We're paying record amounts of needless tax

By Jennifer Hill

LONDON (Reuters) - Consumers saved themselves several hundred pounds on average over the past year by paying for goods and services in cash -- but shelled out a record amount in needless tax.

A quarter of British adults -- 12 million people -- have paid for a product or service with cash in the past 12 months, at an average level of 552 pounds each, according to Unbiased.co.uk, a Web site that promotes independent financial advice.

These "cash in hand" payments mean consumers could have pumped 6.6 billion pounds into the black economy.

Despite that, Britons are set to gift a record amount of money to the taxman by failing to take steps to reduce their tax liability.

People are expected to waste a total 9.3 billion pounds this year -- the most since Unbiased.co.uk 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.

David Elms, chief executive of Unbiased.co.uk, said: "It is staggering that one in four UK consumers will happily save themselves an average of 97 pounds in tax by paying for services in cash, thus avoiding VAT, but continue to waste an average of 290 pounds per year in unnecessary tax payments."

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