IF
YOU'RE A NON TAXPAYER YOU CAN STILL SAVE TAX
You
may be a non taxpayer but don't think tax breaks don't apply to you.
If you're married, look at the tax saving ideas for married couples
to see if any apply
to you.
38
Keep
Your Annual Building Society
Statements – They're Worth Money
If
you have savings with a bank or building society, at the end of each year
you will receive a tax voucher, which shows your interest for the year
and the tax which has been deducted at a rate of 20 per cent.
As
a non taxpayer, you can reclaim all the tax deducted from interest –
but not dividends – which you receive. Send your tax vouchers to
your Tax Inspector at the end of the tax year and ask for a rebate.
39
Register
as a Non Taxpayer with Your Bank or Building Society
Since
6 April 1991, non taxpayers have been able to receive interest on bank
and building society accounts without any tax deducted.
If
you're a non taxpayer you may make a declaration stating that you're
a non taxpayer so that your interest can be paid to you gross. Use form
R85 to do this. It's available from tax offices, banks and building
societies.
40
Choose
Your Investments Carefully
When
you're looking for somewhere to invest your money, your first choice
may initially be a bank or building society. As you've seen, your income
from this type of account can be payable gross, or net of tax.
But
there are many other investing routes for you to choose. Be careful, when
comparing rates, to look at the total return on an investment – you'll
probably find better rates on offer where the interest is paid to you
gross – that is, without tax being taken automatically – than
where interest is paid "tax free".
Take
National Savings & Investments products for example.
With some of them, interest is paid gross. In the case of savings certificates,
though, the income is "tax free" – in other words even taxpayers
are not liable to pay tax on the interest. As a non taxpayer you are
likely to obtain a better return by investing in an account paying interest
gross, unless you expect your circumstances to change during the life
of the investment (two or five years in the case of savings certificates).
Conclusion:
If you're a non taxpayer, think how interest will be paid to you before
you make an investment. Look ahead to ensure that it will still be appropriate
for your needs when you come to sell or cash it in. To compare like with
like, find out what your gross return will be in each case.
©
Charterhouse Communications plc, 2004.
All
rights reserved. No part of this publication may be reproduced, stored
in any retrieval system, or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise, without
the prior permission of the publishers.
Successful
Personal Investing (SPI) is designed to provide authoritative education
and training in the subject matter covered. While the publisher has
taken all reasonable care in the preparation of this publication, its
accuracy cannot be warranted. Materials and examples in SPI do not constitute
advice on the making or changing of any particular investment. If financial
advice or other expert assistance is required, the services of a competent
professional person should be sought. For these reasons the publisher
will not be liable for any loss arising from investments made or changed
in reliance on statements contained in SPI.
REFS is
a mine of invaluable information for the private investor.
