professionals have come up with several ways in which UK residents can reduce their tax bill: these include using a pension if you are over the age of 55 to make use of the tax advantages, investing in ISAs at the start of the year when they are generally more profitable, and checking whether any capital gains tax liability exists before cashing an investment.
Managing director at Tilney Bestinvest, Jason Hollands, suggested investors give their portfolio a “detox” review before putting any new money into ISAs or pensions before the end of the tax year.
“By doing this at the start of the year, taxpayers will go into the tax year end period with a much clearer idea of the areas which they should focus on.”

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