Latest news with #taxman
Daily Mail
11 hours ago
- Business
- Daily Mail
How 2.6 million can avoid paying tax on their savings
Four times as many will pay tax on their hard-earned savings this year compared with 2021-22. Some 2.64million will be stung by income tax on the interest they earn in their savings accounts in 2025-26, says HM Revenue & Customs. The taxman is clawing back earnings on a record number of savers, with another 120,000 dragged into the net over the past year. Four years ago, just 647,000 paid the punitive tax. This is because while savings rates have soared, the Personal Savings Allowance (PSA) has been frozen for nearly a decade. Interest on savings is treated as income and taxed at your marginal rate of income tax. Savers all have a PSA, giving them £1,000 or £500 of interest tax-free, for basic and higher rate taxpayers, respectively. 1) Put your savings into an Isa The best way to shield savings from tax is to funnel your money into an Individual Savings Account ( Isa ). These are much like any other type of cash savings account, except any interest earned is completely sheltered from tax. You can put up to £20,000 into Isas every tax year. Savers can bag a rate above 5 per cent on easy access Isas, while one-year fixes pay up to 4.3 per cent. Laura Suter of stockbroker AJ Bell says: 'Using tax wrappers like cash Isas or investment Isas is now more important than ever to protect your savings.' 2) Max out other allowances If your only source of income is your savings interest – and that is less than £100,000 – you qualify for tax-free allowances. These are the personal allowance of £12,570 and the £5,000 starting rate for savings. Low earners can use their personal allowance of £12,570 to earn interest tax-free if it has not been used up by earnings or other income, such as a pension. Those earning less than £12,570 receive an extra £5,000 tax-free allowance for their savings income. This means someone can earn £12,570 in income and £6,000 in savings interest (£5,000 starting savings allowance plus the personal savings allowance of £1,000) before tax is applied. Another way you could cut a tax bill is by transferring some of your personal allowance to your spouse if they earn less than you and below £12,570. 3) Premium Bonds Tens of millions flock to National Savings and Investments (NS&I) to win one of two £1million prizes in the monthly Premium Bonds draw. Any prizes are tax-free. Prizes offered by the Treasury-backed bank NS&I range from £25 to £1million and the maximum you can invest in Premium Bonds is £50,000. But winning is not guaranteed and your money won't earn interest in Premium Bonds. The odds of any Premium Bonds winning a prize in a monthly draw is one in 22,000. 4) Invest in gilts For those with larger amounts of cash they don't need immediate access to, investing in government bonds can be a tax-efficient alternative. Look for gilts with low coupons that can be bought below the value at which they will mature. This is because price gains made on gilts are exempt from capital gains tax. You receive a regular income, known as the coupon, and if you hang on until the maturity date you get all your money back, except in the unlikely event that the UK defaults on its debt.
Daily Mail
2 days ago
- Business
- Daily Mail
Four ways to sidestep tax on savings that'll hit a record 2.6m
Four times as many will pay tax on their hard-earned savings this year compared with 2021-22. Some 2.64million will be stung by income tax on the interest they earn in their savings accounts in 2025-26, says HM Revenue & Customs. The taxman is clawing back earnings on a record number of savers, with another 120,000 dragged into the net over the past year. Four years ago, just 647,000 paid the punitive tax. This is because while savings rates have soared, the Personal Savings Allowance (PSA) has been frozen for nearly a decade. Interest on savings is treated as income and taxed at your marginal rate of income tax. Savers all have a PSA, giving them £1,000 or £500 of interest tax-free, for basic and higher rate taxpayers, respectively. A basic rate taxpayer would breach their PSA with £19,600 in the top easy-access account, while a higher-rate taxpayer would breach it with £9,800 saved. This was £154,000 and £77,000 respectively in 2021. Banks and building societies automatically report interest earned to HMRC. So how can you sidestep the tax? We asked experts for their top tips... 1) Put your savings into an Isa The best way to shield savings from tax is to funnel your money into an Individual Savings Account (Isa). These are much like any other type of cash savings account, except any interest earned is completely sheltered from tax. You can put up to £20,000 into Isas every tax year. Savers can bag a rate above 5 per cent on easy access Isas, while one-year fixes pay up to 4.3 per cent. Laura Suter of stockbroker AJ Bell says: 'Using tax wrappers like cash Isas or investment Isas is now more important than ever to protect your savings.' 2) Max out other allowances If your only source of income is your savings interest – and that is less than £100,000 – you qualify for tax-free allowances. These are the personal allowance of £12,570 and the £5,000 starting rate for savings. Low earners can use their personal allowance of £12,570 to earn interest tax-free if it has not been used up by earnings or other income, such as a pension. Those earning less than £12,570 receive an extra £5,000 tax-free allowance for their savings income. This means someone can earn £12,570 in income and £6,000 in savings interest (£5,000 starting savings allowance plus the personal savings allowance of £1,000) before tax is applied. Another way you could cut a tax bill is by transferring some of your personal allowance to your spouse if they earn less than you and below £12,570. 3) Premium Bonds Tens of millions flock to National Savings and Investments (NS&I) to win one of two £1million prizes in the monthly Premium Bonds draw. Any prizes are tax-free. Prizes offered by the Treasury-backed bank NS&I range from £25 to £1million and the maximum you can invest in Premium Bonds is £50,000. But winning is not guaranteed and your money won't earn interest in Premium Bonds. The odds of any Premium Bonds winning a prize in a monthly draw is one in 22,000. 4) Invest in gilts For those with larger amounts of cash they don't need immediate access to, investing in government bonds can be a tax-efficient alternative. Look for gilts with low coupons that can be bought below the value at which they will mature. This is because price gains made on gilts are exempt from capital gains tax. You receive a regular income, known as the coupon, and if you hang on until the maturity date you get all your money back, except in the unlikely event that the UK defaults on its debt.
Times
21-07-2025
- Business
- Times
The obscure rule that lets you bust the Isa allowance
Money worries are a horrible reality after the death of a spouse. But a little-known tax exemption could help ease some of the financial burden by boosting your Isa allowance way above the £20,000 annual limit. Additional permitted subscription (APS) allows a wife, husband or civil partner to inherit an Isa allowance from their partner, offering a popular, and legal, way to beat the taxman after a death. It allows a spouse to benefit from a higher tax-free allowance, even if their partner left the actual assets in the Isa to someone else. Savers have a £20,000 tax-free annual Isa allowance, but an APS can be applied to any new or existing Isa opened by someone whose spouse has died. This gives them an additional tax-free allowance for one year, equal to the value of their partner's Isa when they died. Once a person has died, their accounts become 'continuing Isas', accruing interest or returns on the stock market. This status ends either three years after death, when the administration of the estate is complete or when the Isa is closed — whichever one comes first. For example if your Isa had £10,000 in it when you died and your spouse had already used their full £20,000 limit for the year, they could increase their tax-free allowance for that year to £30,000. If the Isas contained £80,000, the spouse would have an allowance of £100,000 for the year. In many cases, the spouse will inherit the money in the Isa, but even if they don't, they can still claim the tax-free allowance. The time limit for claims is three years after death, or 180 days after the assets were distributed to the surviving spouse or other relatives. • Why the cash Isa shake-up was put on pause Before you can apply, the death must be registered with your spouse's Isa firm and you will have to prove that you were living with them when they died. APS applications should be made to the Isa manager that will ultimately be looking after the funds, so if you plan to move the money that would be your Isa firm, rather than the one that holds your spouse's account. That firm will then claim the APS on your behalf by contacting the other Isa manager to get the final value of the accounts and calculate the tax-free allowance. Not all Isa firms offer APS, however, so check to avoid unnecessary paperwork and stress. Sarah Coles from the investment platform Hargreaves Lansdown said: 'These inherited allowances aren't always well understood, but can be incredibly valuable — potentially protecting tens of thousands of pounds from tax.' Hargreaves Lansdown found that the number of clients inheriting Isas through APS went up a third in the last tax year, compared with 2023-24. It was two-thirds higher than in 2022-23. • My brother is getting a £40k early inheritance. Will I be stung with the tax bill? If you leave stocks and shares Isas to your spouse, all the investments can be transferred, but you have to do it within 180 days of the assets being distributed. Hargreaves Lansdown found that 48 per cent of those who went through the APS process didn't make any changes in the first year to the portfolio they inherited
Yahoo
19-07-2025
- Business
- Yahoo
ATO 'looking closely' at common tax return claim six million Aussies make
Do you need to wear a suit to work? Or perhaps you need to wear a uniform emblazoned with your company's logo? Perhaps you work in a clothes shop and have to come to work wearing clothes bought in that store? Whatever the case, you have to conform to your employer's dress policy so there might be an expectation that you'll be treated the same way by the taxman when it comes to claiming tax deductions for your work clothing. If only it was so simple! RELATED ATO $4,400 tax deduction update sparks warning for millions of Aussie workers Top 10 superannuation funds revealed as Aussies receive 'double-digit' returns Compensation sought for millions of Qantas customers hit in major cyber data breach The ATO claims that more than six million people are claiming tax deductions for clothing and laundry, with an unspecified proportion of those claims believed to be bogus. So, with the ATO looking closely at all such claims, now is a good time to consider what you can and can't claim. What clothes can I claim a tax deduction on? You can claim a deduction for the cost of buying and cleaning: occupation-specific clothing protective and unique clothing (ie, not everyday wear) clothing that allows the public to easily recognise your occupation – such as the checked trousers a chef wears distinctive uniforms clothing and footwear that you wear to protect yourself from the risk of illness or injury posed by your job or the environment in which you do your job. To be considered protective, the items must provide a sufficient degree of protection against that risk, and might include: fire-resistant and sun-protection clothing (including sunglasses) hi-vis vests non-slip nurse's shoes rubber boots for concreters steel-capped boots, gloves, overalls, and heavy-duty shirts and trousers overalls, smocks and aprons you wear to avoid damage or soiling to your ordinary clothes whilst at work. What can't I claim tax deductions on? You can't claim the cost of purchasing or cleaning clothes you bought to wear for work that are not specific to your occupation, such as a bartender's black trousers and white shirt, or a business suit. Bad news for office workers! If you work in a clothing store, you also can't claim the cost of clothing you purchased in that store, even if you're required to wear it to work, since those items of clothing are not specific to your occupation (you could also wear them outside work, on a Saturday night out for instance). Ordinary clothes (such as jeans, shirts, shorts, trousers, socks, closed shoes) are not regarded as protective clothing if they lack protective qualities designed for the risks of your work. To take the example of closed shoes, you may seek to argue that such shoes provide a level of protection for your feet from work-place hazards but unless that protection is something specific, over-and-above a general level of foot protection, you're not going to be able to claim a deduction. Compulsory work uniform You can generally claim a deduction for the cost of a compulsory work uniform, provided that you bear the cost and aren't reimbursed by your employer. This is a set of clothing that identifies you as an employee of an organisation. It is compulsory for you to wear the uniform while you're at work and there is a strictly enforced policy ensuring that this happens. Typical occupations where a compulsory uniform is required include police officers, nurses, military personnel, airline staff and supermarket staff. You may be able to claim a deduction for shoes, socks and stockings where they are an essential part of a distinctive compulsory uniform and where their characteristics (colour, style and type) are specified in your employer's uniform policy (as is sometimes the case with air stewardesses and nurses, for instance). You may be able to claim for a single item of distinctive clothing, such as a jumper, if it's compulsory for you to wear it at work. Non-compulsory work uniform You can claim for a non-compulsory uniform provided it is unique and distinctive to the organisation you work for. Clothing is unique if it has been designed and made only for your employer. Clothing is distinctive if it has your employer's logo permanently attached and the clothing is not available to the public. You can't claim the cost of purchasing or cleaning a plain uniform (for example, a generic white shirt and pair of black trousers, as worn by many wait staff). Non-compulsory work uniforms must usually have a design registered with AusIndustry in order to be tax deductible. Shoes, socks and stockings can never form part of a non-compulsory work uniform, and neither can a single item such as a jumper. Cleaning of work clothing You can claim the costs of washing, drying and ironing eligible work clothes, or having them dry-cleaned. If the total amount of your laundry expenses are $150 or less and your total work-related expenses are $300 or less, you don't need to provide written evidence for your laundry expenses. Instead, for washing, drying and ironing you do yourself, the ATO allows you to use the following amounts to work out your laundry claim: $1 per load - this includes washing, drying and ironing - if the load is made up only of work-related clothing, and 50 cents per load if other laundry items are included.
The Sun
11-07-2025
- Business
- The Sun
Hundreds of thousands of parents could have child benefit STOPPED in weeks if they don't take action
HUNDREDS of thousands of parents could have child benefit stopped in weeks if they don't take action. Parents of school children aged 16 to 19 need to extend their Child Benefit claim. The benefit is worth up to £1,354 a year for the first or only child, and up to £897 per a year for each additional child. However, payments automatically stop on August 31 or after the child has turned 16 unless parents renew their claim when their child is continuing in education. Parents of a child who is furthering their education have until this date to tell HMRC or their payments will cease. Last month, the taxman began posting letters to parents reminding them of the change. HMRC will be delivering letters up until July, so don't worry if you have not received yours yet. The letters will include a QR code which, when scanned, directs them straight to so parents can update online. Parents can also extend their child benefit claim via or the HMRC app. The payment works out at £26.05 per week for one child and £17.25 per week for each additional child, so it is important to respond to the HMRC if you want to receive the benefit in September. You can receive the cash boost up until their child is 19, and enrolled in an apprenticeship program or the following education schemes: A levels or similar, for example International Baccalaureate T levels Scottish Highers NVQs and most vocational qualifications up to level 3 home education - if it started either before your child turned 16 or after 16 if they have a statement of special educational needs study programmes in England a pre-apprenticeship Angela Rayner says lifting 2-child benefit cap not 'silver bullet' for ending poverty after demanding cuts for millions Your child must be accepted onto the course before they turn 19. What is child benefit? You get child benefit if you're responsible for bringing up a child who is under 16 or under 20 if they are in approved education or training The payment is used to help parents cover the costs of childcare. It is paid at two weekly rates - £26.05 per week for your eldest or only child and £17.25 for any additional children. Payments are usually made every four weeks, on a Monday or Tuesday, but sometimes are made weekly. If you are claiming child benefit for a child under 12, you also receive National Insurance (NI) credits. NICs count towards your State Pension so claiming the benefit can be useful if you are missing any. The reason NICs are so important is because you need 35 NIC years to receive a full new State Pension. You are considered a parent, or responsible for a child if you live with them and are paying at least the same amount as the Child Benefit rates to look after them - for example for food, clothes or pocket money. It's important to note that eligibility changes if a child goes into hospital or care and if your child starts to live with someone else. If you're not sure about your eligibility, you can contact the child benefit office. You must contact the Child Benefit Office if you think you are paid too much or too little. What help is available for parents? CHILDCARE can be a costly business. Here is how you can get help. 30 hours free childcare - Parents of three and four-year-olds can apply for 30 hours free childcare a week. To qualify you must usually work at least 16 hours a week at the national living or minimum wage and earn less than £100,000 a year. Tax credits - For children under 20, some families can get help with childcare costs. Childcare vouchers - If your employer offers childcare vouchers you can get up to £55 a week in tax and national insurance savings. You pay for your childcare before your tax contributions are taken out. This scheme is open to new joiners until October 4, 2018, when it is planned that tax-free childcare will replace the vouchers. Tax-free childcare - Available to working families and the self-employed, for every £8 you put in the government will add an extra £2.
