WITH rising council tax bills, higher interest rates hurting homebuyers who failed to fix their mortgage rate, and a squeeze on pay rises threatened in the public sector, 2007 could be a painful time for Middle Britain. Yet too many of us, says the latest TaxAction report from IFA Promotion which represents financial planners, pay more tax - as much as £7.9bn in 2007 - than we need to do. IFAP estimates average waste at £160 per head this year, against £95 in 2002. It's important because personal tax levels have risen from £40.5bn in the mid-1980s to £149bn today. But although 27 million adults claim to resent rising tax bills, IFAP found three quarters of us do nothing to reduce them. Says David Elms, chief executive of IFAP which runs the Unbiased.co.uk website: "Since we launched TaxAction 15 years ago, we have seen a shift in responsibility in personal tax away from her Majesty's Revenue & Customs (HMRC) towards the individual." Mr Elms says Inheritance Tax (IHT) is one of the biggest areas of wasted tax, on which families throw about £1.5bn a year "down the drain". "An independent financial advisor can make the avoidance of IHT and the sorting out of wider tax issues a much simpler process," he says. But a tax check is likely to cost £75-£200 in a consultation with an IFAP member. Here's where some of us lose money to the Inland Revenue which we really ought to keep: * IF YOU have assets over £285,000, it makes sense to plan your inheritance carefully. An extra £1.5bn could be passed to chosen heirs by planning properly to avoid IHT liabilities. IHT is often lost because couples neglect to write their life assurance policies in trust, not thinking about IHT allowances or, worst of all, by not making a will at all. If a life assurance policy isn't written into a trust, it might be included in the rest of the estate and still hit by IHT. One IFAP member firm, Wolverhampton-based FSC Investment Services, publishes a Simple Guide to IHT Planning. Potential IHT loss to the taxman: £1.5bn. | 
Article
