Consumers to gift taxman record amount

Britons are set to gift a record amount of money to the taxman by failing to take steps to reduce their tax liability, figures showed on Tuesday.

Britons are expected to waste a total 9.3 billion pounds this year - the most since Unbiased.co.uk, a Web site that promotes independent financial advice, started its "tax action" report 16 years ago.

That is almost 1.4 billion pounds more than the amount paid in unnecessary tax last year, and equates to an average of 290 pounds per person.

Inheritance tax - one of the most penal in Britain, levied at 40 percent - accounts for a large part of the expected wastage, despite a fifth of people naming it as the tax they most resent.

A total 1.9 billion pounds - 360 million pounds more than in 2007 - is expected to unnecessarily pour into the Treasury due to a failure to mitigate inheritance tax (IHT).

A growing number of people are being hit with IHT as the housing market boom has pushed many people beyond the threshold at which it is charged, currently 300,000 pounds.

David Elms, chief executive of Unbiased.co.uk, said: "We have seen a lot of talk about stealth taxes and IHT, but our figures prove that it hasn't changed the way people deal with this tax and too much money is still being wasted - and practically gifted to the taxman - a somewhat surprising result given the large amount of people who are dissatisfied with the current tax system."

More than half the population - 34 million people - are dissatisfied with the current tax regime, according to a poll of 3,084 people for Unbiased.co.uk, but 82 percent admit to doing nothing to reduce the amount they pay.

Britons are also expected to waste this year:

* 3.7 billion pounds by failing to claim tax credits;

* 936 million pounds by failing to use tax-efficient means of charitable giving;

* 726 million pounds by failing to optimise contributions to personal or company pension schemes, or making additional voluntary contributions;

* 479 million pounds by failing to file their tax returns correctly and on time;

* 472 million pounds by not fully utilising personal tax allowances;

* 264 million pounds by not using capital gains tax allowances effectively;

* 263 million pounds by not sheltering investments in tax-free individual savings accounts;

* 242 million pounds by not using the tax-free saving potential of child trust funds;

* 184 million pounds by not taking advantage of employee share plans.

"With more and more people feeling the pinch in the current financial climate, it is surprising just how much we are willing to throw away in wasted tax payments," added Elms.

The findings come at a time when consumers are increasingly feeling the pinch amid the continuing global credit crunch.

It has spelt an end to easy and cheap credit, causing lenders to hike rates and turn down more mortgage and loan applications as they respond to a perceived higher risk among borrowers.

At the same time fuel, food and council tax costs are rising, putting growing pressure on household budgets.