Average taxpayer overpays £421

The average taxpayer gives HM Revenue & Customs £421 a year more than they need to by failing to take advantage of tax allowances and benefits, new figures show.

Taxpayers are collectively wasting £12.6 billion on tax payments that could be easily avoided, according to the annual Tax Action report by financial advice group unbiased.co.uk.

More than £7.2bn of that wastage is in unclaimed tax credits. Another £2.45bn is handed over unnecessarily because of a widespread failure to make use of tax relief on pensions contributions, while almost £1bn in charitable contributions needlessly finds its way into the revenue’s coffers.

And with just over a month to use up the 2011/12 individual savings account (Isa) allowance, the report reveals that savers lose out on £403 million a year by failing to take full advantage of the tax-free products.