Every year, each British taxpayer gives the Inland Revenue an average of £132 too much. In total, that’s £5.7bn being wasted by working people and those with savings. But with a little planning you can not only avoid this unnecessary expense, but also make additional savings of up to several hundred thousand pounds

• If you fill in a self-assessment form, be sure to have it in by the 31 January and avoid the £100 fine for late submission. In 2003, nearly 875,000 people were late sending their self-assessment forms to the Inland Revenue.
  
  
• Avoid inheritance tax through a variety of means, and retain some of the £1,213m that is wastefully gobbled up with 40% tax rate, by the death levy. If you have assets of more than £263,000, your chosen heirs may miss out on their full legacy unless you leave a watertight will and make some simple arrangements for your assets to be redistributed among your nearest and dearest as gifts. For more details, see UKNetGuide’s feature on avoiding inheritance tax.
  
  
• National Savings offers four tax-free savings certificates. You and your spouse can each invest £15,000 into each issue. Two certificates are index-linked and pay a fixed rate of interest above inflation, meaning the value of your savings is guaranteed to keep pace with rising prices.
  
  
• Make the most of ISAs (Individual Savings Accounts) while you can. The government plans to reduce the amount you can invest from April 2006. A mini-ISA currently allows a person to save up to £3,000 a year tax-free, while a maxi-ISA allows an annual tax-free saving of £7,000.
  
  
• Returns are free on Premium Bonds, into which everyone can invest up to £30,000. Bonds are a bit like lottery tickets with a tax-free prize. A draw is made once a month. The odds of winning a prize – which could be anything from £50 to the £1m jackpot – is 30,000 to one per bond. So if you invest the full amount and enjoy average luck, you’ll win 12 times a year.
  
  
• Buy the shares of small and growing companies via venture-capital trusts and you will have the potential to enjoy generous tax perks. You and your spouse can each invest up to £20,000 and, if the shares are new issues and you are a high-rate taxpayer, get income tax relief of 40% (as long as the shares are held for a least three years).
  
  
• Many millions – an estimated £359m, in fact – would be paid to good causes and not the tax man if people donated in tax-efficient ways, such as Gift Aid. This allows each registered charity to claim back 28p in every pound of each donation (while the basic rate of tax is 22%). The donor will receive a similar level of relief on his or her donation.