The Inland Revenue only sends out tax returns to those it believes need to fill them in. Regular candidates include higher-rate taxpayers, the self-employed, pensioners, and anyone whose tax affairs are not straightforward. The majority of taxpayers are employees whose earnings are below the higher- rate tax threshold and who have no tax complications. They don't have to fill in a return. Your fears of being drawn into the tax-return net are unfounded if you normally have simple tax affairs.
Tax returns for the 1997/98 tax year have been sent out in the last few weeks. If you have not had one, ask yourself this question: did you receive income or make gains on tax which is still due, between 6 April 1997 and 5 April 1998? If so, you are legally bound to report the income or gains to the Inland Revenue by 5 October 1998. You will then be sent a tax return.
In your case this probably doesn't apply. As a basic-rate taxpayer you don't need to tell your tax office about the insurance bond payout, just as you don't have to report every bit of building society interest when basic-rate tax has been deducted at source. But make sure the insurance payout does not take you into the higher-rate tax bracket. For the 1997/98 tax year you'll have to pay higher-rate tax on any taxable income over pounds 26,100. Income covered by your tax allowances plus taxable deductions (such as pension contributions) is not taxable. So even if your only allowance is the personal allowance of pounds 4,045, you wouldn't have a higher-rate tax liability for the 1997/98 tax year until your tax income goes above pounds 30,145. If you are in any doubt, call a tax enquiry centre (listed under Inland Revenue in the phone book).
My partner and I are unmarried co-habitees in our mid-30s with two young children. We are in the process of drawing up a will. We aren't sure whether we can appoint each other as executors since we will also each be the principal beneficiary of the other's will. Also, should we approach a solicitor to act as joint executor?
You could arguably be considering using solicitors in the wrong way. It sounds like you are being guided by a book to draw up a DIY will without paying a solicitor. Although your will is fairly simple, it might be wise to pay a competent solicitor to make sure it is legally watertight and says what you want it to say. Otherwise problems could be discovered only after you have died, when it will be too late to do anything about it.
By contrast, appointing a solicitor or professional organisation (such as a bank) as your executor could be a huge mistake. Many a frustrated heir can tell stories of long delays, incompetence and high charges.
Unfortunately, it's very hard to dislodge a solicitor or other executor who has been appointed in a will.
It makes much more sense to appoint each other as executors. It's logical for a wife to sort out her husband's affairs (and vice versa) after he has died, especially if she inherits the bulk of the estate. A beneficiary of a will can indeed be an executor. (A beneficiary, or a beneficiary's husband or wife, should not sign as a witness to a will. The will won't be invalid, but a witness cannot receive any legacy.)
Appoint a relative or friend to act as joint executor, especially as you want to protect your children's interests should you both die at the same time. You need not be burdening them with an onerous task.
Nor need you worry about whether you or your partner would be up to the task of acting as executor. An executor can always enlist the help of a solicitor if necessary. But the executor will at least have some control over the solicitor, can get some idea of costs in advance and can get rid of a solicitor who drags his or her feet.
Get a copy of "How to obtain probate" from the Probate Department, Somerset House, Strand, London WC1R 1LP. This will tell you what an executor has to do, and show you how to keep all your personal papers in order so each partner will be able to sort out the estate in the event of the other's untimely death.
I am a non-taxpayer and can reclaim the tax deducted from my small portfolio of privatisation shares. I can choose to have some of the dividends paid in the form of extra shares. With these, however, I am told that I cannot reclaim tax. Is that right? If so, does that make cash dividends the only realistic choice ?
It is correct that you can only reclaim tax on cash dividends. Unfortunately for you, non-taxpayers will not be able to reclaim the tax credit even on cash dividends from April 1999. Dividends will still come with a tax credit. This will be 10 per cent, compared with 20 per cent now. But you will be able to have the tax credit reclaimed on your behalf only if the shares are held in a PEP or in one of the new tax-free ISAs (individual savings accounts) available from next April.
While you still have the chance to have a cash dividend and to reclaim tax, don't automatically dismiss the option of taking more shares instead. This type of dividend allows you to increase your shareholding at no extra cost. There are no broker's charges to pay. And it is possible that the long-term rise in the value of the shares will give you a better return than investing the cash and reclaimed tax in, say, a building society deposit account. Your choice will depend on what view you take of the shares' prospects.
q Write to the personal finance editor, 'Independent on Sunday', 1 Canada Square, Canary Wharf, London E14 5DL, and include a phone number, or fax 0171-293 2096. Do not enclose SAEs or any documents that you wish to have returned. We cannot give personal replies or guarantee to answer letters. We accept no legal responsibility for advice given.Reuse content