July 2007

Dear Alan,

Welcome to the first issue of Positive Balance, issued just after we celebrated our second birthday on 1st July 2007, at Druce Accountants . I have launched this newsletter as a way of making sure I maintain regular contact with you, while providing you with some useful information and pointers in the world of tax and accounting.

In each issue I will be touching on a different subject. If there any particular areas or topics that you would like me to cover then please do call me on 01235 769 722 or click here to email me and I will include them in future issues.

     Best wishes,

    Neil



Are You Paying Too Much Income Tax?

As an individual you are allowed to earn a certain amount each year (your personal allowance) before you pay Income Tax. The rates of income tax you have to pay then depend on how much money you earn over an above these personal allowances. Here is a summary of the main income tax rates and allowances that are applicable for you as an individual during the current tax year (6th April 2007 Ė 5th April 2008).

Income tax allowances

2007-08 (£)

Personal allowance (No tax to pay up to this level)

5,225

Personal allowance for people aged 65-74

7,550

Personal allowance for people aged 75 and over

7,690

Married couple's allowance (born before 6th April 1935 but aged under 75)

6,285

Married couple's allowance - aged 75 and over

6,365

Income limit for age-related allowances

20,900

Minimum amount of married couple's allowance (aged 72 and over).

2,440

Blind person's allowance

1,730

Taxable Bands Allowances

2007-08 (£)

Starting rate 10%

0 - 2,230

Basic rate 22%

2,231 - 34,600

Higher rate 40%

over 34,600

As you can see, most individuals can earn £39,825 before you have to pay tax at the higher rate of 40%. Savings and dividend income are taxed at just 20% and 10% respectively whilst you are still below the 40% threshold. This means that itís worth reviewing your dividend income where possible to maximise this tax saving. This applies more if you own and run a limited company and can determine how much and when a dividend is paid.

Donít forget to use your annual ISA allowance, after all why pay tax on savings when you donít need to?

Are you aware that you can claim mileage expenses from your employer at a rate of 40p per mile for the first 10,000 miles and 25p thereafter if you use your own car and fuel for business trips? Provided you complete an expense claim there will be no income tax to pay. Do you also know you can claim an additional 5p per mile if you have a passenger? More importantly in this time of Ďgreení awareness you can claim 20p per mile if you use your bicycle for business trips.

There are also National Insurance charges on the self-employed, employees and employers. I will cover these in more detail in another issue of Positive Balance.


Tax and Accounting Really can be Exciting!!!

Just to prove that accounting and tax are not always dull, hereís a more light hearted view of the industry.  Accountant Martin Taylor has clocked up 34,000 miles with a world tour of 42 Status Quo gigs in just nine months whilst raising money for the charity Cancerbackup.  I wonder if he has learnt the chords yet?

Dates for Your Diary

6th July             Deadline for employers to submit your 2006/07 P11D/P9D

19th July           PAYE/NIC Payments due for the month ending on 5th July

19th July           Class 1A Contributions on benefits-in-kind for 2006/07 due

19th August       PAYE/NIC Payments due for the month ending on 5th August

19th September PAYE/NIC Payments due for the month ending on 5th September and if youíre paying quarterly for the three months ending on 5th September

30th September Deadline for submitting your Self Assessment Tax Return if you want HMRC to do the calculations for you.