September 2003

Repayment of Tax to Individuals with Lower Incomes

Millions of pounds of tax is automatically deducted from interest paid on bank and building society accounts every year, but much of it can be reclaimed by account holders who have little or no other income. The Taxman’s Taxback campaign tried to get account holders who only pay tax at 10% or whose income is less than the personal allowance (£4,615 for those under 65), to claim back the tax due to them, but there has been little response. You (including pensioners) can claim this back if you were a 10% (or less) taxpayer any time in a particular tax year and tax was deducted from your (or your children’s) interest.

It’s not just money from the last tax year which is up for grabs. You can claim back any tax deducted from interest credited since April 5, 1997, as the deadline for a repayment claim is five years and ten months after the end of the tax year in which the tax was deducted. You can download a repayment claim form, R40, HERE, or ask for one to be sent to you by calling the Taxback helpline (Tel: 0845 980 0645).

June 2003

Positive Benefits !

The Chancellors' latest budget has given some minor improvements to the treatment of employee benefits. The increases to existing tax - free benefits are:

1. The annual staff party exemption has doubled from £75 to £150 per person.

2. Long service awards were increased from £20 to £50 for each year of service.

3. An employee who receives gift(s) from a third party (such as a customer) will not be charged to tax if they do not exceed £250 per annum (previously £150).

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March 2003

National Insurance Increase

National Insurance rates will be going up from April 2003.

Employees will pay 11 per cent rather than 10 per cent on earnings between the primary earnings threshold (which is now same as the single personal allowance) and the upper earnings limit. The personal allowance is to remain unchanged for 2003/04 and the upper earnings limit goes up by nearly 2 per cent, so representing a double increase in this tax burden.

Employees will now pay 1 per cent on all earnings above the upper earnings limit of £30,940.

Employers will now pay a further 1% in their NI Contributions rising from 11.8 % to 12.8 % on all earnings above £4,628 per year. Employees on £50,000 will be expected to pay an extra £504 in the year, up from £2589 to £3084.

The employers’ NI Contributions will rise by approximately 8.5% from £5,355 to £5,807 giving a combined increase in contribution to 18% on a salary of £50,000.

The NI Contributions for the self-employed will increase from 7 % to 8 % in 2003/04 for earnings between £4,615 and £30,940. In addition, for the first time, there will also be a 1 per cent contribution on profits above the £30,940 threshold.

A self employed person making profits of £50,000 will suffer an increase in the Class 4 NI Contributions for 2003/04 of approximately 27 % from £1,806 in 2002/03 year to more than £2,300.
 

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