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How much have you overpaid your self assessment tax obligations? Not at all if you’re a client with Springfords of course, but just who is donating an extra £4.6bn to the Treasury every year? It could be you.
On the face of it, there’s nothing too difficult about paying your self assessment tax. At least, that’s what our Chancellor, George Osbourne, would like us all to think – personal tax returns are easy to complete and you send in the cash thank you very much.
The form might be a bit intimidating, and the threats for failure to cough up every last penny of income only slightly veiled, but it can be done. You just wouldn’t want to leave any income out, certainly not that penny, on pain of some unspecified severe penalty. Under that implied menace, most people will agonise over everything, and pay up what they hope is everything they owe.
The point is that, when it comes to tax collection, there’s clearly an emphasis on demanding as much as possible, rather than alerting taxpayers to all of their legal entitlements to tax deductible expenses and allowances. Of course, that’s where Springfords come in – we ensure that you minimise your tax bill by claiming everything you are legally due. But that’s enough of the plug!
It’s no trivial matter. Recent research by insurers Prudential and the website unbiased.co.uk came to the conclusion that British taxpayers will lose £4.6bn this year alone, by failing to make the most of their available tax allowances and deductible expenses. That’s a staggering volume of funds flowing into the Treasury.
If that figure from the recent survey is accurate, then as an industry, unclaimed tax allowances and deductible expenses would be among the Office of National Statistics top fifty UK business sectors, bigger by turnover than forestry or fishing.
According to the findings, each of the thirty-million or so tax-paying Britons throws away around £159 on average in unnecessary tax payments every year. We manage this through not claiming expenses to which we are legally entitled to set against our income resulting in over-payments of income tax, IHT and CGT.
Inaction is costly too, or a tidy little profit for the Treasury, depending on how you look at it. Around seven million people do not pay any funds into a pension scheme for example, resulting in approximately £1.9m of unnecessary tax payments a year, Prudential suggests. Other figures quoted are almost as big. Around £595m will also be overpaid on IHT this year, while around £208m will be thrown away on unnecessary CGT payments.
Self-assessment doesn’t really give us too many pointers, and it’s up to us all to make sure we’re claiming all we should. But with a little fore-planning, and a word with us at Springfords, you could save more than the average £159, and make a little dent in that £4.6bn of overpayments.
Sorry, Mr Osbourne, but it’s just not your cash in the first place.