Turn the tables on the taxman
Tax Planning: Why hand more than your share of a hard-earned wage to Mr Clarke? Take a little time and you could collect a cheque from the Exchequer
Wednesday 26 February 1997
There are two main reasons for this massive overpayment - failing to make full use of tax allowances, and failing to manage our savings in the most tax-efficient manner.
Look first at your tax allowances. Yes, the tax form looks complicated, and yes, it might need a couple of hours with a calculator or a computer and a simple spreadsheet. But just think of the satisfaction at getting the better of the taxman - to say nothing of the money you might save.
Here are a couple of simple scenarios that might help to cut your tax bill.
Imagine a married couple where one partner works and the other does not - and has no other individual income. Do you have any investments? If so, in whose name? If they are held by the non-working partner - which usually means the wife - the income would be offset against her previously unused personal allowance.
In addition to the personal allowance, there is also an additional married couple's allowance of pounds 1,720. Unless you tell the Inland Revenue otherwise, this will automatically go to the husband. It's often seen as a last throwback to the dark ages - as recently as the 1970s - when the taxman would not answer letters from married women on the grounds that their tax affairs were a matter for their husbands.
But if you are a family where the wife pays tax at a higher marginal rate than the husband, the couple could cut their collective tax bill by switching the allowance to the wife.
There are many more ways in which a little time and effort can cut your tax bill - time and effort which is essential, rather than optional, under the latest arrangements for self-assessment of tax.
There are three things to remember about this new regime: make sure you keep accurate and detailed records, post the paperwork and payments on time (or you will face penalty payments of pounds 100 or more), and if in doubt, consult an accountant now, before it is too late.
Now to the savings and investment side of your affairs. It is 10 years since - as his television commercials remind us - then Chancellor Nigel Lawson introduced personal equity plans, or PEPs.
Although most of the plans advertised in these pages are "wrappers" for holdings in unit trusts, PEPs were originally intended to enable individuals to hold share stakes with growth and income tax free. And yet thousands of shareholders still hold their shares directly, rather than through a PEP - handing over an extra pounds 300m a year to the Inland Revenue along the way.
Take just one example. In July 1989, about a million people became shareholders for the first time when Abbey National converted to a bank and floated on the stock exchange. At the start of trading, 1,000 shares were worth pounds 1,300; this week they are worth about pounds 7,700 - and, of course, dividends paid out over the period have totalled a further pounds 994.
A number of brokers, such as Kleinwort Benson, think that Abbey's strong performance of recent years might be slowing and advise clients to sell now and take their profits.
If you follow that advice, will you benefit from Chancellor Lawson's tax-break - or hand over part of your windfall to his successor, Kenneth Clarke?
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Mark Dampier: Woodford’s young companies could be the stars of the future
10 tips for taking out a personal loan
Seven fund superstars to trust with your cash
The 10 Best money-saving sites
Simon Read: Payday loans that are marketed at kids? Why not? They're already brainwashed into wanting products
- 1 'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
- 2 Number of global billionaires has doubled since the financial crisis
- 3 Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
- 4 Of course, teenage girls need role models – but not like beauty vlogger Zoella
- 5 North Korean officials 'publicly executed for watching South Korean soap operas'
Pope Francis declares evolution and Big Bang theory are real and God is not 'a magician with a magic wand'
Huge surge in Ukip support after EU funding row, according to new poll
Ukip ‘exploiting grooming scandal’ to secure party’s first police chief
Nigel Farage: 'There’s nothing wrong with white people blacking up'
Muslims, immigration and teenage pregnancy: British people are ignorant about almost everything
Nigel Farage and Frankie Boyle clash over Andrew Lawrence's 'Mock the Week' criticism
iJobs Money & Business
£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...
£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...
£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
Day In a Page
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000