TAX NEWS - June 2010

UK Tax Tips: Ten tax tips to beat the Budget

As George Osborne, the new Chancellor, prepares to deliver his 'austerity Budget', Times Money comes up with some handy hints on how to maximise your income - and minimise your tax bill.


1 Be Isa-wise

From April 2010 everyone can put up to £10,200 into an Individual Savings Account (Isa). The whole sum can be placed into a stocks and shares Isa, alternatively up to half can be put into a cash Isa. Chas Roy-Chowdhury, of the Association of Chartered Certified Accountants (ACCA) says: "For a couple, this represents £20,400 savings annually protected from income tax or capital gains tax."


2 Know your entitlements

There are 28 separate means-tested benefits and tax credits and Citizens Advice  reckons that an estimated £16 billion goes unclaimed each year.


3 Claim tax relief on your pension

At the moment if you pay higher-rate tax the Revenue will give you £40 tax relief on every £100 saved. The Budget may lower tax relief on pensions but even if it does pension contributions are likely to remain a very tax-efficient investment.


4 Make a will

At present, any amount individuals leave above £325,000 (£650,000 for couples) will be subject to inheritance tax (IHT) at 40 per cent. So it makes sense to make a will in which you can leave money to charities or pay it into trust funds for children and grandchildren. This money will not suffer IHT.


5 Make use of your partner

Couples should arrange their investments so that the one on the lower tax band holds most of the portfolio in his or her name.


6 Reclaim tax paid on interest

Anyone whose income is less than their tax allowance does not have to pay income tax on their savings. Mr Roy-Chowdhury says: "They should complete and send off the form R85 to the Revenue to ensure their interest is paid gross."


7 Check your tax code

The Revenue's change to a new computer system earlier this year resulted in thousands of incorrect tax codes being sent out. You should check your payslip to ensure you are not being charged too much tax.


8 Make use of Gift Aid

If you tick the Gift Aid box in any donation you make to charity it will receive the full pre-tax amount rather than the  amount you have paid from your post-tax income.


9 Make sure you declare and pay your tax on time

If you fail to meet the deadline for filing tax returns, or don't make a return of any sort when you should, you are liable to incur a heavy fine.


10 If in doubt, ask a professional

Mr Roy-Chowdhury says: The UK tax system is complicated but a qualified accountant will be able to navigate you though the tax maze."