It’s a new tax year, time to wish many happy returns
With another tax year officially over, what should we be doing to make the most of the next 12 months
Yesterday marked the start of another tax year. And by definition this means the 2008/09 tax year has finished.
Too late now to whine about your tax bill and wish you had made that lump sum pension contribution!
So, what should you be doing about the 2009/10 tax year now that it has started?
If you file a tax return you could start pulling together the information needed to do it.
Tax codes need to be checked. If you are paid monthly you may have a new tax code used at the end of April.
You may have been told in January or February how this would be worked out.
The basic tax code for people was 603L and should change to 647L. Many other codes will, in a similar way, have 44 added to the number of the code. This equates to the £440 increase in the personal tax allowance to £6,475.
If you think your code might be wrong you must contact HM Revenue & Customs. They can explain the code to you and make any necessary changes.
A phone call might do — take down their name — but often a letter asking for a reply makes for less stress.
If you have a company car make sure the right amounts are being deducted from your tax code — to avoid nasty shocks later on.
As with regards to pensions, the start of a new tax year means a fresh start to the maximum you can contribute. Anyone, children included, can pay £3,600 into a pension each year.
Those with earnings from employment or a business can invest an amount up to the total amount they earn.
There is an upper limit of £245,000 this year. Tax relief on pensions changed from April 2008 as a result of the basic rate of tax dropping to 20%.
From now on you have to pay in £80 for the tax relief of £20 to make up a gross contribution of £100. Previously £78 would have done the trick. Higher rate taxpayers will not lose out by this change, but everyone else will.
In business, many things need to be done for the old 2008/09 tax year. The Employer’s return of tax and NIC deducted from staff needs submitted. Do it online and get £75 tax-free.
The return of National Insurance on company cars will have to be submitted and paid for. VAT returns may need done, and the accountant is probably eagerly awaiting your tax return information.
If business is slacker than in previous years then why not split your extra time between doing extra marketing activities and tidying up the business finances?
Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co — www.hustontax.com or 028 9080 6080