Tax – Keep It Low But Legal

If you are really well-to-do you could employ an account to look after your tax affairs, but for most of us this is not a realistic proposition. The resultant charge for the accountant’s services could well exceed any saving achieved, so we have to deal with the problem ourselves. This is not too bad if it is dealt with in a logical order rather than the system which is employed by many – last minute blind panic!

It is fairly certain that most of us have been in that position at some time, and it certainly does not produce the best results. So you are going to be your own accountant. You start with a big advantage – a good knowledge of your financial situation and records. Well you do, don’t you? Of course you do, because during the last tax year you have not destroyed one piece of paper which could have a bearing on the tax due.

You will have kept clear records if you are self employed, but even if you are on PAYE you must retain anything which may be relevant. This will not be a massive heap of paper, but must include the obvious essentials such as bank statements, building society books, dividend vouchers and any documents from the tax office.

One item which you will almost certainly have received from the taxman is your ‘notice of coding’. Put simply, this tells you how much you can earn before tax becomes payable. If in doubt about what it means read the leaflet which accompanies the notice; it explains the significance of your code number in a very straightforward way.

It is very important to check that the figures used are correct. The current tax free earning limit is