Dates for your diary

Don’t miss these deadlines

The deadline for submitting your 2008/09 tax return by post is 31 October 2009 

Returns filed manually after this date will result in a £100 fine. Paper returns must reach HM Revenue & Customs (HMRC) by this date so that it can calculate the tax you owe before the 31 January payment deadline.
The end of October is also the final submission date for paper returns if you want the tax you owe to be collected through your tax code. This is possible if you owe less than £2,000.

The deadline for filing your 2008/09 tax return online is 30 December 2009 if you want to pay through your tax code

Six million taxpayers filed online last year, an increase of 50 per cent on the previous year. This method means the tax owed is calculated automatically. Rebates are also paid back more quickly to online filers. All tax owed must be paid by 31 January 2010.

Late filing and payment means taxpayers are automatically fined £100. If the balance has not been paid by 28 February 2010, a further five per cent surcharge is added to the bill and if the tax still has not been paid by 31 July 2010 another five per cent charge is applied.

Tax-efficient wealth creation

Taking advantage of the increased savings allowance

If you are considering your Individual Savings Account (ISA) options, the good news is that the permitted contribution allowance will be extended for investors over the age of 50 from 6 October this year.

If you are under the age of 50 you will also be able to take advantage of the increased allowance from 6 April next year.

The overall ISA limit will increase to £10,200 (up from £7,200), although the maximum tax-free entitlement will remain unequal for those depositing savings and those investing in shares. You will be able to invest up to £10,200 in a share ISA, whereas the maximum cash ISA deposit will be £5,100.

Cutting the time taken for annuity transfers
The pensions industry’s ‘Options’ initiative has delivered significant improvements in its first three months of operation, cutting the time taken for annuity transfers between providers signed-up to the Options initiative to an average of just eight calendar days, compared to a pre-Options pilot scheme achieving an average transfer time of 31 days. This improvement of over three weeks will see annuity policies processed through Options being set up much more quickly. The system is designed to speed up the exchange of information and funds as part of the annuity transfer process, including those carried out under the Open Market Option (OMO). Timescales are expected to improve further over time as refinements are made and more providers start to use the system.

Investing offshore

For the appropriate investor looking to achieve capital security, growth or income, there are a number of advantages to investing offshore, particularly with regards to utilising the tax deferral benefits. You can defer paying tax for the lifetime of the investment, so your investment rolls up without tax being deducted, but you still have to pay tax at your highest rate when you cash the investment in. As a result, with careful planning, a variety of savers could put offshore investments to good use. 

The investment vehicles are situated in financial centres located outside the United Kingdom and can add greater diversification to your existing portfolio. Cash can also be held offshore in deposit accounts, providing you with the choice about when you repatriate your money to the UK, perhaps to add to a retirement fund or to gift to children or grandchildren. Those who work overseas or have moved abroad to enjoy a different lifestyle often want to pay as little tax as is legally possible.

Many offshore funds offer tax deferral. The different types of investment vehicles available offshore include offshore bonds that allow the investor to defer tax within the policy until benefits are taken, rather than be subject to a basic rate tax liability within the underlying funds. This means that, if you are a higher rate tax payer in the UK, you could wait until your tax status changes before bringing your funds (and the gains) back into the UK.

The wide choice of different investment types available include offshore redemption policies, personalised policies, offshore unit trusts and OEICs. You may also choose to have access to investments or savings denominated in another currency.

Many banks, insurance companies and asset managers in offshore centres are subsidiaries of major UK, US and European institutions. If you decide to move abroad, you may not pay any tax at all when you cash-in an offshore investment, although this depends on the rules of your new country.

Regarding savings and taxation, what applies to you in your specific circumstances is generally determined by the UK tax regulations and whatever tax treaties exist between the UK and your host country. The UK has negotiated treaties with most countries so that UK expats in those countries are not taxed twice. Basically, if a non-domiciled UK resident is employed by a non-UK resident employer and performs all of their duties outside the UK, the income arising is only subject to UK tax if it is received in or remitted to the UK.

Investor compensation schemes tend not to be as developed as in the UK, so you should always obtain professional advice to ensure that you fully understand each jurisdiction. It is also important to ensure that you are investing in an offshore investment that is appropriate for the level of risk you wish to take.

The value of investments and the income from them can go down as well as up and you may not get back your original investment. Past performance is not an indication to future performance. Tax benefits may vary as a result of statutory change and their value will depend on individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent finance acts. Currency movement can affect the value of an offshore investment.