LOW value coins could be phased out in the UK as the Government looks for people's views on how they spend their money.

Bosses are inviting comments on the mix of coins in circulation and the report says low value coins - like 1p and 2p - as well as the high value £50 note are the least used of the denominations.

The Government report says some of the smaller coins are only used once before they leave a cash cycle and end up being stored in a jar.

There are no current plans for them to be scrapped, but bosses say the Royal Mint may soon have a surplus.

The report said: "In the normal course of the cash cycle, many denominations fall out of circulation, for example, by being placed into savings jars.

"Surveys suggest that six in ten 1p and 2p coins are used in a transaction once before they leave the cash cycle.

"They are either saved, or in 8 per cent of cases are thrownaway. 

"To meet demand created by such losses from circulation, in previous years the government and the Royal Mint have needed to produce and issue over 500 million 1p and 2p coins each year to replace those falling out of circulation.

"However, due to an increase in the rate of decline in the use of cash for lower value transactions, there is a reduction in demand for coin from cash processors; they are now holding increasingly large stocks of coin that have returned to them but for which there is declining future demand.

"This situation has been compounded in the short term by the public returning not only their round £1 coins but also other denominations during the recent recoinage of the £1 coin.

"With falling long term demand over time, structural surpluses of some denominations of coin may be generated. This will affect the long-term demand for new coin from the Royal Mint."