Taxing times Print E-mail
Written by Jonquil Lowe, 2008   
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Tax penalty tips

  • Take care preparing your return.
  • If the Revenue works out your bill, check the calculations carefully.
  • Keep good records to support the figures on your return.
  • If you spot a mistake, tell your tax office straight away.

Use your allowances

There are many ways to save. The simplest is to use your tax-free allowances each year. Three of the most important are:

1. Your income tax personal allowance

Everyone can have at least £6,035 of income tax-free in 2008-09. If you pay tax on income from your savings or, say, rental income but your partner is a non-taxpayer, consider sharing the assets between you so that some of the income makes use of their allowance. If you are a basic rate taxpayer, this could save your household up to £6,035 x 20% = £1,207 tax this year. Higher-rate taxpayers could save up to £6,035 x 40% = £2,414

2. Your cash individual savings account (ISA) allowance

In 2008-09, you can pay up to £3,600 into a cash ISA. If it earned 6 per cent a year, a basic-rate taxpayer would gain over £43 a year compared with a taxed savings account and a higher-rate taxpayer over £86.

3. Your capital gains tax allowance

You can make up to £9,600 of capital gains in 2008-09 tax-free. If you are paying income tax on interest, dividends or life-insurance investments, consider switching to investments that give you capital gain instead. This could save a basic-rate taxpayer up to 20% x £9,600 = £1,920 and a higher-rate taxpayer up to £3,840.

Useful contacts

Chartered Institute of Taxation
For a list of tax advisers in your area phone 020 7235 9381, www.tax.org.uk

Inland Revenue
www.hmrc.gov.uk

TaxAid
For free tax advice if your income is low (less than around £15,000 a year)
Tel: 0845 120 3779, www.taxaid.org.uk

Tax Help for Older People (TOP)
For free tax advice if you are a pensioner and your income is low (less than around £15,000 a year) tel: 0845 601 3321, www.taxvol.org.uk

Jonquil Lowe is a freelance financial journalist, researcher and author of the Financial Times Guide to Personal Tax, which contains over 175 tax-saving ideas and is available from bookshops, price £12.99.



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