Enter Your E-mail

Kelly Sizer of LITRG outlines a few important tax and tax credits issues you should be thinking about as the autumn months approach. 

Introduction

Each month, certain key tax and tax credits deadlines come up and it can be easy to forget what you should be doing and when. To help remind you of them and also some welfare benefits matters, the Low Incomes Tax Reform Group has been producing a series of monthly articles. Here we have the latest, for September, which also provides links to further useful information. 

Tax and Self Assessment

Get to work on your 2008/09 tax return – paper filers only have two months left!

Last year, tax return filing deadlines changed. Those sending in a 2008/09 paper return now have to do so by 31 October 2009, but if you are filing online you have until 31 January 2010. Whether filing on paper or online, the sooner you get to work on your return, the better. ‘Beat the Tax Return Deadline’ gives more detail.

Not received a tax return but think you need to fill one in? Act by 5 October

Self Assessment tax returns (or a notice to complete one) for the year to 5 April 2009 would normally have been issued in April.  If you haven’t received one, but you think you might have tax to pay for 2008/09 (for example, if you started to have a new source of income in the year such as rent from letting out a property), you must tell HMRC. The deadline for telling them is 5 October 2009. Telephone the Self Assessment helpline on 0845 900 0444.

Have you been charged another 5% for late payment of 2007/08 tax?

If you still hadn’t paid tax you owed for 2007/08 by 31 July 2009, you might by now have received a notice from HMRC stating that you need to pay another 5% surcharge as a penalty for late payment. You have 30 days to appeal if you think that you should not have been charged the penalty or if you had a reasonable excuse for delayed payment. 

If you had entered into a ‘time to pay’ arrangement with HMRC on or before 31 July 2009, agreeing to pay late 2007/08 tax by instalments, you should not have received a 5% surcharge.  If you have received such a notice in error, make sure you contact HMRC about it as soon as possible. To discuss time to pay, individuals not in business should contact HMRC on 0845 366 1204; businesses should use the Business Payment Support Line on 0845 302 1435.

Staying on at school? Going to university?

Students should have a look at ‘August – time for sun, sea and… tax?’ for some reminders of things to consider at this time of year. 

Make the most of your tax-free savings

Putting your cash savings into a tax-free Individual Savings Account (‘ISA’) is a sensible decision for most people. But did you know that the maximum you can invest is increasing? When the changes come in depends on how old you are – those aged 50 or over can pay more in from 6 October 2009, but everyone else has to wait until 6 April 2010. If your 50th birthday falls before 6 April 2010, you qualify for the higher investment limit from 6 October 2009. The new limits are given below.

If you have savings in non-ISA accounts, you might want to consider switching them into ISAs if you would otherwise pay tax on them. For example, pensioners who have built up savings might be paying tax on the interest at 20% (or 10% if your income falls within the savings band). By putting cash into an ISA, you can earn interest tax-free. 

Each year, you can put £7,200 into an ISA, but only £3,600 of this can be held in cash. This year’s Budget increased the annual investment limit to £10,200 per person, £5,100 of which can be held in cash; but this higher limit is only available to people aged 50 and over from 6 October 2009 (available to all from 6 April 2010). 

You can also hold stocks and shares and other types of investment in ISAs. More information is given in HMRC’s ISA factsheet, although unfortunately at the time of writing, this factsheet had not been updated for the Budget 2009 changes to the limits. 

Tax credits

Did you miss the 31 July renewal deadline?

Read the section in ‘August – time for sun, sea and… tax?’ advising you what to do. If you have been notified of a tax credits overpayment, you might also find it helpful to read LITRG’s tax credits overpayment guide.  

Childcare costs – any changes to consider?

LITRG’s July article gave information about claiming the childcare element of Working Tax Credit and whether changes in childcare costs over the summer holidays would have any impact. Similar considerations could apply now, for example if your children are starting school or are now eligible for a free nursery place and your childcare costs are changing as a result. Have a look back at the July article (follow the link below to our earlier articles in the series).  

State benefits

Aged 60 or over?  Can you claim the winter fuel allowance?

The key date for determining whether you are entitled to an extra payment towards your winter fuel bills this year is 27 September 2009. If you are aged 60 or over by that date and meet the other qualifying criteria (for example, you are in receipt of a relevant state benefit which entitles you to the allowance), you could get a payment of between £125 and £400. The exact amount depends on your individual circumstances. 

And the good news is, the payment is tax-free! So make sure you don’t include it with your state pension figure or other taxable state benefits on your tax return if you need to complete one. 

Are you being paid enough? Check your National Minimum Wage entitlement

From 1 October, National Minimum Wage rates increase.  The rates from 1 October 2009 will be:

• £5.80 an hour for adults (workers aged 22 and over)
• £4.83 an hour for workers aged 18 to 21 inclusive
• £3.57 an hour for under 18s

The Directgov website provides more information on entitlement to the National Minimum Wage and how to work out whether you are being paid enough.  

Useful links

The full series of monthly reminder articles is available to read on the LITRG website.

The LITRG website also gives more information on appeals.

For information on Time to Pay, go to the HMRC website.

The 10% savings band is described on the LITRG website.

HMRC’s ISA factsheet can be downloaded from their website.

Additional guidance on childcare costs for tax credits can be found on HMRC’s website.

Find out more about winter fuel allowance, including how to claim, on the Directgov website.

Go to Directgov for more information on the National Minimum Wage.