UK taxpayers are overpaying billions of pounds in tax by not taking advantage of the tax reliefs available to them, with pension relief accounting for the largest share.
According to a report issued by Prudential and unbiased.co.uk, UK taxpayers are set to pay an extra £4.9 billion in tax in 2015 - up from £4.7 billion in 2014 - by not taking advantage of pension reliefs; Isas; and inheritance tax (IHT) and capital gains tax (CGT) breaks.
The report claims that this equates to an average of £165 per individual taxpayer, up from £161 last year.
Wasted pension relief accounts for over half of the total, with taxpayers losing out on £2.9 billion by either not paying into a pension or not claiming back their reliefs from HMRC. According to unbiased.co.uk there are currently 4.2 million adults in the UK who are not saving into a pension.
Les Cameron, tax specialist at Prudential, comments: "Busy lives and ever-changing tax rules mean that tax planning may not always be at the top of many people's to-do lists. But by failing to plan efficiently, many of us are simply not maximising the available value of our hard-earned savings."
The research shows that £1.3 billion is also being lost in unused cash and stocks and shares Isa allowances, £1.2 billion of which is due to a failure to use cash Isas, and a further £104 million through stocks and shares investments not held in Isas.
Around £550 million will also be wasted in IHT as people fail to put their life insurance policies into trust before their death, while £158 million is being lost in CGT, again, due to the failure of individuals to use Isas to shelter their investments from tax.
Karen Barrett, chief executive of unbiased.co.uk, says: "Millions of UK taxpayers are putting their money into taxed saving and investment products, when there are substantial reliefs, allowances and better rates readily available.
"Changes to tax legislation, as well as the new pensions freedoms, make it seem less stressful to take no action, but there are simple steps that will make a real difference to your finances."
This article was written for our sister website Money Observer