Updated October 2008
As the economic downturn intensifies we have set out below a few personal tax planning strategies that you might like to consider.
1. Checking PAYE codes. If you are employed make sure you check your latest notice of coding, especially if there are adjustments for benefits in kind, or tax underpayments for previous years.
2. Benefits in kind. Certain benefits are now starting to lose their shine, for instance the provision of private petrol by employers for company cars and the tax charge for private use of a company van. From both the employers and employees point of view it may be time for a thorough review.
3. Company cars. The case for switching from “gas guzzlers” to low carbon emission cars is now compelling. Apart from the very real savings in running costs the tax charge to employees is minimised and if the CO2 rating qualifies, employers may be able to write the investment off in the year of purchase.
4. Tax free savings. If you are looking for tax free savings both ISA’s and National Savings Certificates qualify. The annual limit for ISA’s is currently £7,200, the limit for National Savings Certificates £15,000 per issue.
5. Tax refunds. If you know you are going to qualify for a refund, file your tax return as soon as you can after the 6 April. Any delay means HMRC get to keep your money in their bank account!
6. Salary sacrifice. It is worth considering this type of scheme to save tax. For instance your employer can offer childcare vouchers in exchange for a reduction in salary. The vouchers are received by the employee tax and National Insurance free. This scheme alone could convert £2,916 of your annual salary to a tax free status.
7. Rent-a-room relief. You can let out a room in your own home and take rents of up to £4,250 per annum tax free.
If you would like to discuss any of these topics, or indeed any other issues that concern you regarding the current downturn in the economy, please call.