Copyright: Copyright ©Which?-IDP 1999
Citation: ©Which?-IDP 1999


Additional information

There are various areas on the tax return and the supplementary pages where you may need to give additional information. TaxCalc has several 'buttons' throughout the program which allow you to do this, and each button will feed the information through to the relevant part of your Return.

The context-sensitive help for each screen tells you what data you may need to enter as additional information.

There is a maximum number of characters which will fit in each 'Additional information' box on your tax return and Supplementary Pages. To make sure that all your data have been transferred to your form, you should print a draft copy and check it carefully. If there is too much additional information, you should transfer the surplus to a separate sheet and attach it to your facsimile form.


Additional personal allowance

Tax Guide

Tax Tips

Name of child claimed for

Child's date of birth/full-time educational institution

Click if the child lives with you

Shared claims

If you are married and your spouse is incapacitated

You may be able to claim the additional personal allowance if you have a dependent child and:

you were separated or not married on 6 April 1998 (if you are living with someone as husband and wife without being married you can still claim but you get only one allowance between you), or

you are married, but living with a husband or wife who was not able to care for him or herself throughout 1998-99 because of illness or disablement.

The allowance is worth 15 per cent of £1,900 in the 1998-99 tax year, i.e. £285. This is deducted from your tax bill in the 'Allowances and reliefs given in terms of tax' section of the detailed tax summaries (on the 'View' menu of TaxCalc).

Name of child claimed for

Enter the child's name. He or she must be either your own child (including a stepchild or child you have legally adopted), or any other child who was aged under 18 whom you maintain at your own expense (eg a younger sibling). You get the same allowance however many qualifying children you have: claim for the youngest child, unless someone else is already claiming for him/her.

Child's date of birth/full-time educational institution

The child must be under 16 on 6 April 1998, or in full-time education, or undergoing full-time training lasting at least two years for a trade, profession or vocation. Enter the child's date of birth and (if born after 5 April 1982) the name of the educational establishment.

Click if the child lives with you

Unless you are claiming because your spouse cannot care for him/herself, the child must have lived with you for at least part of the 1998-99 tax year.

Shared claims

If two people can claim the additional personal allowance for the same child (ie if the child lives with each of them for part of the year), the allowance is divided between them in agreed proportions. If they cannot agree, the allowance is divided in proportion to the time the child spends with each of them during the year.

Enter the percentage you are eligible for, or the number of days if the allowance is divided in proportion to time spent. Note that if you do not enter a percentage or the number of days, but have given the name of a child for whom you are claiming the allowance, TaxCalc will automatically assume that you are entitled to 100 per cent of the allowance. Also enter the name and address of the other person claiming (including the postcode).

If you are married and your spouse is incapacitated

Even if you are married, you claim the additional personal allowance if you have a dependent child and your spouse was unable to look after him/herself at all throughout the 1998-99 tax year because of illness or disability. Click here if this applies.


Adjustment to arrive at profit/loss

Tax Guide

Tax Tips

Adjustment to arrive at basis period

Farmers' averaging

Overlap profit brought forward

Overlap relief used

Adjustment to arrive at basis period

If your basis period is not the same as your accounting period, you need to make an adjustment to the figures you have already entered. If so, enter the figure here. This can be a positive or a negative figure - ie it may increase your net profit or reduce it. If the adjustment figure reduces your net profit, enter the figure as a 'minus'.

The adjustment is worked out by first averaging your profits out over the correct period, to find your profit or loss for your basis period. Then, you take the difference between this figure and the figure you have entered as your profit or loss for the 1998-99 accounting period. The result is the adjustment you need to make. See Inland Revenue Help Sheet IR222: How to calculate your taxable profits, (on the TaxCalc Help menu) for more information.

Example

Farmers' averaging

If you are a farmer or market gardener you may be able to claim to average two years' profits. You will need the Inland Revenue Help Sheet IR224 Farmers and Market Gardeners, which explains more. As with the adjusted profit figure, if you do enter an amount here and it should be deducted from your net profit, enter the figure as a minus.

Overlap profit brought forward

If your annual accounting date is not between 31 March and 5 April, when you start in business you can end up being taxed on the same profits in two consecutive years because of the way in which your basis period can overlap with your accounting period. The same may have applied on the transition to the system of self-assessment. These profits are called 'overlap profits' and the special relief which you can claim to compensate is called 'overlap relief'.Enter here any overlap relief brought forward from previous years. - see IR Help Sheet IR222 How to calculate your taxable profits (available in the Help Sheets section of TaxCalc's Help files) for how to work this out.

Overlap relief used

Enter here  the amount of overlap relief you are claiming to use in 1998-99. Note though, that you can claim this relief only when you close down or sell your business, or if you change your accounting date.

If the overlap relief is greater than your taxable profits it creates a loss and will increase an existing loss. If you have more overlap relief brought forward than you are using in 1998-99, TaxCalc will show the rest as an amount to carry forward, on your self-employment supplementary page.


All other income

Tax Guide

Source

Amount after tax

Tax deducted

Amount before tax

Losses brought forward

Losses used in 1998-99

Losses sustained in 1998-99

Post cessation and other business receipts

Below are examples of the 'other' types of income or profits which could be entered here.

Freelance or casual earnings (you only have to enter your profits from this sort of activity, so deduct any allowable expenses from the income you receive before you enter it).

Certain types of income received after a business has ceased.

Rental from leasing equipment you own.

Annual payments from an unauthorised UK unit trust.

Capital sums recieved from the sale of patent rights.

Any taxable 'cashbacks' which you receive as incentives, for example, to take out a mortgage or buy a car - these are only likely to be taxable as income where the cashback consists of payments receivable in more than one year.

Sickness benefits paid after you stopped working for an employer, but only to the extent that you did not contribute to the cost of the benefits (for example, by paying insurance premiums). Sick pay if you are still working for the employer goes in the 'employment' screens. See Inland Revenue leaflet IR153 Tax exemption for sickness or unemployment insurance payments (from tax offices).

Certain lump sums from a retirement benefit scheme which has not been approved by the Inland Revenue.

Also see Inland Revenue Help Sheet IR325 Other income, particularly if you have 'other income' from more than one source. Any investment income not listed above for which you have not found an appropriate section should be entered on the Other investments screen in the Savings and Investments section of TaxCalc, not here.

Note
If you are not sure whether a 'cashback' is taxable, you should enter it anyway, but also tick the 'Click here if any figures are provisional' box on the Tax already paid screen in the Other information section of TaxCalc, and give details under 'Additional information' on the same screen.

Source

Enter a simple description of the source of the income. This is not needed for the tax return but TaxCalc requires a brief entry for identification purposes.

Amount after tax

Enter the net amount of income received after any tax has been deducted.

Tax deducted

Enter the amount of tax deducted (if any) from the income before you received it.

Amount before tax

Enter the gross amount of income before tax has been deducted.

Losses brought forward

If you have allowable losses from earlier years (and which you have not already set against previous income), enter them here.

Losses used in 1998-99

Note that you can only set these losses against certain types of income (for example, not against income from unauthorised unit trusts or from unapproved retirement benefits schemes), so see Inland Revenue Help Sheet IR325: Other income to work out what you should enter here. The amount entered is deducted from the taxable amount of 'other income' so there is no point in entering more losses than you need to reduce your 'other income' to zero. You can carry forward unused losses to future years.

Losses sustained in 1998-99

Enter here the total of any losses made in 1998-99 which relate to 'other income', for example, if you made a loss on leasing out equipment. This section is only for losses not already entered elsewhere. You can carry the losses forward to set against any relevant 'other income' in future years.

Note
Enter any additional information using the 'Additional information' button on the Tax already paid screen, in the Other information section of TaxCalc.

Post cessation and other business receipts

If you cease to be involved in a business, you may still find yourself receiving income from it (e.g. a bad debt which is unexpectedly paid). If you have this type of income you can either:

enter the total in this section in which case it will form part of your income for 1998-99, or

you can elect to have the income taxed as income of the year in which the business ceased.

If you choose the latter do not include the income on this Other Income screen, instead click the 'Claim other reliefs' box on the Tax already paid screen, in the Other information section of TaxCalc, and give details of the amount you wish to claim and the year in which the business ceased. If you decide to enter it here, see the notes to the Inland Revenue Tax Return for what expenses and other deductions you can claim.


Allowable expenses
Main allowable business expenses

Tax Guide

Basic costs and general running expenses

Use of home for work

Wages and salaries

Workplace nurseries

Tax and National Insurance for your staff

Entertaining your staff

Gifts

Travelling

Interest payments

Hire purchase and leasing

Hiring

Insurance

Trademarks, designs and patents

Legal costs

Repairs

Debts

Subscriptions and contributions

Training

Secondments

Basic costs and general running expenses

Expenses normally allowed are: the cost of goods bought for resale and raw materials used in business; discounts allowed on sales; advertising; delivery charges; heating; lighting; cleaning; business rates; proportion of the council tax on a second home or main home if let out or used for business; telephone; rent of business premises; replacement of small tools and special clothing; postage; stationery; computer software with a limited lifetime; relevant books and magazines; accountants' fees (mostly); bank charges on business accounts; VAT if you are not registered. However, the initial cost of buildings, machinery, vehicles, equipment and permanent advertising signs is not allowable. Neither is any money paid as a result of extortion.

Use of home for work

The proportion attributable to your business use of telephone, lighting, heating, cleaning and insurance costs is allowable. Also a proportion of rent or mortgage interest, business rates, council tax and (in Northern Ireland) domestic rates, if you use part of your home exclusively for business.

Wages and salaries

Wages, salaries, redundancy and some leaving payments paid to employees are allowable. Also, payments on counselling employees made redundant and pensions for ex-employees and dependants. Your own wages or salary, or that of any business partner are not allowable, nor are wages paid to family members if these are excessive for the work done.

Workplace nurseries

The cost of some types of child care provision for employees' children is normally allowable, however, the cost of premises and equipment is not.

Tax and National Insurance for staff

Employer's National Insurance contributions for employees are normally allowed. Also, VAT on allowable expenses if you are not a registered trader for VAT - you can claim relief on the VAT by using VAT-inclusive prices for your allowable expenses. The following, however, are not allowable: income tax; Capital Gains Tax; inheritance tax; your own National Insurance and VAT if you are VAT registered.

Entertaining your staff

Entertainment of your own staff, for example, a Christmas party, is allowable (within limits). Any business entertainment is not allowed.

Gifts

Gifts costing up to £10 a year to each person are normally allowable, so long as the gift advertises your business . Food, drink, tobacco, gifts or vouchers for goods given to anyone other than employees are not allowable.

Travelling

The cost of travel and accommodation on business trips and travel between different places of work is allowable. Also, some of the running costs of your own car: the whole cost, excluding depreciation, if used wholly for business; a proportion if the car is used privately too. Provided trips are exclusively for business purposes, the cost of travel is allowable to and from the UK to carry on business performed wholly outside the UK. Travel between home and business, and meals, except the reasonable cost of evening meals and breakfast on overnight trips, are not allowable. Neither is the cost of buying a car or a van (you can claim capital allowances instead for these). Parking and motoring fines are not allowable.

Interest payments

Interest on, and costs of arranging, overdrafts and loans for business purposes are allowable, but not interest on loans paid or credited to partners or interest on overdue tax.

Hire purchase and leasing

Hire purchase

The hire charge part of payments (ie the amount you pay less the cash price) is allowable. Also, rent paid for leasing cars or machinery (although it may be restricted for expensive cars - see leasing, below). The cash price of whatever you are buying on hire purchase is not allowable.

Leasing cars

If you lease a car with a retail price when new of more than £12,000, part of the leasing cost is not allowed as an expense. However, this restriction does not apply to vehicles which are designed primarily for carrying goods, or which are unsuitable (and not commonly used) as private vehicles. Nor does it apply if your trade consists of running a taxi or hire car business for the general public.

If the restriction applies, work out the allowable proportion of the cost as follows:

deduct £12,000 from the retail price of the car when new and add half of this excess back to the £12,000.

multiply this amount by the leasing cost

divide this amount by the retail price.

Example

Retail price of car when new	=	£25,000
Annual leasing cost	=	£8,000
£25,000 - £12,000	=	£13,000
£12,000 + £6,500	=	£18,500
£18,500 x £8,000/£25,000	=	£5,920

£5,920 is the part of the leasing cost which can be treated as an allowable expense.

Hiring

Reasonable charges for hiring capital goods, including cars, are normally allowable.

Insurance

Business insurance (eg professional indemnity, employer's liability, fire and theft, motor) is allowable. Also, life insurance, personal accident insurance, permanent health insurance and private medical insurance for employees. Your own life, accident, permanent health and private medical insurance are not allowable.

Trademarks, designs and patents

Fees paid to register a trade mark or design, or to obtain a patent are normally allowable. However, the cost of buying a patent from someone else is not allowable (you can claim capital allowances instead).

Legal costs

The costs of recovering debts, defending business rights, preparing service agreements and appealing against rates on business premises are allowable. Also, the costs of renewing a lease with the landlord's consent for a period not exceeding 50 years (but possibly not in full if a premium is paid). However, expenses (including stamp duty) for acquiring land, buildings or leases are not allowable. Neither are fines and other penalties for breaking the law nor the costs of fighting a tax case.

Repairs

Normal repairs and maintenance to premises or equipment are allowable. The cost of additions, alterations and improvements is not allowable.

Debts

Specific bad debts and, in part, doubtful debts are normally allowable, however, a general reserve for bad or doubtful debts is not allowable.

Subscriptions and contributions

Payments which secure benefits for your business staff and genuine contributions to an approved local enterprise agency are allowable. Also, payments to professional bodies which have arrangements with the Revenue (in some cases only a proportion) and contributions to Business Link organisations or Training and Enterprise Councils.

Training

Subject to certain conditions, the cost of training employees to acquire and improve skills needed for their current jobs is allowable. Also, the cost of training employees who are leaving, or who have left, in new work skills.

Secondments

The cost of seconding employees on a temporary basis to certain educational bodies, including local education authorities and institutions maintained by them, and to charitable institutions is allowable.


Allowances & adjustments contents

Tax Guide

Capital allowances

Adjustment to arrive at profit/loss


Allowances contents

Tax Guide

Married couple's allowance

Transitional allowance

Blind person's allowance

Additional personal allowance


Annual turnover

Tax Guide

Tax Tips

Turnover

Goods etc taken for personal use

Other income/profits

Deductions from net profit

VAT

Turnover

Enter your turnover for the relevant accounting period and any other taxable business receipts on this screen. If your annual turnover is less than £15,000, you have a choice. The Inland Revenue allows you to give only 'three-line' accounts, that is, your turnover, your allowable expenses, and your profits. You can, however, give fuller information in the same way as larger businesses, if you prefer.

If you are entitled to give only three-line accounts, you need only complete the 'Turnover' box on this screen, but you should include in the figure you enter any other business income, together with the value (normal selling price) of all goods taken out of the business for your personal use, or for your family or friends (less anything you paid for them). Exclude balancing charges - these should be entered on the Capital allowances screen.

If your annual turnover for this business is £15,000 or more you must give the further details requested in the box. See Inland Revenue Help Sheet IR229 Information from your accounts for more information (available on the 'Help' menu of TaxCalc).

Goods taken for personal use and other adjustments which increase profits

You must make adjustments to your profits for goods taken out of the business for your personal use, or for your family and friends. If your turnover was less than £15,000 and you are submitting 'three line' account information only, do not enter anything in this box. If your turnover was £15,000 or more, enter here the normal selling price of all goods taken out for such use, minus the price, if any, which was paid for them and has been included in the turnover figure given above.

Other income/profits

If your turnover was less than £15,000 and you are submitting 'three line' account information only, do not enter anything in this box. If your turnover was £15,000 or more, enter here any other business income, included in the business accounts, which you did not include as turnover in the box above but be careful - most other types of income should be elsewhere in the partnership section of TaxCalc. If so, make sure you also enter it in the box 'Deductions from net profit', lower down on the screen, otherwise you will be taxed twice on it.

Deductions from net profits (other than expenses)

If your turnover was less than £15,000 and you are submitting 'three line' account information only, do not enter anything in this box. Otherwise use this box for adjustments to any amounts you took into account in arriving at your net profit or loss  but which are either not taxable receipts or are not taxed as profits from the business. Any taxable income entered in both 'Other income/profits' above and elsewhere in the Self-employment section, should be put here so that you do not pay tax twice on these amounts. See the notes that accompanied your Self-employment supplementary pages (available on the 'Help' menu of TaxCalc) for more information. Any amount entered here TaxCalc will deduct from your net profit (or add to your loss if applicable).

VAT

If your turnover was less than £15,000 and you are submitting 'three line' account information only, do not enter anything in this VAT section.

Otherwise, if you are registered for VAT you can enter details of business income and allowable expenses either all net of VAT or all inclusive of VAT. If you choose to show income and expenses inclusive of VAT then include your net payment to Customs and Excise as an expense under 'Other expenses' in the Expenses screen.

Any net repayment you receive from Customs and Excise should be included as a taxable receipt in the 'Other income/profits' box on this screen.

You may have bought capital equipment on which you are claiming capital allowances instead of deducting them as expenses. If you are entering VAT-inclusive figures, you should add the VAT to the amount entered in 'Other expenses' on the Expenses screen or (if you received a net refund from Customs & Excise) deducting it from the figure entered in box 'Other income/profits' on this screen. Also write in the amount of VAT on capital items under 'additional information' on the Details screen.

If you enter details of your income and expenses inclusive of VAT, make a note of the VAT payable on 'capital items'. These might include business premises, plant machinery, vehicles etc. Enter this as additional information using the 'Additional information' button on the Details screen. You should also tell the Revenue, using the 'Additional Information' button, if you either registered or deregistered for VAT during the period. Give the date it took effect and whether sales and expenses while you were registered were inclusive or exclusive of VAT.


Balance sheet

Tax Guide

If you have accounts, they may include a balance sheet in which case you should simply copy the entries on your balance sheet to this screen. TaxCalc will transfer the information on this screen to page four of the self-employment supplementary pages.

If you do not have a balance sheet, or your turnover was less than £15,000, or you clicked the 'Full details are not required' box on the Details screen, you do need not complete this screen.

Make sure that you have transferred all the figures to the summary and that each is included only once. Do not include any figures that do not appear on your balance sheet.

You should use your judgment to transfer the figures from your accounts to the most appropriate boxes. Depending on the circumstances of your business, certain elements in the balance sheet may appear either as assets or as liabilities. For example, a bank account with business funds in it will be an asset, while an overdrawn account will be a liability. For the former, enter the balance under 'bank/building society balances'. For the latter, enter the balance in 'loans and overdrawn bank accounts'.

Other items that might be affected in this way are most commonly the Capital Account balances and the net profit or loss. Where a balance on the Capital Account is overdrawn, or the business made a net loss in the year, you should enter the amount as a minus figure.

Any additional information which may be necessary should be entered in the 'Additional information' box.


Basic calculation
Tax summary - basic calculation

Tax Summary

Tax Calculation working sheet

What to do next

Disagreements about the tax due

Tax Summary

This gives a brief summary of your tax in 12 steps. If you want to see how a particular figure in this summary was arrived at, click on the relevant highlighted links to go to the tax calculation working sheet.

Note
TaxCalc will not give you the right answer if you have not entered details of tax owing from previous years, tax refunds, or PAYE adjustments. Go to the Tax already paid screen in the Other information section of TaxCalc to check the amounts you entered.

Tax Calculation Working sheet

TaxCalc bases its calculations on the 'tax calculation working sheets' used by the Inland Revenue. The basic working sheet is sent out with the tax return, but there are alternative versions for people in various circumstances, for example, people who have taxable capital gains or lump sums from life insurance or employment. TaxCalc uses the right one for you and follows the same box reference system, although not necessarily in the same order. In particular subsidiary calculations are shown at the end of the working sheet (with links to them from the earlier totals). Explanations of some of the boxes are given below.

We recommend that you have a copy of the appropriate Inland Revenue working sheet to hand for reference (copies are available from the Inland Revenue Orderline, Tel: 0645 000404, e-mail: saorderline.ir@gtnet.gov.uk). The notes accompanying the working sheets also give useful explanations of how the tax is worked out.

W1 to W21 Income and deductions

W23 and W24 Pension/training payments made net

W25 and W26 Allowances given as a deduction from income

W28 Savings income taxed at the lower (20%) rate

W43 Allowances and reliefs given in terms of tax

W44 Notional tax

W37 Extra tax on savings income

W40 VCTs and EIS subscriptions

W45 Tax credit relief

W49 Class 4 National Insurance contributions

W48 Recoverable tax on charitable covenants, annuities and gift aid payments

W51 Unpaid tax for earlier years included in PAYE code for 1998-99

W53 Tax paid at source

W54 Tax due for 1998-99 included in next year's PAYE code

W60 Payments already made

W64 Tax of under £1,000 to be collected by PAYE

W70 Payments on account

Amount due on 31 March 2000

Savings breakdown

What to do next

Before you send your return off, please check that you have given all the necessary information, in particular:

if you are due a tax repayment, whether you want it paid out to you rather than set against future tax bills (on the Claim tax repayment screen in the Other information section). See Paying your tax

if you want to tell the Revenue the amount of tax you owe, rather than getting the Revenue to calculate it as well and using TaxCalc's figure only as a check (on the Personal details screen)

if you are taxed under are PAYE and you are sending your return in before 30 September 1999, if you want any tax owed (under £1,000) collected through your PAYE code (on the Personal details screen)

if you want to claim to change your payment on account - if so you must also enter the appropriate alternative figure in the Tax already paid screen in the Other information section of TaxCalc.

If you want to find out more about self assessment and how it affects the way in which you pay tax, see 'Dealing with the Inland Revenue'.


Blind person's allowance

Tax Guide

Tax Tips

Date of registration

Name of authority where registered

Transfer of surplus allowance

Additional information

In England and Wales you must be registered as blind on a local authority register to be eligible for this allowance. You are not eligible if you are partially-sighted rather than blind.

In Scotland and Northern Ireland, where there is no local authority register, you qualify if you are unable to perform any work for which eyesight is essential. There are various local schemes with which you can register.

The allowance is £1,330 in 1998-99 and you get relief at your top rate of tax.

Date of registration

If this is the first year you are claiming, enter the date on which you were registered. Note that if you are in the process of registering, but your registration is delayed until after 5 April 1999, you can still claim the allowance if you have evidence of blindness at that date. This will usually be an ophthalmologist's certificate, if this was used as the basis for registration. If this applies to you, enter the date of the certificate, and explain the situation by clicking on the 'Additional information' button in the Transitional allowance screen.

Name of authority where registered

If you live in England or Wales, enter the local authority with which you are registered, and the date on which you registered. If you live in Scotland or Northern Ireland enter either 'Scotland claim' or 'Northern Ireland claim'.

Transfer of surplus allowance

If you are married, you can transfer any unused blind person's allowance to your husband or wife, whether or not he (or she) is blind. TaxCalc will tell you when you go to either the tax return or the tax summary on the 'View' menu of TaxCalc if it would benefit you to transfer unused allowances. If so, click the relevant box depending on whether you are claiming the unused allowance or you are transferring it to your spouse.

If the surplus is being transferred to you, enter the amount to be transferred. You can find this out by asking your spouse to run TaxCalc: he or she should then go to either the tax return or the tax summary on the 'View' menu of TaxCalc. .The relevant message will tell you how much is available to transfer. The same applies if you want to transfer your unused allowances to your spouse: open your own TaxCalc file and go to either the tax return or the tax summary on the 'View' menu of TaxCalc. You do not need to enter in your own file the amount you are transferring to your spouse - just click the 'I want my spouse to have my surplus' button and make sure your spouse has entered the amount in his or her own file.

Additional information

If you want your spouse to have any unused blind person's allowance you should enter your spouse's name, address, tax reference, national insurance number and tax office in the 'Additional information' box on the Transitional allowance screen. Also do this if you are the person claiming the unused allowance.


Business expenses

Tax Guide

Tax Tips

If your turnover is below £15,000

If your turnover is £15,000 or more

Disallowable expenses

Total expenses

Construction industry subcontractor costs

Other direct costs

If your turnover is below £15,000

If your annual turnover is less than £15,000, you have a choice. The Inland Revenue allows you to give only 'three-line' accounts, that is, your turnover, your allowable expenses, and your profits. You can, however, give fuller information in the table in the same way as larger businesses, if you prefer.

If you are entitled to give only three-line accounts, you need only complete the 'Total expenses' box. Include only expenses which are allowable against tax (see Main allowable business expenses). Exclude capital allowances - these should be entered on the Capital allowances screen.

If your turnover is £15,000 or more

If your annual turnover for this business is £15,000 or more you must break down your expenses as requested in the table. See  Main allowable business expenses. Enter the total amount of the expenses you incurred for each category in the right-hand column. If any part of the expense is not allowable against tax enter this in the left-hand column. For more information see the Notes on self employment which accompanied your tax return, in which there is a table which provides specific information on each item, and Inland Revenue Help Sheet IR229 Information from your accounts (both notes and Help Sheet are available on the 'Help' menu of TaxCalc).

Disallowable expenses

Some of the amounts you include as business expenses in your accounts may not be allowable for tax purposes. As you enter the amount of expense which appears in your accounts you must also enter any part of the expense which is 'disallowable'. Sometimes an expense may be totally disallowable, such as the cost of entertaining customers or depreciation of fixed assets (although the latter may be allowable as capital allowances). Sometimes only a portion of an expense may be disallowable, for example if you use your car for business and private use, part of the total expense (the part which relates to your private use) will be disallowable for tax purposes. For these type of expenses you should enter the full amount paid out in the Total expenses column and the part of the expense which you cannot claim against tax in the Disallowable expenses column.

Total expenses

You should enter the total expenses which appear in your accounts in this column, broken down into the categories shown. You can include any  business expenses incurred during the relevant accounting period, according to the date they were invoiced to you (unless the Revenue has agreed that you should be taxed on a cash basis). If any part of the expense does not attract tax relief enter that part under the Disallowable expenses column - but make sure you put the total amount of the expense here.

If you are registered for VAT, remember to enter your expenses either all on a VAT-inclusive or a VAT-exclusive basis, and check that the correct VAT box on the Turnover screen is ticked.

Construction industry subcontractor costs

Enter all payments to subcontractors in the construction industry. If any tax has been deducted on payments made to uncertified subcontractors, show the amount paid before deduction of tax. Any payments you made which related to non-business work should go in the Disallowable expenses column.

Other direct costs

These are expenses deducted to arrive at your gross profit which may not come under one of the other specific headings. For example, direct labour costs, carriage, machine hire, small tools and consumables, discounts allowed to customers, commissions you have paid, etc.

Depreciation of fixed assets would be entered here but note, this is not an allowable expense for tax purposes so you will also have to enter any amount for this kind of depreciation under 'Disallowable expenses'.


CGT - capital losses
Capital gains tax - capital losses

Tax Guide

Tax Tips

Unused losses of earlier years

This year's losses used against earlier year's gains

This year's losses used against 1997-98 income/1998-99 income

Income losses etc

Note
Further information on capital gains tax is given in the Inland Revenue's Notes on capital gains tax which accompany the capital gains tax supplementary pages. These notes are available under the TaxCalc 'Help' menu.

Use this screen as a record of your allowable losses made in this year and in previous years. The information on this screen will be transferred to the capital gains tax supplementary pages and will act as notification to the Revenue of losses you have made, those you wish to offset against income or gains, and those you wish to carry forward.

In order to make sensible choices over what to do with your losses - for example, if you have made trading losses and want to know how much of them to claim against your gains for 1998-99 - you need to know your capital gains tax position for 1998-99 before taking losses into account. If you don't already know this, run TaxCalc, leaving this screen blank, save your file, and go to the capital gains tax supplementary pages on the 'Tax return' drop-down menu under the 'View' menu of TaxCalc. This will show your total chargeable gains or total allowable losses for the year. Once you have decided how best to use any losses, return to this screen.

Enter all amounts as positive figures.

Unused losses of earlier years

Enter here any allowable losses you have made in previous tax years, as yet unused. Divide them into losses made before 6 April 1996 and those made between 6 April 1996 and 5 April 1998. This is because losses made between 6 April 1996 and 5 April 1998 must be used in priority to any other losses you may have from 1995-96 and earlier years.

This year's losses used against earlier year's gains

This only applies to personal representatives who are completing a tax return for someone who has died. Any losses made by the deceased between 6 April 1998 and the date of death can be carried back to be set against gains of the three preceding years. Further information is available in IR Help Sheet IR282 Death, personal representatives and legatees.

The only other situation in which losses can be set against the gains of earlier years is if they relate to mineral leases.

This year's losses used against 1997-98 income/1998-99 income

If you have losses from the disposal of certain unlisted shares, you may be able to claim to set those losses against your income for either the current or the previous year, rather than your gains. See Inland Revenue Help Sheets IR286 Income tax losses for shares you have subscribed for in unlisted trading companies  or IR297 Enterprise Investment Scheme and Capital Gains Tax.

You might prefer to set gains against income if you have a high income tax liability but no capital gains tax liability. Enter in the appropriate box the amount of such losses (if any) made during 1998-99 which you wish to use against income of 1997-98 or 1998-99.

Income losses, etc

Enter here any losses you received from trading; losses you incurred from furnished holiday lettings; expenses you incurred after ceasing in business (if you have not claimed these against income tax), or job-related expenses you incurred after leaving an employment. But only enter these amounts if you want them to be offset against any capital gains made during the 1998-99 tax year. You can only offset them against gains if you have no taxable income against which to set them. TaxCalc will deduct any figure entered here from your total chargeable gains for this year. See Inland Revenue Help Sheet IR227 Losses (available on the 'Help' menu of TaxCalc).


CGT - disposals
Capital gains tax - disposals

Tax Guide

Tax Tips

Asset description

Assets are unquoted shares

Any figures estimated

Assets owned on 31 March 1982

Any reliefs apply

Business assets/Percentage applicable to private use

Date of acquisition/disposal

Disposal proceeds

Chargeable gain/allowable loss

Further information

Note
Further information on capital gains tax is given in the Inland Revenue's Notes on capital gains tax which accompany the capital gains tax supplementary pages. These notes are available under the TaxCalc 'Help' menu.

Asset description

Enter a description of each asset disposed of in the 1998-99 tax year, if it does not count as a tax-free gain. For example, if you have disposed of land or buildings, give the address and a description of the property: if you have disposed of shares, give the name of the company, and the number and type of shares of which you have disposed.

If you have disposed of more than one asset in the tax year, enter details for each separately using the 'Add' button.

Also include assets on which you are treated as making a gain or loss in 1998-99, even if the disposal occurred in earlier years - for example if you deferred a gain to 1998-99, or if you are not domiciled in the UK and have remitted proceeds of assets disposed of outside the UK in earlier years to which the remittance basis applies.

Assets are unquoted shares

Tick this box if:

the assets described were unquoted or unlisted shares (where the price is not quoted on the Stock Exchange Daily Official List) at some point during the time you owned them. or

you obtained the shares on a share exchange or other company reorganisation, and the shares were not quoted on the Stock Exchange during the whole period of your ownership. In some cases, the new shares may simply count as an extension of ownership of the old ones: see Inland Revenue Help Sheet IR285: Share reorganisations, company take-overs and Capital Gains Tax (available on the 'Help' menu of TaxCalc).

If either case applies, you will need to agree a price for the unquoted shares with the Inland Revenue.

Any figures estimated

Tick this box if you have used an estimated figure in calculating the gain or loss. For example, you will need to use estimates if you have disposed of an asset:

acquired from or disposed to a connected person (for example, someone in your family)

that was owned by you at 31 March 1982, and you have opted to use the value of the asset on that date as the basis of your calculation.

Note
Give information as to why you have used estimated figures in the 'Further information' box.

Assets owned on 31 March 1982

There was a major change in the taxation of capital gains in 1982. For assets held on 31 March 1982, the capital gain is normally worked out using the market value on 31 March 1982. Tick this box if the asset you are describing was owned on this date.

Any reliefs being claimed

Tick this box if the asset you have described is affected by any of the capital gains tax reliefs such as roll-over relief or retirement relief (but not if you are only claiming taper relief). Full details of all common reliefs against capital gains tax can be found in the Notes on capital gains tax which should accompany the capital gains tax supplementary page of your tax return (and which are available on the 'Help' menu of TaxCalc). Describe the relief you are claiming under 'Further information' .

Business assets/Percentage applicable to private use

An asset used partly or wholly for business purposes after 5 April 1998 qualifies for taper relief. A business asset is:

an asset (except shares or securities) used in your business, or by your 'qualifying company'

an asset (except share or securities) used by you in work for a trading employer to which you are required 'substantially the whole' of your time

shares or securities held by you in a qualifying company.

A qualifying company is a trading company (or the holding company of a trading group) in which your shares entitle you to exercise at least 25 per cent of the voting rights (or 5 per cent if you are a full-time working director or employee).

Click this box if the asset qualifies as a business asset. If you used it only partly for the business also complete the 'Percentage applicable to private use' box (if you do not enter a percentage TaxCalc will assume that it is used wholly for the business).

Date of acquisition/date of disposal

Note that you should give the actual date of acquisition, even if this was before 6 April 1998, if you want TaxCalc to work out the indexed gain/loss for you. TaxCalc will enter the date required in the tax return.

The date of disposal (or acquisition) is usually the date of the contract. If the contract is not completed until a number of conditions have been met, the date of disposal/acquisition is the date on which the last of the conditions is met. There are special rules for transfers in some cases, so check with your advisers or tax office in complex cases.

Disposal proceeds

Enter the sale price when you sold the asset, or its market value if you gave it away. If you sell an asset for less than it is worth, the final value is usually the market value.

If you are not domiciled in the UK, and you disposed of assets outside the UK to which the remittance basis applies, enter only the amount you actually remitted to the UK in 1998-99 (whenever the disposal occurred).

Chargeable gain/allowable loss

This box is for the gain or loss after indexation allowance and other reliefs but before taper relief (TaxCalc will work out your taper relief for you automatically). TaxCalc can also work out the indexed gain/loss for you on straightforward disposals. If you want TaxCalc to do the calculation, leave this box empty and click on the button to the right of the box. If you already know the indexed gain or loss, enter the amount here (show an allowable loss as a minus figure). For more information on how to do the sums see the Tax Guide or the Inland Revenue Notes accompanying the Capital Gains Tax supplementary pages (available on the Help menu of TaxCalc).

However, TaxCalc cannot work out the complex calculations needed if you have disposed of shares or unit trusts in the same company which you have acquired at different times (if, for example, your holding was increased by scrip dividends). In this case, the shares are usually 'pooled'. For further information see Inland Revenue Help Sheet IR284, Shares and Capital Gains Tax (available on the 'Help' menu of TaxCalc) or check with your financial adviser. You will also need to do your own calculations if you are claiming other reliefs such as roll-over relief.

Further information

Any information you type in here will appear in column O on page 3 of the Inland Revenue's capital gains tax pages. You may need to enter information here if:

you want to explain why estimates or valuations have been used

are claiming reliefs (e.g. roll-over relief, but not taper relief)

any taxable value has been transferred (ie to your spouse)

you have made a part disposal

you have exchanged shares or securities in a company reconstruction or takeover

the remittance basis applies.


CGT - other_gains
Capital gains - other gains

Tax Guide

Tax Tips

If you have disposed of your only/main residence

Additional liability in respect of offshore trusts

Attributed gains

Additional information

Note
Further information on capital gains tax is given in the Inland Revenue's Notes on capital gains tax which accompany the capital gains tax supplementary pages. These notes are available under the TaxCalc 'Help' menu.

If you have disposed of your only/main residence

Gains made when you part with your only or main residence are usually tax-free. However, there may be some tax to pay if your garden and grounds exceed half a hectare, you have not used the property as your main residence for the whole time you owned it, you let part or all of it out, or if you use part exclusively for business. If you parted with your main home in 1998-99 and it counts as a tax-free gain, click here: if part or all of the gain is taxable, give details in this screen and the Disposals screen. Also see Inland Revenue Help Sheet IR283 Private Residence Relief (available on the 'Help' menu of TaxCalc).

Additional liability in respect of offshore trusts

You may have to pay tax because you have received, or you are treated as having received, capital or a benefit from any non-resident or dual resident settlement. If so ask for Inland Revenue Help Sheet IR301 Capital gains on benefits from non-resident and dual resident trusts. This will tell you how to work out the amount of tax which you will have to enter here.

Note
If this applies to you, you must enter the name and the tax reference, if you know it, of the Trust in 'Additional information'. If you are unsure as to whether this applies to you, ask your tax office for guidance.

Attributed gains

In some circumstances, you may have to pay capital gains tax on gains made by a trust in which you have an interest. These 'attributed gains' include those made by:

a trust not resident in the UK, the gains of which are attributed to you because you have received capital payments or benefits (see Inland Revenue Help Sheet IR301 Calculation of the increase in tax charge on capital gains from non-resident, dual resident and immigrating trusts)

a trust not resident in the UK and of which you are a settlor (see Inland Revenue Help Sheet IR299 Non-resident trusts and capital gains tax)

a UK-resident trust from which you can or do benefit and of which you or your spouse are the settlor.

Enter any such gains which are 'attributed' to you (you may need help from your tax office or tax adviser) and the name of the source.

Additional information

Use this button to enter any additional information concerning your capital gains liability for 1998-99, for example details of any offshore trust from which an additional capital gains tax liability arises.


Capital allowances

Tax Guide

Tax Tips

Capital allowances

Balancing charges

If your turnover is less than £15,000

Note
Working out the detailed rules for capital allowances can be tricky: If you have not got an accountant you should consult a good tax book. If you want TaxCalc to get as close as possible to your tax liability, you will need to enter your best estimate here. See also Inland Revenue Help Sheet IR222, How to calculate your taxable profits (available on the TaxCalc Help menu).

Capital allowances

When you buy 'capital assets' such as computers or cars you cannot claim their cost as a business expense nor, under tax rules, can you claim depreciation. Instead, for tax purposes, you claim ‘capital allowances’. Capital allowances are worked out by adding the cost of each capital asset to a 'pool of expenditure'. You can then deduct 25 per cent of the value of the pool at the end of each year from your profits as a 'writing-down allowance'.Enter your total allowances here, within the following categories:

plant and machinery, such as tools, computers and other business equipment (but not goods for sale or resale - these are claimed as business expenses). Note that for small and medium-sized businesses buying plant and machinery higher-than-normal allowances apply for the first year: 50 per cent for purchases in the 12 months to 1 July 1998, 40 per cent for purchases since that date

motor cars - note that separate records must be kept for cars which cost £12,000 or more and there's a £3,000 maximum yearly allowance per car

agricultural buildings, industrial buildings and certain other buildings

patents, scientific research, mineral extraction, dredging and various types of 'know-how'.

You cannot claim for anything you have bought solely for private use, or the cost of land. You cannot claim capital allowances on things you lease (instead you can claim the leasing costs as a business expense) but you can claim allowances for things you buy on hire purchase.

Balancing charges

If you sell a capital asset, the sale proceeds (or original cost, if less) are deducted from the pool before the writing-down allowance is worked out. If the proceeds of all the items you sell come to more than the value of the pool, the excess (called a balancing charge) is added to your profits for the year, and taxed.

If a balancing charge occurred on any of your 'pools', enter the amount in the relevant box. This will be added to your net profit.

If your turnover is less than £15,000

If your annual turnover is less than £15,000, the Inland Revenue does not require a full breakdown of your income and expenditure. However, the Revenue still requires separate information about your capital allowances and balancing charges, so you must enter them on this screen - do not include them with the figures you enter for your Turnover and Expenses in the Income and expenses screens.


Capital gains and lump sums calculation

Introduction

Tax summary

Tax calculation working sheet

Lower-rate income tax calculation

Basic-rate income tax calculation

Basic-rate capital gains tax calculation

Higher-rate capital gains tax calculation

What to do next

Disagreements about the tax due

Introduction

Working out your tax is particularly complex if, in 1998-99, you received:

a taxable lump sum on leaving a job, or

a refund of surplus contributions to an AVC scheme, or

a taxable gain on a life insurance policy which has a basic-rate notional tax credit (virtually all do). You will often see these referred to as 'chargeable event gains' in tax-speak (as opposed to 'chargeable gains' which the Revenue uses to mean taxable capital gains).

These one-off lump sums can push the rest of your income into a higher tax band. A further complication is that you pay tax on insurance gains at a minimum of 23 per cent, even if you are a non-taxpayer or lower-rate taxpayer.

Capital gains are normally taxed as the top slice of your income, but special rules prevent you being disadvantaged in certain cases. So, if you also have capital gains, it becomes even more difficult to decide how best to set off your various types of income and gain against your allowances and tax bands.

Tax Summary

This gives a brief summary of your tax in 12 steps. If you want to see how a particular figure in this summary was arrived at, click on the relevant highlighted links to go to the tax calculation working sheet.

Note
TaxCalc will not give you the right answer if you have not entered details of tax owing from previous years, tax refunds, or PAYE adjustments. Go to the Tax already paid screen in the Other information section of TaxCalc to check the amounts you entered.

Tax Calculation Working sheet

TaxCalc bases its calculations on the 'tax calculation working sheets' used by the Inland Revenue. The basic working sheet is sent out with the tax return, but there are alternative versions for people in various circumstances e.g. people who have taxable capital gains or lump sums from life insurance or employment. TaxCalc uses the right one for you and follows the same box reference system, although not necessarily in the same order. In particular subsidiary calculations are shown at the end of the working sheet (with links to them from the earlier totals). Explanations of some of the boxes are given below.

We recommend that you have a copy of the appropriate Inland Revenue working sheet to hand for reference (copies are available from the Inland Revenue Orderline, Tel: 0645 000404, e-mail: saorderline.ir@gtnet.gov.uk). The notes accompanying the working sheets also give useful explanations of how the tax is worked out.

Lower-rate income tax calculation

Some types of income have non-repayable (notional) tax deducted at 20 per cent, others (notably life insurance gains) at 23 per cent, and other savings income has repayable tax deducted at 20 per cent. In order to make best use of your lower-rate tax band, an order of priority for the various types of income and gains has to be worked out in this section. For this reason, your income tax and capital gains tax are calculated as part of the same process.

Basic-rate income tax calculation

This section calculates the amount of income you have above the lower-rate limit (£4,300). It excludes savings income (on which no basic-rate tax is due) and taxable life insurance gains are taxed separately. If part of your income falls within the lower-rate band, and part in the basic-rate band, it makes a further calculation at F46 to work out the order in which the various types of income should be pushed into the basic-rate band. See the notes to the Inland Revenue tax calculation guide for more information.

Basic-rate capital gains tax calculation

This section calculates the amount of capital gains you have above the lower-rate limit (£4,300). If all your gains fall above this limit (because your lower-rate band has already been used by income), then the tax due is shown in box F49B; if part of your gains fall below the £4,300 limit, then these are deducted from the amount taxable at the basic rate, and the tax is shown at box F49F. In either case, the tax is carried over to box F49G.

Higher-rate capital gains tax calculation

F53B shows your taxable gains minus your unused lower-rate band (F49D) and minus your unused basic-rate band (F53A). The result is the amount of your gains liable to higher-rate tax. However, the calculation is complicated considerably if you have taxable life insurance gains ('chargeable event gains'). This is because these use up your basic-rate band in priority to any taxable capital gains ('chargeable gains'). In this case, TaxCalc will follow the Inland Revenue calculations and make an adjustment in the preliminary calculation for F53A and F53D.

Boxes F53C and box F53D are 'either/or' calculations. Box F53D applies if you have taxable life insurance gains subject to notional tax (box F27): box F53C applies if you do not.

F1 to F21 Income and deductions

F23 and F24 Pension/training payments made net

F25 and F26 Allowances given as a deduction from income

F59 Extra tax on savings income

F61 Top-slicing relief

F63 VCTs and EIS subscriptions

F65 Allowances and reliefs given in terms of tax

F66 Notional tax

F67 Tax credit relief

F70 Recoverable tax on charitable covenants, annuities and gift aid payments

F71 Class 4 National Insurance contributions

F73 Unpaid tax for earlier years included in PAYE code for 1998-99

F75 Tax paid at source

F76 Tax due for 1998-99 included in next year's PAYE code

F82 Payments already made

F86A Tax of under £1,000 to be collected by PAYE

F92 Payments on account

Amount due on 31 March 2000

Savings breakdown

What to do next

Before you send your return off, please check that you have given all the necessary information, in particular:

if you are due a tax repayment, whether you want it paid out to you rather than set against future tax bills (on the Claim tax repayment screen in the Other information section). See Paying your tax

if you want to tell the Revenue the amount of tax you owe, rather than getting the Revenue to calculate it as well and using TaxCalc's figure only as a check (on the Personal details screen)

if you are taxed under are PAYE and you are sending your return in before 30 September 1999, if you want any tax owed (under £1,000) collected through your PAYE code (on the Personal details screen)

if you want to claim to change your payment on account - if so you must also enter the appropriate alternative figure in the Tax already paid screen in the Other information section of TaxCalc.

If you want to find out more about self assessment and how it affects the way in which you pay tax, see 'Dealing with the Inland Revenue'.


Capital gains calculation

Introduction

Tax Summary

Tax Calculation Working Sheet

Basic-rate tax calculation

What to do next

Disagreements about the tax due

Introduction

If you made taxable capital gains in 1998-99, these are taxed as if they were your top slice of income. This is usually straightforward, but can work against you if you have lots of savings income, but little other income. In this case, the general rule would mean that your savings income (which, unless you are a higher-rate taxpayer, is only taxed at 20 per cent anyway) could push your capital gains into a higher-rate tax band than necessary. So, there are special rules that mean that if your non-savings income is less than the £4,300 lower-rate limit, your lower-rate band is set against your capital gains before it is used up against your savings income.

To make the calculations easier, the Inland Revenue (and TaxCalc) work out your capital gains tax side by side with your income tax.

Tax Summary

This gives a brief summary of your tax in 12 steps. If you want to see how a particular figure in this summary was arrived at, click on the relevant highlighted links to go to the tax calculation working sheet.

Note
TaxCalc will not give you the right answer if you have not entered details of tax owing from previous years, tax refunds, or PAYE adjustments. Go to the Tax already paid screen in the Other information section of TaxCalc to check the amounts you entered.

Tax Calculation Working sheet

TaxCalc bases its calculations on the 'tax calculation working sheets' used by the Inland Revenue. The basic working sheet is sent out with the tax return, but there are alternative versions for people in various circumstances e.g. people who have taxable capital gains or lump sums from life insurance or employment. TaxCalc uses the right one for you and follows the same box reference system, although not necessarily in the same order. In particular subsidiary calculations are shown at the end of the working sheet (with links to them from the earlier totals). Explanations of some of the boxes are given below.

We recommend that you have a copy of the appropriate Inland Revenue working sheet to hand for reference (copies are available from the Inland Revenue Orderline, Tel: 0645 000404, e-mail: saorderline.ir@gtnet.gov.uk). The notes accompanying the working sheets also give useful explanations of how the tax is worked out.

Basic-rate tax calculation

The capital gains tax calculation here is particularly confusing because G36 and G40 are alternative figures for basic-rate capital gains tax. G36 applies if all your lower-rate band has been used up against income. If some of your gains fall within the lower-rate band G40 applies: G38 is an adjustment to your basic-rate band for CGT purposes. Because you have used this portion of the band against your capital gains it cannot be used against your income and this is why it is deducted from the £27,100 basic-rate limit at box G43. .

G1 to G21 Income and deductions

G23 and G24 Pension/training payments made net

G25 and G26 Allowances given as a deduction from income

G31 Savings income taxed at the lower (20%) rate

G48 Extra tax on savings income

G58 VCTs and EIS subscriptions

G60 Allowances and reliefs given in terms of tax

G61 Notional tax

G62 Tax credit relief

G65 Recoverable tax on charitable covenants, annuities and gift aid payments

G66 Class 4 National Insurance contributions

G68 Unpaid tax for earlier years included in PAYE code for 1998-99

G70 Tax paid at source

G71 Tax due for 1998-99 included in next year's PAYE code

G78 Payments already made

G82B Tax of under £1,000 to be collected by PAYE

G90 Payments on account

Amount due on 31 March 2000

Savings breakdown

What to do next

Before you send your return off, please check that you have given all the necessary information, in particular:

if you are due a tax repayment, whether you want it paid out to you rather than set against future tax bills (on the Claim tax repayment screen in the Other information section). See Paying your tax

if you want to tell the Revenue the amount of tax you owe, rather than getting the Revenue to calculate it as well and using TaxCalc's figure only as a check (on the Personal details screen)

if you are taxed under are PAYE and you are sending your return in before 30 September 1999, if you want any tax owed (under £1,000) collected through your PAYE code (on the Personal details screen)

if you want to claim to change your payment on account - if so you must also enter the appropriate alternative figure in the Tax already paid screen in the Other information section of TaxCalc.

If you want to find out more about self assessment and how it affects the way in which you pay tax, see 'Dealing with the Inland Revenue'.


Capital gains tax contents

Tax Guide

Disposals

Other gains

Capital losses


Charitable gifts

Tax Guide

Tax Tips

Covenants

Gift Aid and Millenium Gift Aid

For further information about giving to charity, see Inland Revenue leaflet IR65 Giving to charity (available on the 'Help' menu of TaxCalc).

Covenants

You can claim tax relief for payments you make to:

charitable covenants. You get basic-rate tax relief by handing over an amount from which basic-rate tax has already been deducted. The charity reclaims this tax. If you are a higher-rate taxpayer, you can claim additional relief through your tax office. The deed of covenant must be capable of lasting for more than three years and the precise wording of the deed is important - charities can provide suitable forms.

annuities and covenants, entered into for full value, for genuine commercial reasons in connection with your trade or profession. Check with your tax office if you are unsure whether payments you make of this kind are eligible. If you are a partner in a partnership, any eligible payments will be shown as 'Partnership charges' in your partnership statement.

Enter the total amount of such payments you actually paid. If you want to use TaxCalc to record and add up all your payments of this type for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen. Do not include the tax treated as deducted - enter only the amount you actually paid. TaxCalc will ‘gross up’ the payment during the tax calculation. TaxCalc will also take account of any additional higher-rate tax relief due.

Gift Aid and Millenium Gift Aid

Gift Aid is a tax relief for single cash gifts to charity of £250 or more: Millennium Gift Aid is a similar scheme but for minimum gifts of £100 to a charities working in particular poor countries. Like covenants, gifts under these schemes are treated as having had basic-rate tax deducted before you pay it. Tax relief is given in a similar way as for covenants to charity, but you cannot claim the reliefs if you are not resident in the UK. See Inland Revenue leaflets IR113 Gift Aid: A guide for donors and charities and IR163 Millennium Gift Aid: A guide for donors.

Enter the total payments you made for 1998-99. If you want to use TaxCalc to record and add up all your individual share dividends of this type for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen. Do not include the tax treated as deducted - enter only the amount you actually paid. TaxCalc will ‘gross up’ the payment during the tax calculation. TaxCalc will also take account of any additional higher-rate tax due.

Note that if you are a trader who makes gifts in kind under the Millennium Gift Aid scheme you can also claim tax relief, but you should not enter them here. Instead, list the articles given and the name of the charity under 'Additional Information' on the Business Details screen in the Self-employment section of TaxCalc (or the Partnership income screen in the Partnership Income section).

Warning
If you are a non-taxpayer, you may not have enough income to set against the charitable payments but you will have deducted tax relief before handing over the payments. The tax relief is 'clawed back' in the tax calculation, and added to your tax bill - TaxCalc takes this into account.


Claim tax repayment

Tax Guide

Tax Tips

If you find you have overpaid tax for 1998-99 you have a choice. You can either have any overpayment offset against tax due in future years, or you can have a repayment now.

This screen does two things. It notifies the Revenue that you want your overpayment refunded to you (rather than offset against tax) and it advises the Revenue where the refund should be sent. You can ask for it to be sent to you at your normal address, or direct to your bank or building society or to your accountant or tax adviser: fill in the appropriate boxes.

If you have not been sent a tax return or discover that you owe tax after you have sent in your return you can still apply for a tax rebate, using Form R40. Form R40 is available from any tax office, or you can print out a copy from TaxCalc (go to the 'View' menu).


Class 4 National Insurance contributions

Tax Guide

Tax Tips

Exemptions to Class 4 contributions

Deferred contributions

Adjustments to profit chargeable for Class 4 contributions

Self employed people and people in partnership must pay Class 4 National Insurance contributions on profits from any trade or profession unless they are exempted. TaxCalc will calculate the amount of Class 4 contributions you should be paying. Note, though, that if you are asking the Revenue to calculate the tax, the amount of Class 4 NICs will, as the Revenue instructs, not be shown on the supplementary sheet for the individual business or partnership: you can see TaxCalc's calculation of the amount by referring to the Tax Summary.

Exemptions to Class 4 Contributions

Click here if you were:

aged under 16 at 6 April 1998 and the Contributions Agency has granted you an exemption, or

not resident in the UK for tax purposes during 1998-99, or

exempt for any other reason (e.g. some trustees, divers and diving supervisors -check with your tax office).

You are also exempt from paying Class 4 contributions for 1998-99 if you are over the state pension age, that is a man aged over 65 or a woman aged over 60 at 6 April 1998, but TaxCalc will automatically claim this exemption for you.

Note
You should give details in additional information as to why you are exempt from Class 4 contributions. Use the 'Additional information' button on the business or partnership Details screen.

Deferred contributions

Sometimes, where both Class 2 and Class 4 contributions could be due, Class 4 contributions may not be payable. In these circumstances the Contributions Agency may agree that your Class 4 contributions can be 'deferred' until such time as your overall contributions can be agreed. Only the Contributions Agency can agree to deferment and the Contributions Agency leaflet CA72 gives further details.

If your contributions for this business have been deferred tick the relevant box.

Note
You should give details under additional information as to why your contributions have been deferred. Use the 'Additional information' button on the business or partnership Details screen.

Adjustments to profit chargeable for Class 4 contributions

You may be able to deduct an amount here to account for any interest or trading losses of this business or partnership which you have not yet already entered as a deduction from your profits. If so you should enter the figure here. TaxCalc will reduce your profit by this amount when working out how much Class 4 NICs you are due to pay. TaxCalc will also automatically enter an adjustment here if you have another business, on which you have made a loss. See the Inland Revenue notes which accompanied the self-employment or partnership supplementary pages for more information on this adjustment, or speak to your tax office who will be able to tell you whether this adjustment applies to you.


Company cars minicalc
Company cars

Tax Guide

Tax Tips

Registration number

Price of car

Amount paid toward private use

Business mileage

Number of days unavailable

Fuel details

Cylinder capacity

Secondary car

Car over four years old

Changed cars

Other motoring costs

The tax return asks only for the taxable value of your company car, but you can use this calculator to check the figure you have been given by your employer. TaxCalc will enter the taxable value calculated here in the box on the main screen. Note that the March 1999 Budget introduced changes to the taxation of company cars - see Budget summary.

Registration number

Enter the registration number of the car here. This is purely for TaxCalc's use, so that each car can be identified - it is not needed for the tax return.

Price of car

The price is normally the list price at the time the car was first registered, (or £80,000 if lower) including:

VAT (but not the annual road tax)

delivery charges

the list price of any accessory fitted before you got the car (including VAT and delivery)

the cost of any accessories over £100 fitted after you got the car (if fitted after 31 July 1993).

Where there is no list price, you will have to agree with the Revenue what the list price would have been, had there been one. However, the open market value at the end of the tax year (or the last day of the tax year in which the car was available to you if earlier) is used for 'classic cars' - those aged 15 years or more at the end of the year and with an open market value of £15,000 or more (providing this is above the list price at registration).

Any capital contributions you make towards the cost of the car and/or accessories, up to a limit of £5,000, will also reduce the 'price' of the car for tax purposes, pound for pound. Note that these are contributions when the car is first bought - not any amount you pay each year for private use.

Amount paid toward private use

If you are required to pay your employer for private use of your car, and do so, enter the amount: your car's taxable value is reduced by the amount you pay.

Business mileage

Click on the appropriate box. Your car's taxable value is reduced by a third if you travel between 2,500 and 18,000 business miles in a tax year, and by two-thirds if you travel 18,000 miles or more. However, for a 'secondary' car, you get no reduction for business mileage between 2,500 and 18,000 business miles, and only a one-third reduction for 18,000 miles or more. This reduction does not apply to the taxable value of your car fuel benefit.

Number of days unavailable

Only complete this box if the company car you normally use was unavailable for use for a continuous period of at least 30 days, during the time you had it, but you had use of the car again before the end of the tax year. For example, if it was off the road for repairs or was loaned to another employee for temporary use.

If your car was available for only part of the tax year, the mileage limits are reduced in line with the time available. TaxCalc will work this out for you automatically.

Note
Travel from your home to your permanent workplace counts as private use.

Fuel details

This is only relevant if you get fuel for private use, if you do, click the appropriate fuel type and engine size for your car. The free fuel counts as a taxable benefit (you are not taxed on fuel you use solely for business purposes). The taxable value depends on your car's engine size and whether it is petrol or diesel. Unlike the taxable value of the car itself, you cannot get a reduction for money you pay to your employer for private fuel, unless you reimburse your employer for all the private fuel you use.

Cylinder capacity

This is only relevant if your employer provides you with fuel for private use, in which case the larger the engine size, the higher the taxable value.

Secondary car

A second company car provided for you or a member of your family is taxed like the first car, except that there is no reduction for business mileage between 2,500 and 18,000 miles, and if business use is 18,000 miles or over you get only a one-third reduction. TaxCalc will take this into account in the calculations. The car you use least for business counts as a 'second’ car. This rule only applies if you had two company cars at the same time from the same employer.

Car over four years old

If your car was four years old or more at the end of the tax year, ie on 5 April 1999, click the box: its taxable value is reduced by one-third.

Changed cars

If you had two company cars from the same employer during the tax year, but not at the same time, enter each as a separate benefit - but do not complete the box titled 'Number of days unavailable'. The taxable value of your car is reduced proportionately in line with the amount of time you had each car - but TaxCalc will work this out for you automatically provided you give the correct information requested (dates and mileage for each car).

For instance, if you changed cars on 31 August 1998, you would fill in the details requested for Car 1 and put 31/08/1998 into the box entitled 'date last available'. Do not complete the box entitled 'date first available' if you had this car before 6 April 1998.

Then press the 'Add new car' button and fill in details for your replacement car (Car 2). Do this in the same manner as for Car 1, except this time complete the box 'date car first available' (in our example this would be 01/09/1998). Do not complete the box 'date car unavailable' if you still had the car on 5 April 1999.

Repeat this exercise if you changed cars more than once during the year. If you changed cars because you moved to a new employer, remember to select the right employer for each (on the Employment details screen) before entering the cars' details.

Merely changing company cars during the year does not mean that you have to complete the box 'Number of days unavailable'. See help entitled 'Number of days unavailable' for when to complete that particular box.

Other motoring costs

If your employer pays for business fuel, repairs, insurance and so on for your company car, it does not increase the taxable benefit. If you pay for them, and are not reimbursed by your employer, you should enter the business expenses under Expenses.


Help contents

The following topics will give you all the information you need to fill in the TaxCalc screens. For further background information, plus an introduction to the Inland Revenue, see the TaxCalc Tax Guide. If you want to search for a particular topic use the 'Find Text' button in the button bar above. You can also access Inland Revenue leaflets, Help Sheets and notes from the Help button bar.

Personal Details

Personal details

Tax return details

Non-residence

Non-residence

Not ordinarily resident

Non-domiciled

Dual residence

Income

Income from employment

Employer details

Benefits and expenses

Company cars

Other fringe benefits

Expenses

Lump sums

Work abroad

Share schemes

Approved savings-related

Approved discretionary

Unapproved share options

Shares acquired

Income from self-employment

Business details

Income and expenses

Annual turnover

Business expenses

Allowances and adjustments

Capital allowances

Adjustment to arrive at profit/loss

Losses

Class 4 National Insurance contributions

Other income and deductions

Balance sheet

Partnership income

Details

Profits

Losses/deductions

Class 4 NICs

Income from savings and investments

National Savings accounts

Shares and unit trusts

Life insurance

Interest and other investments

Foreign income

Savings and investments

Property

Other income from abroad

Entered elsewhere

Income from benefits & pensions

Benefits

Pensions

Income from property

Furnished holiday lets

Other property income

Other income

Trusts & estates

Maintenance

All other income

Reliefs

Loans & mortgages

Pension contributions

Personal pension

Other pension contributions

Maintenance

Charitable gifts

Other reliefs

Allowances

Married couple's allowance

Transitional allowance

Blind person's allowance

Additional personal allowance

Capital gains tax

Disposals

Capital losses

Other gains

Other information

Tax already paid

Claim tax repayment

Additional information

Partnership Return

Please note that the Parnership Tax Return is only available in TaxCalc Plus

Details

Trade/profession details

Income and expenses

Turnover

Expenses

Allowances & deductions

Balance sheet

Statements

Tax Forms

Tax Return & supplementary pages

Basic calculation

Capital gains tax calculation

Lump sums calculation

Capital gains and lump sums calculation

Savings and investments breakdown

The following background sections cover all the other material we feel you may need.

Check list

Inland Revenue Leaflets

Inland Revenue Help Sheets

Inland Revenue Notes

How to use TaxCalc

Where to find Help in TaxCalc

© Which? Ltd & IDP Ltd 1999


Employment - Other fringe benefits
Employment - fringe benefits

Tax Guide

Tax Tips

Assets transferred to you/payments made for you

Vouchers/credit cards

Living accommodation

Interest free and low interest loans

Mobile telephones

Mileage allowance

Vans

Company cars

Company car fuel benefit

Private medical or dental insurance

Other fringe benefits

Enter here the taxable value of any fringe benefits and expenses your employer paid you. Employers are obliged to tell the Revenue about the benefits they pay you on a form P11D or P9D (which form depends on how much you earn), and they must give you a copy of this form by 6 July 1999. after the end of the tax year.

You only need to enter taxable fringe benefits: some fringe benefits are tax-free altogether, and others may be covered by a dispensation or a PAYE Settlement Agreement. You do not have to pay tax on benefits and expenses covered by dispensations or agreements and they do not have to be entered on your tax return.

Benefits provided for members of your family or household are also regarded as your benefits.

For full information on the taxation of fringe benefits see Inland Revenue booklet 480, Expenses and Benefits. A tax guide. Also, leaflet IR125, Using your own car for work (available in the 'Help' menu of TaxCalc). See also the Inland Revenue Help Sheet IR207, Non-taxable payments or benefits for employees.

The taxable value of some benefits depend on whether you earn 'at a rate of' £8,500 or more a year, or are a director. If the benefit is unavailable for part of the tax year, your tax is reduced accordingly. So if, for example, you have a mobile phone (which has a taxable value of £200 if you earn over £8,500) for 300 days of the year, the taxable value will be £200 x 300/365 = £164. Your employer should tell you the taxable value on form P11D, but this is how the more common benefits are taxed:

Assets transferred to you or payments made on your behalf

If your employer gives you something that can be converted into money this counts as a taxable benefit. Examples are a television set, furniture or clothing. If you count as earning at a rate of less than £8,500 a year, enter the amount for which it can be sold. If you earn more, enter either the second-hand value, or if more, the cost to your employer (minus anything you paid for it). There should be an amount included on your P11D to cover such items. See Inland Revenue Help Sheet IR213 Payments in kind - assets transferred.

Also, if your employer makes any payments on your behalf which you are due to make, for example, your personal telephone bill, or your rent direct to your landlord, or has not charged you any tax you are liable to pay, you must include the amount of payment here.

Vouchers/credit cards

This benefit is taxable whatever your level of earnings. Vouchers are items, including tickets, stamps, passes and other documents which you are able to exchange for money, goods or services or use for travel, including for example,

gift vouchers

vouchers or stamps for money

season tickets

tokens used to get goods from machines.

You pay tax on the value of any vouchers you receive.

For cash vouchers you pay tax on the money you got or could have got if you exchanged the voucher. For any other voucher you pay tax on the expense incurred by the person who provided it. For example, your employer might provide you with vouchers to pay for an hotel and meals for you and your partners. Your employer will advise you of the actual cost of the hotel and meals and it is this cost you should list as your benefit in kind.

Credit cards and tokens include:

cards issued by credit card companies

charge cards

retailers' account cards

any other card, token, document or item you can use to get money, goods or services, either on credit or by someone else settling the account.

You pay tax on the value of any money, goods or services you get by using a credit card or token provided by your employer. You do not pay tax on any annual subscription for the card itself or any interest charged by the credit card company, which your employer pays.

Any payments you make to your employer for the voucher or use of the card reduce, pound for pound, the amount you pay tax on. Your employer will advise you of the amount you should declare as your taxable benefit.

Some of the payments you have made by credit card or voucher may be entitled to tax relief if

they were incurred in performing the duties of your job and you are claiming them as 'business expenses'

they were professional fees or subscriptions.

Make sure you enter any amounts like this on the Expenses screen, so tax relief can be given.

You pay tax on the value of vouchers and credit cards. But there are some exceptions such as the first 15p of luncheon vouchers, or vouchers to pay for a car parking space at or near your place of work. For a full list and more information see Inland Revenue Help Sheet IR201, Vouchers, credit cards and tokens.

Living accommodation

Living accommodation is any accommodation in which you can live, whether you live there all the time or only occasionally. The benefit is taxable whatever your level of earnings.

The taxable value is, broadly, the greater of the gross rateable value of the home, or the rent paid by your employer less any rent that you pay. If there is no rateable value, your employer will estimate a value and agree it with the Revenue. If your accommodation costs more than £75,000, there will be an extra charge. However, unless you are a director (when special rules apply) the accommodation is tax-free if one of the following applies.

You have to live in the home to do your job properly (eg you are the caretaker in a block of flats).

You are in the kind of employment where it is customary for living accommodation to be provided and it enables you to do your job better (for example, you are a publican).

There is a special threat to your security and you live in the home as part of special security arrangements.

A list of the main occupations that are exempt are given in Inland Revenue Help Sheet IR202, Living Accommodation. The Help Sheet also contains a working sheet to help you calculate the taxable value of any living accommodation provided for you. However, your employer should indicate the taxable value on your P11D.

Interest free and low interest loans

This benefit is taxable only if you count as earning above the £8,500 limit. If so, you should enter here the cash equivalent of any interest free or low interest loans. This is the difference between the interest you pay and the amount that you would pay based on the 'official' rate of interest. However, if the loan qualifies for tax relief, for example, a home loan, the tax relief is worked out as if you paid interest at the official rate: claim any extra tax relief on the Loans and mortgages screen in the Reliefs section of TaxCalc. As the 'official' rate is liable to change during the tax year, most employers work out the benefit using an average official rate over twelve months. See Inland Revenue leaflet IR145 Low-interest loans provided by employers (available on the 'Help' menu of TaxCalc).

Mobile phones

This benefit is taxable in 1998-99 only if you count as earning above the £8,500 limit. If so, mobile phones have a taxable value of £200 each unless you use them only for business, or you are required by your employer to (and in practice, do) refund your employer for the cost of private use. See Inland Revenue Help Sheet IR209 Mobile Telephones. (Note that mobile phones become a tax-free fringe benefit from 6 April 1999).

Mileage allowance

This benefit is taxable whatever your level of earnings. If you use your own car for work and your employer pays you an allowance, the amount you receive might be more than the amount of tax relief you can claim for your business use of the car. The extra is taxable profit and should be entered here. Travel between your home and your place of work is not classed as business mileage for tax purposes.

However, if the amount of the tax relief you are due for your business use is more than the allowance you receive, you can claim the difference against other income by entering the amount under 'Travel and subsistence costs' in the Expenses screen.

The Fixed Profit Car Scheme (FPCS) is the most common way of calculating the taxable profit of a mileage allowance by deducting fixed relief rates (pence per mile) from the allowances you receive. See leaflet IR125 Using your own car for work for more information (the full text of this leaflet is available under Leaflets in TaxCalc's Help menu)

If your employer has agreed with the Inland Revenue to use the FPCS you will be told what the profit in your mileage allowance was under the FPCS. Enter this amount here. You do not have to use the FPCS amounts if you would benefit from claiming the actual cost of your business mileage, providing you have records to back up your claim.

Alternatively, you can still use the FPCS rates even if your employer is not actually within the scheme. Your employer will confirm the gross mileage allowance paid to you during the tax year, and the number of business miles travelled. You can then use the following table to calculate the tax relief for those business miles.

FIXED PROFIT CAR SCHEME - 1998-99

Car engine size (cc)	Up to 4,000 business miles (pence per mile)	Over 4,000 business miles (pence per mile)
up to 1000	28p	17p
1001 to 1500	35p	20p
1501 to 2000	45p	25p
over 2000	63p	36p

Examples of Fixed Profit Car Scheme calculations

Vans

This benefit is taxable only if you count as earning above the £8,500 limit. A van is defined as a motor vehicle primarily suited for carrying goods or other objects and designed (or adapted) not to exceed a laden weight of 3,500kg in normal use. If you get private use of a company van, you will pay tax on a flat amount of:

£500 if it was first registered on or after 6 April 1995, or

£350 otherwise

If the van was first provided exclusively to you part-way through the tax year, or you started to share the use of the van before the end of the tax year, the standard charge is reduced proportionately. You can deduct any amount you are required to pay for private use of the van. Your employer should provide the taxable figure on your P11D. Also, ask for Inland Revenue leaflet IR136, Income Tax and company vans, for more information.

Company cars

Company cars are taxable only if you earn at a rate of at least £8,500. The taxable value of a company car depends on its list price when first registered, age, value and so on. Your employer should give you a form P11D showing the taxable value of your car: alternatively, TaxCalc can work out the taxable value for you. If you want TaxCalc to work out the taxable value, leave the box on this screen blank but click the button to the right of the tick box. For more information see Company cars or the Inland Revenue leaflet IR133 Income tax and company cars from 6 April 1994. A guide for employees. The full text of this leaflet is available under Leaflets in the Help menu of TaxCalc.

There is no tax to pay if you use a pool car. To qualify, the car must be made available to, and actually used by, more than one employee, and it should not normally be kept overnight at or near an employee's home. Any private use of the car must be merely incidental to business use, for example, travel between your home and your office as part of a business trip.

If you use your own car for business purposes, and your employer reimburses you for your expenses, enter the amount you receive under Mileage allowance, not here.

Company car fuel benefit

This benefit is taxable only if you earn at a rate of at least £8,500. The taxable value is a flat figure which depends on the cylinder capacity of your car and whether it runs on petrol or diesel, however much or little fuel you actually use. Your employer should give you a form P11D showing the taxable value: alternatively, TaxCalc can work out the taxable value for you. If you want TaxCalc to work out the taxable value, leave the box on this screen blank but click the button to the right of the tick box. For more information see Company cars or the Inland Revenue leaflet IR133 Income tax and company cars from 6 April 1994. A guide for employees. The full text of this leaflet is available under Leaflets in the Help menu of TaxCalc.

Private medical or dental insurance

The benefit is taxable only if you count as earning above the £8,500 limit. The taxable value will generally be what the benefit cost the person (your employer) who provided it to you. You will need to get this figure from your employer, if it has not already been provided to you. The figure should be contained on your P11D. If you made any payment towards the cost of the benefit, this should be deducted from the taxable value.

Other fringe benefits

Any fringe benefits you receive which are not included in the list above, should be entered in the box entitled 'Other benefits'. The taxable value will usually be the cost to your employer (minus anything you paid), but there are special rules if your employer lends you something for your private use, or if you are one of a group of employees recieving the benefit. And, if the benefit consists of shares (or the right to buy shares free or cheap) in your employer's company, you should only enter it here if the taxable value is shown on your P11D: otherwise enter it in the Share Schemes section of TaxCalc.

Note that loans of computers become a tax-free fringe benefit from 6 April 1999.


Employment - expenses

Tax Guide

Payments received

Balancing charges

Travel and subsistence costs

Fixed deductions for expenses

Professional fees and subscriptions

Capital allowances

Other expenses

The tax return requires you to enter all the expense payments you received from your employer during the tax year and then to enter separately any allowable expenses which qualify for tax relief. Expenses payments from your employer are added to your income for tax purposes, together with any balancing charges, and allowable expenses are deducted from your taxable income - so it's important to claim all the expenses to which you are entitled. When claiming allowable expenses, it doesn't matter whether or not your employer reimbursed you - you can claim any expenses 'wholly, exclusively and necessarily' incurred for the purposes of your work, even if you had to bear the cost yourself.

You should not enter anywhere in TaxCalc any payment for which your employer has a dispensation from the Revenue - unless the expense you incurred came to more than the amount of the dispensation. In this case, you can claim the excess.

Payments received

Enter here the total amount you received from your employer for expenses during 1998-99 and any balancing charges due. Your expenses payments should be shown on the form P11D or P9D which your employer should give you after the end of the tax year (a copy of which also goes to the Revenue).

Balancing charges

Balancing charges are an addition to your taxable income. They sometimes arise when you sell assets or equipment on which you previously claimed capital allowances. Although this normally applies when you are self-employed they could occur when you dispose of assets or equipment which you have to provide for use in carrying out your duties as an employee. If you need more information, ask for Inland Revenue Help Sheet IR206, Capital allowances for employees and office holders (available on the 'Help' menu of TaxCalc). The Help Sheet will tell you how to calculate any capital allowances or balancing charges that might apply to you.

Travel and subsistence costs

You can claim for travel and subsistence costs for business journeys, but not travel to and from your home. If you pay any running costs for your company car, claim whatever proportion of the cost is attributable to your business use. Occasional late-night journeys home may be allowed, or extra travel costs if public transport is disrupted, for example, by industrial action: there are also a few other exceptions. If you are required to work somewhere other than your normal place of work, you will be able to claim the costs of travelling from home in certain circumstances, described in the Inland Revenue's notes to the Employment supplementary pages.

If you want to use TaxCalc to record and add up all your travel and subsistence costs, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

If you use your own car for work and your employer pays you a smaller allowance than the Fixed Profit Car Scheme scales (or less than the travelling actually cost you), you can claim the amount by which you are out of pocket. Enter the amount here. See also 'Mileage allowance'.

Note that there are special rules covering the travel expenses you can claim if you work abroad. Ask your tax office.

Warning
Tick the box at the bottom of the screen if the figure you enter for travel and subsistence costs includes travel between your home and a permanent workplace. But be prepared to justify the expenses to the Revenue, as these are not normally allowable unless you are working from a temporary workplace. A workplace will not be a temporary workplace if you attend or expect to attend it to perform a significant part of your duties there for more than 24 months (or less, if your job last for less than 24 months). See Inland Revenue leaflet IR161 Tax relief for employees' business travel (available on the 'Help' menu of TaxCalc). For full details and examples of how the rules work in practice, see Inland Revenue booklet 490 Employee travel. A tax and NICs guide for employers (ask your tax office).

Fixed deductions for expenses

These are fixed amounts of expenses agreed between the Inland Revenue and some trade unions or other bodies to cover the cost of maintaining or replacing tools or special working clothes. If you spent more than the fixed amount, you can claim more - if so, you should leave this box blank and enter the amounts spent under 'Other expenses and capital allowances'. Note that a new deduction was announced in March 1999 for fire fighters and healthcare workers who have to wear a uniform but who do not get laundry services provided by their employers. Check with your tax office how much you can claim. The new deduction applies to 1998-99 but you can claim a deduction going back to April 1992 if relevant.

Professional fees and subscriptions

Subscriptions to professional bodies are allowable provided membership is relevant to your job. You can also claim the fee for keeping your name on a professional register approved by the Inland Revenue - but only if this is a condition of your employment. You should enter the amount of the fee on which you wish to claim tax relief. If you are unsure whether the whole fee attracts tax relief, check with the professional body concerned.

Capital allowances

Capital allowances are a deduction from your taxable income. They are an allowance for the depreciation of assets or equipment which you have to provide for use in carrying out your duties as an employee - for example, a car which you have to have for your work. For information on whether you can claim, see Inland Revenue Help Sheet IR206 Capital allowances for employees and office holders (available on the 'Help' menu of TaxCalc).

Other expenses

Books and training courses

Reference books

Working from home

Interest on loans

Married couples

Entertaining

Living expenses

Protective or uniform clothing

Liability insurance and related costs

Books and training courses

The cost of fees and essential books you buy for a full-time external training course lasting four weeks or more is allowable. Your employer must either require you, or at least encourage you to attend the course and must go on paying your wages while you are on it. The extra cost of living away from home and extra travelling expenses, if away for under a year, may also be allowable. Evening course fees are not allowable.

Reference books

The cost of reference books necessary for your job which you have to provide is allowable. (If the book's useful life is more than two years you may have to claim capital allowances instead.) The cost of stationery used strictly for your job is also allowable. The cost of books essential for a full-time training course may possibly be allowable.

Working from home

If you are required to use your home for work, a proportion of the heating and lighting costs, and possibly a proportion of the telephone, cleaning and insurance costs will be allowable. If part of your home is used exclusively for business you may be able to claim a proportion of the rent.

Interest on loans

Interest on loans to buy equipment (for example, a car or a computer) necessary for your job is allowable, providing you would be entitled to capital allowances if you bought the equipment instead, and providing the loan is repaid within three years from the end of the tax year in which you took out the loan.

Married couples

If your employer pays for a wife or husband to accompany an employee on a business trip, the cost may be allowable if the wife or husband has, and uses, practical qualifications directly associated with the trip, or if their presence is necessary for the essential business entertaining of overseas trade customers, or if the employee's health is so poor that it is unreasonable to travel alone. Only a proportion of the cost may be allowed.

Entertaining

Expenses of entertaining customers are only rarely allowable. If you work for a trading concern, you can only claim if the entertainment was a 'necessary' part of doing your job (in tax terms) and your employer has put a tick in the box against 'entertainment' on your form P11D. Employees of some non-trading organisations may be able to claim more entertainment expenses. If in doubt, check with your employer.

Living expenses

If you keep a permanent home, reasonable hotel and meal expenses when travelling in the course of your job are allowable. But if, say, you are a single person living in an hotel and give up your room when travelling, you can claim only the extra cost of reasonable hotel and meal expenses over your normal board and lodging. You cannot claim expenses for meals you would not have normally had at that time.

Protective or uniform clothing

If you wish to claim for the cost of replacing, cleaning and repairing protective or functional clothing (for example, a uniform) necessary for your job put the amount here. Equally, the cost of maintaining and repairing factory and workshop tools and musical instruments you are required to provide should go here. Only use this box if you are not claiming under fixed deductions for expenses.

Liability insurance and related costs

You get tax relief for the costs and expenses of dealing with a claim that you committed some wrongful act as an employee, or for the cost of insuring against such a claim. Enter the amount here.


Fixed Profit Car Scheme

Fixed Profit Car Scheme Examples

Example 1

Your employer paid you 30p per mile for travelling 6,500 business miles in your car in the year. Your car has a 1,400cc engine:

Amount received	6,500 x 30p	= £1,950
less FPCS relief	4,000 x 35p	= £1,400
	2,500 x 20p	= £500
Total			£1,900
Taxable 'profit' of mileage allowance			£50

This 'profit' should be entered on the Benefits screen. TaxCalc will add this to your gross income, just like any other taxable fringe benefit.

Employer 2

Your employer pays you 10p per mile for travelling 3,000 business miles in your car in the year. Your car has a 1,800cc engine

Amount received	3,000 x 10p	= £300
FPCS relief	3,000 x 45p	= £1,350
Tax relief still due		= £1,050

In Example 2, the amount of tax relief still due can be claimed as an 'allowable expense' and should be entered under 'Travel and subsistence costs' in the Expenses screen. TaxCalc will deduct this amount from your taxable income.


Foreign income - property

Tax Guide

Tax Tips

Country/address

Chargeable premiums

Unremittable income

Remittance basis

Claiming tax credit relief

Total rents and other receipts

UK tax

Foreign tax

Amount chargeable

Expenses

Tax adjustments

Private use

Capital allowances and balancing charges

10% wear and tear

Losses

Enter on this screen any income received from land or property which is not in the UK. This is taxed in broadly the same way as that from UK property, except that the special rules for furnished holiday lets do not apply. Enter details for each overseas property separately, using the ‘Add’ button: TaxCalc will work out the taxable profit for each. Amounts should be entered in sterling except where stated otherwise.

Warning
The taxation of income from abroad can be complex and TaxCalc cannot anticipate every exceptional case. Not all your overseas income may be taxable in the UK (or special rules may apply) if you count as not resident, not ordinarily resident or not domiciled in the UK. Fuller information is given in the Inland Revenue notes accompanying the ‘Foreign’ supplementary pages. Also see Inland Revenue leaflets IR20 Residents and non-residents and IR139 Income from abroad? If you are in any doubt about what to enter, ask your tax office or tax adviser for help.

Chargeable premiums

If you receive premiums from the grant of a lease and other such payments for property abroad, only part of the premium may be taxable. A working sheet to help you work out the taxable income is included in the Inland Revenue’s notes accompanying the ‘Foreign’ supplementary pages. Type in ‘Chargeable premiums’ in the ‘Address’ box, tick the 'Chargeable premiums' box and enter the taxable amount in the ‘Total rents and other receipts’ box - you do not need to complete the ‘Expenses’ or ‘Tax adjustments’ boxes.

Country/Address

Enter here the name of the country in which the income or gain arose, and the address of the property.

Unremittable income

If you have income from property outside the UK that you were unable to transfer (or ‘remit’) to the UK, because of exchange controls or a shortage of foreign currency in the overseas country, then you can claim that the unremittable income should not be taxed until it is possible to transfer it. Note that you cannot claim ‘unremittable’ status for income arising from property in the Republic of Ireland.

If you have unremittable income, you should still tell the Revenue about the income by entering the country, amount before tax and foreign tax, but be sure to click on the ‘Unremittable income’ box and leave the 'Amount chargeable' box empty. You still need to enter your taxable profit from the property - you can either complete the ‘Expenses’ and ‘Tax adjustments’ boxes and TaxCalc will do this for you, or you can work it out for yourself, enter the result under ‘Total rents’, and leave the ‘Expenses’ and ‘Tax adjustments’ boxes empty. In this case only, enter the rent (and other figures) in the foreign currency of the country concerned, rather than converting it to sterling. After you have printed out the tax return, cross out the £ sign pre-printed on the form.

Remittance basis

The remittance basis applies to you if you are resident in the UK, but are either:

claiming to be not domiciled in the UK, or

a citizen of the Commonwealth or of the Republic of Ireland and are not ordinarily resident in the UK.

If you are taxed on the remittance basis, you need only enter overseas property income that you actually bring into the UK, unless the property is in the Republic of Ireland (to which the remittance basis does not apply). You do not need to complete the 'Expenses' or 'Adjustments' boxes, or give the address of the property.

Claiming tax credit relief

To avoid paying two lots of tax on your foreign income, both overseas and in the UK, you can just deduct the foreign tax from the before-tax amount, and then work out your UK tax on the amount you are left with. However, claiming tax credit relief instead will usually result in a lower tax bill, because it provides relief if the foreign income pushes you into a higher tax bracket.

For this reason, the ‘tax credit relief’ button will remain ticked unless you click on it. However, you can see what difference it makes by running TaxCalc both with and without the ‘tax credit relief’ button ticked to see which produces the smallest tax bill. In particular, tax credit relief is likely to be less advantageous if you would have no UK tax to pay on the item in any case.

If you decide not to claim tax credit relief, or cannot (see Note below), or if the income is unremittable, you should click on the ‘tax credit relief’ button to remove the tick, deduct the foreign tax from the before-tax amount of income, and enter the result in the ‘Amount chargeable’ box.

Note that if you eventually get a refund of some of the foreign tax on which you are claiming relief now, you have to notify the Inland Revenue who will claw back some of the relief.

Note
Tax credit relief is not always available, for example it is not available on dividend income from the Isle of Man. You should always check the position for any country from which you receive foreign income or gains, in case there are any limitations or special rules to observe. Note, too, that while TaxCalc works out tax credit relief for you in most cases, it cannot deal with special rules if as well as foreign income you have taxable lump sums from an employer or from a life insurance policy, or if you have taxable capital gains. Special tax calculation guides are available from the Inland Revenue Orderline (0645 000404) if this affects you. Ask your tax office or tax adviser.

Total rents and other receipts

Total up all income (whether it is paid in cash or kind) due to you in the 1998-99 tax year, even if you do not receive the money or goods until later. Include any rent arrears that may be paid to you after April 5 1999, but which fell due in the tax year ending 5 April 1999. However, exclude any rent you may have received in advance (ie any rent relating to the period beginning 6 April 1999 and beyond).

Include all income from this source, whether it comes from land, commercial or domestic property. It does not matter whether the property is let furnished or unfurnished, but include any payments for services such as meals, laundry, gardening etc., as well as income such as receipts from waste tipping or sporting rights, and ground rents.

UK tax

Your foreign income may be paid to you through an agent in the UK (for example, a bank). The agent will normally deduct tax before passing the money on to you. In this case, you should enter the amount deducted here: TaxCalc will take it into account when working out your final tax bill.

If you have already paid some tax on this income through your payments on account, enter this on the Tax already paid screen under Other information, not here.

Foreign tax

Enter here the sterling equivalent of any foreign tax you have already paid on the item of income. For example, some foreign tax may have been deducted before the income was paid to you (in which case it is known as ‘withholding tax’). TaxCalc will take the foreign tax into account when deciding how much further UK tax is due. However, you cannot take into account any tax in excess of the amount set out in any Double Taxation Agreement between the UK and the foreign country. If you paid more, you should enter here only the minimum amount to which you were liable and approach the overseas tax authority for a refund of the excess. Further information on the amount of foreign tax you can set against your UK tax bill is given in the notes to the ‘Foreign’ supplementary pages.

Amount chargeable

The figure to enter here depends on whether the income counts as unremittable income and on whether or not you are claiming tax credit relief:

if you have entered an item of unremittable income it is not taxable. Do not enter anything in the ‘amount chargeable’ box.

if you have decided to claim tax credit relief, you can also leave the ‘amount chargeable’ box blank, providing you have entered the before-tax amount. TaxCalc will calculate the relief for you separately, providing the ‘tax credit relief’ box for the item is ticked. If you do enter anything in the amount chargeable box, this will override TaxCalc's calculations of your taxable profit.

if you are not claiming tax credit relief, enter the rest of the data required on the screen, save it, and then look at the ‘Foreign’ supplementary page under 'Tax return forms' on the ‘View’ menu of TaxCalc. This will show you the taxable profit from this property for the year. Deduct the foreign tax from the taxable profit,  and enter the result at ‘Amount chargeable’. Remember to click on the tax credit relief button to remove the tick.

Expenses

You can deduct certain expenses from your rental income. A loan to buy or improve property which you let may also be deductible.

If only part of the property is let, or for only part of the year, you can claim only whatever part of the expense is in line with the proportion of the letting. Enter the correct proportion of your expenses in the appropriate box.

Note that if your total property income in the year before expenses is under £15,000 over the whole year, you do not need to break down your expenses into the categories shown: you can just enter the total under ‘Other expenses’ and leave the other boxes empty.

Tax adjustments

To arrive at your 'taxable' income (or loss) from property, you need to make certain adjustments to the net profit or loss which arose during the tax year.

Private use

Private and personal expenses are not allowable. If you spend money on something which is only partly used in the renting of the property(ies) or land you own, and partly for your own private use you must either:

put the proportion of the expense which relates to the rental property under 'expenses', or

put the whole amount of the expense in the 'expenses' section and also enter the proportion of the expense which relates to private use under 'tax adjustments'.

For example, say you employ a caretaker who works for three hours a week on your private property abroad, and three hours a week maintaining an adjoining property on which you receive rental income. You could either claim 50 per cent of the wages you pay under 'expenses' or you can put 100 per cent of the wage bill into 'expenses' and 50 per cent under 'tax adjustments - private use'. It does not matter which method you choose as long as you only claim the expenses due to you for the rented property (or land).

Capital allowances and balancing charges

When you work out your profits from property income, you must not deduct:

the cost of buying, altering, building or installing or improving fixed assets (for example, property and machinery), or

depreciation or any losses which arise when you sell them.

Instead you may in a few cases be able to claim capital allowances. These reduce a profit or increase a loss. An adjustment, known as a balancing charge, may arise when you sell an item, give it away or stop using it. Balancing charges increase your profits or reduce your loss. For more information ask for Inland Revenue Help Sheet IR250 Capital Allowances and Balancing Charges in a Rental Business. Note that you cannot claim capital allowances if you are renting out a furnished 'dwelling house' or flat - you can claim an allowance for ‘wear and tear’ instead.

Relevant deductions

The calculation of tax credit relief can be affected by tax relief you have claimed on payments such as personal pension contributions or charitable covenants. If any of the payments you have claimed under the ‘Reliefs’ section of TaxCalc relate specifically to, and depend upon the amount of, a particular item of foreign income, you should enter the amount of the payment as a ‘Relevant deduction’. An example might be personal pension contributions you make, on the basis of foreign earnings. If only part of the payment is related to the foreign income, you should enter only the relevant part.

10% wear & tear

You can claim a deduction for 'wear and tear' if you let a furnished property. You may claim a deduction for either:

the cost of replacing a particular item of furniture or furnishings less anything you received from selling the original item and less any amount that represents an improvement on or addition to the original item

an allowance amounting to ten per cent of the rent received after deducting charges or services which would normally be borne by a tenant but which are, in fact, borne by you (for example, Council Tax).

If you have the option of claiming either capital allowances or wear and tear you must choose one or the other - you cannot have both.

Losses

If you have made a loss from owning an overseas property, it can either be:

 set against profits arising in the same year from all your other overseas property.

 carried forward to set against other income from overseas property in future years.

If you have carried forward losses on overseas property for tax years before 1998-99, enter under 'Losses brought forward' the amount which you wish to offset against 1998-99 income from this property. TaxCalc will deduct this when working out your taxable profit.

However, neither the Inland Revenue tax return nor TaxCalc can currently deal with a situation where you have more than one overseas property and you made a loss on one of them in 1998-99. In this case, you should give details of the overall result (setting all your losses against all your profits) by clicking on the 'Additional information' button in this screen. Note that TaxCalc will not be able to work out your overall tax bill in this case.


Foreign income - savings & investments

Tax Guide

Tax Tips

Dividends, interest and other savings income

Dividends etc. taxable on remittance basis

Country

Unremittable income

Amount before tax

UK tax

Foreign tax

Amount chargeable

Claim tax credit relief

Relevant deductions

Foreign life insurance

Notional tax

Policy

Top-slicing relief

Number of years

Amount of gain

The Inland Revenue asks you to enter each item of overseas investment income separately on your tax return. So separate entries need to be made for the income from each savings account, share or unit trust holding. If you acquired more than one block of shares in the same company at different times, each block should be entered as a separate item.If you have money invested jointly with your husband or wife, enter half the income paid out by the account, unless you have already elected for a different split. Amounts should be given in sterling except where otherwise stated.

Warning
The taxation of income from abroad can be complex and TaxCalc cannot anticipate every exceptional case. Not all your overseas income may be taxable in the UK (or special rules may apply) if you count as not resident, not ordinarily resident or not domiciled in the UK. Fuller information is given in the Inland Revenue notes accompanying the ‘Foreign’ supplementary pages. Also see Inland Revenue leaflets IR20 Residents and non-residents and IR139 Income from abroad? If you are in any doubt about what to enter, ask your tax office or tax adviser for help.

Dividends, interest and other savings income

Enter here any overseas savings and investments income which is taxable in the UK. You should not enter:

foreign income dividends paid by a UK company. These count as UK, not foreign, income and should be entered in the Savings and investments section of TaxCalc

any gains from selling or disposing of your investment in an offshore fund. In some cases, these gains are taxed as income rather than as capital gains, but they should be entered on the Other income from abroad screen, not here. Only enter here the income from such funds

stock dividends or scrip issue bonus shares from a foreign company, distributions in the form of the company’s own stocks and shares or distributions that count as a return of your capital.

Dividends etc. taxable on remittance basis

The remittance basis applies to you if you are resident in the UK, but are either:

 claiming to be not domiciled in the UK, or

a citizen of the Commonwealth or of the Republic of Ireland and are not ordinarily resident in the UK.

If the remittance basis applies, you need to enter in this table only any overseas savings and investments income which you have actually transferred to the UK. You do not need to enter income arising overseas which you have not transferred, unless it is Republic of Ireland income from pensions, securities, stocks, shares and rent (to which the remittance basis does not apply).

Country

Enter here the name of the foreign country in which the income or gain arose. As required by the Inland Revenue, also enter the type of income received, by typing in after the name of the country [D] for dividends, [I] for interest or [O] for other savings income.

Unremittable income

If you have income arising outside the UK that you were unable to transfer (or ‘remit’) to the UK, because of exchange controls or a shortage of foreign currency in the overseas country, then you can claim that the unremittable income should not be taxed until it is possible to transfer it.

If you have unremittable income, you should still tell the Revenue about the income by entering the country, amount before tax and foreign tax, but be sure to click on the ‘Unremittable income’ box and leave the ‘Amount chargeable’ box empty. In this case only, enter the income and foreign tax in the foreign currency rather than converting it to sterling. After you have printed out the tax return, cross out the £ sign pre-printed on the form.

Amount before tax

Enter the sterling equivalent of any amount credited to you (or remitted, if previously unremittable), before deducting any UK or foreign tax, but after deducting any unremittable income. The information should be shown on any dividend or unit trust voucher, or any other documentation received with the income.

There is an exception if you received dividends from Finland, France, Italy or the Republic of Ireland. For these dividends, you may be able to receive payment of the overseas tax credit, in addition to the dividend. If this applies, you should add together the dividend received plus the tax credit and enter the total as the ‘Amount before tax’ (and remember to include any tax withheld as 'Foreign tax'). For further information contact the Inland Revenue at:

Financial Intermediaries and Claims Office (International)

Fitzroy House

PO Box 46

Nottingham

NG2 1BD.

Tel: 0115 974 2000.

UK tax

Your foreign income may be paid to you through an agent in the UK (e.g. a bank). The agent will normally deduct tax before passing the money on to you. In this case, you should enter the amount deducted here: TaxCalc will take it into account when working out your final tax bill.

If you have already paid some tax on this income through your payments on account, enter this on the Tax already paid screen in the Other information section of TaxCalc, not here.

Foreign tax

Enter here the amount of any foreign tax you have already paid on the item of income. For example, some foreign tax may have been deducted before the income was paid to you (in which case it is known as ‘withholding tax’). TaxCalc will take the foreign tax into account when deciding how much further UK tax is due. However, you cannot take into account any tax in excess of the amount set out in any Double Taxation Agreement between the UK and the foreign country. If you paid more, you should enter here only the minimum amount to which you were liable and approach the overseas tax authority for a refund of the excess. Further information on the amount of foreign tax you can set against your UK tax bill is given in the notes to the ‘Foreign’ supplementary pages.

Amount chargeable

The figure to enter here depends on whether you have entered an item of unremittable income and  on whether or not you are claiming tax credit relief.

If you have entered an item of unremittable income it is not taxable. Do not enter anything in the ‘amount chargeable’ box.

If you want to claim tax credit relief, you can also leave the ‘amount chargeable’ box blank, providing you have entered the before-tax amount. TaxCalc will calculate the relief for you separately, providing the ‘tax credit relief’ box for the item is ticked.

If you are not claiming tax credit relief, take the before-tax amount, deduct the foreign tax, and enter the result at ‘Amount chargeable’. Remember to click on the tax credit relief button to remove the tick.

Claiming tax credit relief

To avoid paying two lots of tax on your foreign income, both overseas and in the UK, you can just deduct the foreign tax from the before-tax amount, and then work out your UK tax on the amount you are left with. However, claiming tax credit relief instead will usually result in a lower tax bill, because it provides relief if the foreign income pushes you into a higher tax bracket.

For this reason, the ‘tax credit relief’ button will remain ticked unless you click on it. However, you can see what difference it makes by running TaxCalc both with and without the ‘tax credit relief’ button ticked to see which produces the smallest tax bill. In particular, tax credit relief is likely to be less advantageous if you would have no UK tax to pay on the item in any case.

If you decide not to claim tax credit relief, or cannot (see Note below), or if the income is unremittable, you should click on the ‘tax credit relief’ button to remove the tick, deduct the foreign tax from the before-tax amount of income, and enter the result in the ‘Amount chargeable’ box.

Note that if you eventually get a refund of some of the foreign tax on which you are claiming relief now, you have to notify the Inland Revenue who will claw back some of the relief.

Note
Tax credit relief is not always available, for example it is not available on dividend income from the Isle of Man. You should always check the position for any country from which you receive foreign income or gains, in case there are any limitations or special rules to observe. Note, too, that while TaxCalc works out tax credit relief for you in most cases, it cannot deal with special rules if as well as foreign income you have taxable lump sums from an employer or from a life insurance policy, or if you have taxable capital gains. Special tax calculation guides are available from the Inland Revenue Orderline (0645 000404) if this affects you. Ask your tax office or tax adviser.

Relevant deductions

The calculation of tax credit relief can be affected by tax relief you have claimed on payments such as personal pension contributions or charitable covenants. If any of the payments you have claimed under the ‘Reliefs’ section of TaxCalc relate specifically to, and depend upon the amount of, a particular item of foreign income, you should enter the amount of the payment as a ‘Relevant deduction’. An example might be personal pension contributions you make, on the basis of foreign earnings. If only part of the payment is related to the foreign income, you should enter only the relevant part.

Foreign life insurance

A ‘foreign’ policy is a policy from an overseas insurance company, but not usually from a UK branch of an insurance company based overseas. Check with the company if in doubt. Most gains from foreign insurance policies are taxable - however, the rules for when you are treated as having made a ‘gain’, and for calculating the amount of the gain, can be complex and you should check Inland Revenue Help Sheet IR321: Gains on foreign life insurance policies. Note that the remittance basis does not apply to life insurance gains.

If you have more than one foreign life insurance policy (apart from a 'cluster' policy which bundles together a number of identical policies), also enter details of each under 'Additional information' on the Tax already paid screen in the Other information section of TaxCalc.

Notional tax

Most UK life insurance policies are regarded as already having had the equivalent of basic-rate tax - ‘notional tax’ - deducted from the gain before you get it. An overseas insurance policy is only regarded as having had notional tax deducted if:

it was taken out before 18 November 1983, and has not been changed since in such a way as to increase the benefits payable or to extend the term

the insurance company is resident in other European states and has been taxed on the underlying investments. This is likely to apply only for insurers resident in Denmark, Sweden and, in some cases, Ireland: check with the insurer.

If this applies, multiply the amount of the gain by 23 per cent and enter the result in the ‘Notional tax’ column. The notional tax takes care of your basic-rate tax bill on the gain, but you may have higher-rate tax to pay if you are a higher-rate taxpayer.

Policy

Enter any name/reference you wish to give the policy - this is not needed for the tax return, but TaxCalc requires a brief reference here for identification purposes.

Top-slicing relief

Receiving a lump sum from insurance could work against you if it meant that you were pushed into a higher tax bracket. Top-slicing relief gives you some protection against this. It works, broadly, by spreading the gain over the lifetime of the policy (or over the number of years since the last chargeable gain took place).TaxCalc works out whether top-slicing relief will save you tax and automatically deducts it from your tax bill if it will.

Number of years

So that TaxCalc can correctly work out the top-slicing relief on any tax bill, you need to enter the number of years over which the taxable gain should be spread. Enter the number of complete years since you took out the policy (look at the policy commencement date), or the number of complete years since the last chargeable gain took place (eg if in one year you cashed in part of your policy and you are now cashing in the rest).

Amount of gain

Enter the taxable amount of the gain, in sterling - details of how to work this out are given in  Inland Revenue Help Sheet IR321: Gains on foreign life insurance policies.


Foreign income contents

Tax Guide

Savings

Property

Other income from abroad

Entered elsewhere


Foreign income entered elsewhere

Tax Guide

Tax Tips

Tax credit relief for other foreign income

Country

Foreign tax

Amount chargeable

Tax credit relief

Relevant deductions

Tax credit relief for foreign capital gains

Amount of gain

Period over which gain accrued

Foreign tax

Amount of tax credit relief

Warning
The taxation of income from abroad can be complex and TaxCalc cannot anticipate every exceptional case. Not all your overseas income may be taxable in the UK (or special rules may apply) if you count as not resident, not ordinarily resident or not domiciled in the UK. Fuller information is given in the Inland Revenue notes accompanying the ‘Foreign’ supplementary pages. Also see Inland Revenue leaflets IR20 Residents and non-residents and IR139 Income from abroad? If you are in any doubt about what to enter, ask your tax office or tax adviser for help.

Tax credit relief for other foreign income

You may have entered income received from outside the UK elsewhere in TaxCalc. For example, if you work overseas you need to complete the Employment, Self-employment or Partnership sections of TaxCalc, as appropriate: you may also have entered foreign income on the Any other income screen.

If so, TaxCalc will work out the taxable amount of income or gains, but if you have paid foreign tax on this income, and want to claim tax credit relief, you should also fill in this screen. When you print out the tax return, you should check the page reference number where the information is entered, and write this reference in the left-hand column on page F3 of the Foreign supplementary pages.

Country

Enter here the name of the country in which the income or gain arose, and the page number in your tax return where you entered the rest of the information relating to it (e.g. page E2 of the ‘Employment’ supplementary pages).

Foreign tax

Enter here the sterling equivalent of any foreign tax you have already paid on the item of income. This is needed to calculate the amount of tax credit relief you are due.

Amount chargeable

You should enter here the item of income which you have entered elsewhere in TaxCalc and on which you are now claiming tax credit relief. However, you may need to adjust the amount you enter:

if only part of the taxable amount entered elsewhere relates to overseas income. You need to enter here only the amount of the overall profits attributable to the overseas receipts

if you earned profits from a trade, profession or vocation in 1998-99 and you have overlap profits. See Inland Revenue Help Sheet IR260: Overlap.

Tax credit relief

To avoid paying two lots of tax on your foreign income, both overseas and in the UK, you can just deduct the foreign tax from the before-tax amount, and then work out your UK tax on the amount you are left with. However, claiming tax credit relief instead will usually result in a lower tax bill, because it provides relief if the foreign income pushes you into a higher tax bracket.

For this reason, the ‘tax credit relief’ button will remain ticked unless you click on it. However, you can see what difference it makes by running TaxCalc both with and without the ‘tax credit relief’ button ticked to see which produces the smallest tax bill. In particular, tax credit relief is likely to be less advantageous if you would have no UK tax to pay on the item in any case.

If you decide not to claim tax credit relief, or cannot (see Note below), or if the income is unremittable, you should click on the ‘tax credit relief’ button to remove the tick, deduct the foreign tax from the before-tax amount of income, and enter the result in the ‘Amount chargeable’ box.

Note that if you eventually get a refund of some of the foreign tax on which you are claiming relief now, you have to notify the Inland Revenue who will claw back some of the relief.

Note
Tax credit relief is not always available, for example it is not available on dividend income from the Isle of Man. You should always check the position for any country from which you receive foreign income or gains, in case there are any limitations or special rules to observe. Note, too, that while TaxCalc works out tax credit relief for you in most cases, it cannot deal with special rules if as well as foreign income you have taxable lump sums from an employer or from a life insurance policy, or if you have taxable capital gains. Special tax calculation guides are available from the Inland Revenue Orderline (0645 000404) if this affects you. Ask your tax office or tax adviser.

Relevant deductions

The calculation of tax credit relief can be affected by tax relief you have claimed on payments such as personal pension contributions or charitable covenants. If any of the payments you have claimed under the ‘Reliefs’ section of TaxCalc relate specifically to, and depend upon the amount of, a particular item of foreign income, you should enter the amount of the payment as a ‘Relevant deduction’. An example might be personal pension contributions you make, on the basis of foreign earnings. If only part of the payment is related to the foreign income, you should enter only the relevant part.

Tax credit relief for foreign capital gains

In order to work out the taxable amount of any capital gains, you need to complete the ‘capital gains’ screens of TaxCalc. However, if you have paid foreign tax on this gain, and want to claim tax credit relief, you should also fill in this screen.

Note
TaxCalc does not currently work out the tax credit relief for foreign capital gains. You need to calculate this yourself, using the Inland Revenue Help Sheet IR261 Tax credit relief and capital gains, and enter the result in the appropriate column on this screen.

Amount of gain

Because different countries have different rules for determining the amount of a taxable capital gain, the amount taxable in the UK will often be different from that taxable in the foreign country. In this case, the amount of foreign tax for which you can claim tax credit relief is restricted in line with the part of the gain that is taxable in both the UK and the foreign country.

To find out the amount of gain taxable under UK rules, make sure that you have entered all the data for this gain in the ‘Capital gains’ screens. Then go to the ‘View’ menu of TaxCalc, click on 'Tax Return Forms' and then 'Capital Gains' in the drop-down box: the taxable gain to enter will be shown on this form.

To find out the amount of the gain taxable under foreign rules, you will need to consult either the tax authorities of the country concerned, or your own tax adviser. Enter the amount of the gain in sterling.

Period over which gain accrued

Because the tax rules of countries differ, the amount of the gain for tax purposes might be accrued over different periods in the UK and in the foreign country. You need to enter the period in days, for both the UK and the foreign country. You get relief for the foreign tax on only the part that is accrued over the same length of time as the UK tax.

Foreign tax

Enter here the amount in sterling of any foreign tax you have already paid on this gain. TaxCalc will take the foreign tax into account when deciding how much further UK tax is due. Note that you do not qualify for indexation allowance on the foreign amount.

There are two ways in which foreign tax can be taken into account in the calculation:

by simply deducting the foreign tax paid from the gain or loss on a particular asset

by claiming tax credit relief. This will normally result in the smallest tax bill but see Note above. And it won’t work to your advantage if you would not have UK tax to pay on the gain, for example where a loss means that there is no UK tax against which the relief can be credited.

Amount of tax credit relief

Enter the amount of relief separately for each gain, calculated using Inland Revenue Help Sheet IR261: Tax credit relief and capital gains.


Fringe benefits & expenses contents
Benefits & expenses contents

Tax Guide

Company cars

Other fringe benefits

Expenses

Tax-free fringe benefits


Furnished holiday lets

Tax Guide

Tax Tips

Total income from furnished holiday lettings

Expenses

Tax adjustments

 -Private use

 -Capital allowances & balancing charges

Losses

 -Offset against total income

 -Carried back

 -Offset against income from other property

Jointly-owned property

Enter in this section the total income and expenditure arising from properties which qualify as furnished holiday lettings.

Total income from furnished holiday lettings

Enter here the total income from furnished holiday lettings arising in the 1998-99 tax year. If you provide services such as meals, laundry, gardening etc, any income you receive should be included here. If you own the property with someone else, see Jointly-owned property below for what to enter.

Expenses

You can deduct certain expenses from your income. A loan to buy or improve property which you let may also be deductible. If your total rents before deducting expenses are £15,000 a year or more, you must provide a breakdown of your expenses under the appropriate headings in the 'Expenses if income is £15,000 or more': otherwise just enter the total expenses.

If only part of the property is let, or for only part of the year, you may be able to claim only whatever part of the expense is in line with the proportion of the letting. Enter the correct proportion of your expenses in the appropriate box.

Tax adjustments

To arrive at your 'taxable' income (or loss) from property, you need to make certain adjustments to the net profit or loss which arose during the tax year.

Private use

Private and personal expenses are not allowable. If you spend money on something which is only partly used in the renting of the property(ies) you own, and partly for your own private use you must either:

put only the proportion of the expense which relates to the rental property under 'expenses', or,

put the whole amount of the expense in the 'expenses' section and also enter the proportion of the expense which relates to private use under 'tax adjustments'.

For example, you employ a gardener who works for three hours a week on your own garden at home and three hours a week maintaining the garden in a property on which you receive rental income. You could either claim 50 per cent of the wages you pay under 'expenses' or you can put 100 per cent of the wage bill into 'expenses' and 50 per cent under 'tax adjustments - private use'. It does not matter which method you choose as long as you only claim the expenses due to you for the rented property.

Capital allowances and balancing charges

When you work out your profits from furnished holiday lettings, you must not deduct:

the cost of buying, altering, building or installing or improving fixed assets (for example, property and machinery), or

depreciation or any losses which arise when you sell them.

Instead you may be able to claim capital allowances. These reduce a profit or increase a loss. An adjustment, known as a balancing charge, may arise when you sell an item, give it away or stop using it. Balancing charges increase your profits or reduce your loss. For more information ask for Inland Revenue Help Sheet IR250 Capital Allowances and Balancing Charges in a Rental Business.

Losses

If you have made a loss from furnished holiday lettings in 1998-99, you have a choice of how to use it. You can use losses to reduce your overall tax liability in this tax year or, in some circumstances, your overall tax liability in earlier tax years; alternatively, you can set it against other profits from property and, if you have no such profits, carry it forward to set against the profits of future years. TaxCalc can show you the effect of the various options on your tax bill for 1998-99 - but because TaxCalc does not have data for earlier and future years, it cannot tell you which option will save you the most tax overall. If you are unsure how best to use your losses, it might be worth getting professional help from your tax adviser.

To see the effect of the various options, first enter details of your lettings so that TaxCalc can work out your loss (this will appear on Box 5.15 of the Land and property supplementary sheet under 'Tax Return Forms' on the 'View' menu of TaxCalc). Then try entering your losses in alternative boxes in the 'Losses' section, to see which option show the least tax in the tax summary on the 'View' menu of TaxCalc. See IR Help Sheet IR227: Losses , available in the Help Sheets section on TaxCalc's Help menu, for the various choices open to you (although this Help Sheet covers businesses, the same rules apply to furnished holiday lettings).

Losses offset against total income

Enter here the amount of loss you want to offset against your total income from all sources in 1998-99 (as opposed to just against rental income). If the amount of loss is more than your total income, you can set the excess against any taxable capital gains for the year. To do this, go to the Losses screen in the Capital gains section of TaxCalc and enter the excess under 'Income losses'.

Losses carried back

Enter here any loss you have made from letting land or property that you wish to offset against income and/or gains for an earlier tax year.

Note
Even if you have already claimed to offset this loss, you should still enter it here, but enter a note of the amount in the 'Additional information' box on this screen.

Losses offset against income from other property

If you have not used up your total losses from this type of letting against other income or capital gains (either in this tax year, or against an earlier year), you can offset the balance against income from other land and property. Enter the amount you want to offset against other rental income for the 1998-99 tax year in the box.

Jointly-owned property

If you own and let either holiday property or other types of land and property jointly with one or more people, you should include only your share of the income on the tax return. Also, put your share of the allowable expenses and losses etc, in the relevant sections. If you receive notice of your share after expenses have been deducted, enter your income share as normal but leave boxes in the 'expenses' section blank. Make sure you tick the relevant box about jointly-owned property.

Note
You must also include the name and address of the person who has been nominated to keep records of the lettings in the 'Additional information' box on this screen.


Income & expenses contents

Tax Guide

Turnover

Business expenses

Main allowable business expenses


Income contents

Tax Guide

Income from employment

Share schemes

Income from self-employment

Partnership income

Income from savings & investments

Foreign income

Income from benefits

Income from pensions

Income from property

Other income


Income from benefits

Tax Guide

Jobseekers' Allowance

Widowed mother's allowance

Invalid care allowance

SSP/SMP paid by DSS

Incapacity benefit

Enter here any taxable social security benefits (which are those listed on the screen). Enter the total taxable amount you were entitled to in the tax year, not just the weekly rate - your benefit office will be able to tell you the amount.

Jobseekers' Allowance

The taxable amount to enter is what you received for yourself and your husband or wife (or someone who looks after your child). It does not include any extra payments for children, as these payments are tax-free. Your benefit office should have given you a statement of the total benefit paid and the taxable portion of this amount.

Widowed mother's allowance

Enter here the amount of any widowed mother's allowance you received. You should not include the £1,000 widow's payment (if you got it): this is tax-free. If you got widow's pension enter it on the Pensions screen in the Income section, not here. Do not include any amount given to you because you have a dependent child - this is tax-free.

Invalid care allowance

This is a weekly benefit for people of working age who are caring for a severely disabled person. The taxable amount to enter is what you received for yourself and your husband or wife (or someone you live with as husband and wife). Do not enter any extra payments you get for children, as these payments are tax-free.

SSP and SMP paid by DSS

Statutory maternity pay and statutory sick pay are normally paid to you by your employer - if this is the case do not enter them here, put them in the Employment section of TaxCalc. However, if these benefits are paid to you direct by the DSS, enter them here. Maternity allowance is a different benefit from statutory maternity pay - it is tax-free and you do not need to include it anywhere in TaxCalc.

Incapacity benefit

Only some payments of incapacity benefit are taxable. If you were receiving invalidity benefit before 13 April 1995 any incapacity benefit you receive is not taxable (unless there has been a break in your claim). If you were not receiving invalidity benefit before 13 April 1995 any incapacity benefit you receive after the 28th week of your incapacity is taxable. Your benefit office will work out the amount on which tax has to be paid and show it on form P45 (IB) if you stopped claiming during the tax year, or a form P60 (IB) if you are still claiming on 5 April 1999.

Enter the total taxable amount you received during 1998-99 and any tax already deducted (your benefit office should give you this information). Do not include any tax-free amount.


Income from employment

Tax Guide

Tax Tips

Employer

Address

PAYE reference

Date started

Date finished

If you were a director

If this was a close company

Taxable income

Tax already deducted

Tips

Any other payments

Most people can get the figures to enter from the form P60  which your employer should give you after the end of the tax year, or from the form P45 you get when you leave a job. These will usually show the taxable income figure to enter on your tax return. Also see Inland Revenue Help Sheet IR208: Payslips and coding notices (available on the 'Help' menu of TaxCalc).

If you had more than one job during the tax year, or were unemployed during the period, the figure on your P60 may include income from previous jobs or Jobseeker's Allowance. But the tax return requires you to enter income from each job separately, and Jobseeker's Allowance should be entered under the Pensions and benefits section, not here. So you may need to look back at your P45 and payslips to separate out the various amounts of income.

Employer

Enter the name of your employer here.

Note
You must enter your employer's name here or TaxCalc will not recognise the figures entered which relate to this employment. Complete all the screens (for example, including fringe benefits and expenses) relating to each job or directorship before you go on to the next job or directorship.

Address

Enter your employer's address here, and your employer's postcode in the box below.

PAYE reference

Enter your employer's PAYE reference here. This will be found on your P60 or your payslip. If in doubt, check with your employer. Note that if you have already been sent a tax return, this may appear under 'Employer reference' on the first page of the tax return. If you have more than one employer, or changed jobs recently, it may save confusion at your tax office if you enter as the first job in TaxCalc the job to which the Employer reference on your Revenue-issued return relates: it is this reference which TaxCalc will print on the first page of the substitute tax return.

Date started

Only enter this date if you started this employment after 5 April 1998.

Date finished

Only enter this date if you left this employment before 6 April 1999.

If you were a director

Click the relevant box if, at any time during your employment with the company, you acted as a director. This may affect both how any fringe benefits are taxed, and also what counts as your earnings.

When entering your taxable income, you should include all the income you received in 1998-99, even if you earned it in an earlier year, or you have been paid for work not done. Income is 'received' on the date you became entitled to the money, e.g. when the money was credited to you in the company accounts even if you were not able to draw on the money at that time, or from the date your earrnings for a particular period were decided, unless this was before that period ended. In this case, you are treated as receiving the earnings on the last day of that period. Also include money that was due to you but which you have agreed should be used for the business instead.

If this was a close company

If you were a director and the company was a 'close' company, click this box. A close company is, broadly, one controlled by

five or fewer participants, or

any number of participants who are directors.

Participants are persons who have a share or interest in the income or capital of the company, such as the shareholders and certain loan creditors.

Taxable income

Enter here the amount you were paid by this employer, after deducting:

any tax-free income, such as profit-related pay within the tax-free limits, which does not have to be entered on the tax return

contributions to your employer's pension scheme which qualify for tax relief (see the Tax Guide)

payments to charity deducted directly from your pay via a payroll giving scheme.

But include overtime, bonuses, statutory sick pay, maternity pay, taxable income from a profit-sharing scheme and taxable profit-related pay. Taxable amounts from other share schemes should only be entered here if they have already been taxed under PAYE: otherwise, enter them in the share schemes section of TaxCalc. Include the tax deducted from your profit share when you enter details of the amount of tax paid on the earnings from this job - tax will usually have been deducted under PAYE along with tax due on your earnings.

Enter the amount actually received, even if you earned it in an earlier tax year or you have been paid for work not yet done. Your P60 will usually show the taxable income figure to enter on your tax return, i.e. after pension contributions, but if you are not sure, check with your employer.

If you were non-resident or not ordinarily resident in the UK during 1998-99, the Non-residence section of TaxCalc will help you decide whether you need to complete the Employment section of TaxCalc. Also see Inland Revenue Help Sheet IR211 Employment - residence and domicile issues. If you need to include your non-UK earnings here, you may also be able to claim that some of the earnings are tax-free; the tax-free portion should be entered on the Income from work abroad screen. If you want to claim tax credit relief for foreign tax paid, go to the Entered elsewhere screen in the Foreign section of TaxCalc.

Tax already deducted

Enter here any tax you have already paid under PAYE, ie tax deducted from your wages before you receive them. Your P60 or P45 will give you full details. If your P60 or P45 shows a tax refund for this job, enter the amount as a minus figure.

If you received a tax repayment from your tax office or benefits office after you left a job, remember to include it in the Tax already paid screen in the Other Information section of TaxCalc.

Tips

Enter here any tips or gratuities you may have received in this employment but which are not already included in the figure for taxable income.

Any other payments

Enter here any other money payments not included in the figure for taxable income. Do not include lump sum payments paid in connection with the ending of a job, either on retirement, redundancy or death - enter these on the Lump sums screen.


Income from employment contents

Tax Guide

Employer

Benefits & expenses contents

Lump sums

Work abroad


Income from lump sums

Tax Guide

Full amount received

Tax allowable amounts

'Lump sums' cover one-off payments you might receive from your employer, usually - but not necessarily - at the end of your employment, such as redundancy pay and ex-gratia payments on retirement. They do not include any tax-free lump sums from a Revenue-approved, statutory or foreign government pension scheme - you do not need to enter these anywhere on this screen. If you are a member of HM Forces, also leave out any terminal grant, gratuity or other lump sum paid to you under Royal Warrant, Queen's Order or Order in Council. Nor do you need to enter any legal costs reimbursed direct to your solicitor as part of compensation when you lose a job.

Warning
The taxation of lump sums can be very complex: various reliefs can be deducted from some lump sums, but not from others, depending on the part of tax law under which they fall. In working out your taxable income from lump sums, TaxCalc follows Inland Revenue Help Sheet IR204, Lump sums and compensation payments (available on the 'Help' menu of TaxCalc). The Inland Revenue wants to know about all lump sums, even if they are tax-free (apart from the tax-free pension lump sums mentioned above). So enter the whole amount you received in the boxes in the 'Full amount received' section: TaxCalc will work out the taxable amount for you, and enter the payments in the correct boxes on your tax return.

Full amounts received

Under 'Full amounts received', enter:

any payments received under the terms of your employment.

any payments from a non-approved retirement scheme (include any tax-free amounts, but also enter the tax-free part under 'retirement/death lump sums' in the 'Tax allowable amounts' section). A non-approved retirement scheme is a scheme set up by your employer to provide benefits on your death or retirement, which does not meet the Inland Revenue rules for tax-free contributions.

other payments, for example, redundancy payments made under the government’s redundancy payments scheme or a scheme approved by the Inland Revenue, pay in lieu of notice - provided it’s not in your contract - and any other lump sums received, so long as they are not for work done, not part of your conditions of service, and (technically at least) unexpected. The first £30,000 of these 'other payments' is tax-free, but TaxCalc will deduct £30,000 from the amounts entered here, so you should enter the full amount received.

Tax allowable amounts

Enter here the tax-free amount of any payments you have already entered under 'Full amounts received'. These are:

any lump sum for a disability which meant you couldn't carry on your job (enter under 'disability payments'). However, don't include payments on retirement or death arising because of an injury - enter them under 'retirement/death lump sums' instead

compensation for loss of a job done entirely or substantially outside the UK (under either full or partial foreign service exemption, as appropriate - see Inland Revenue Help Sheet IR204 for how to calculate this)

lump sums from non-approved retirement benefit schemes which were funded either by your own contributions or by contributions from your employer on which you have already been taxed. Because contributions to these are made out of your taxed income (and you are taxed on any amounts your employer pays in) the benefits are tax-free. Remember, you do not need to enter lump sums from approved pension schemes anywhere on this screen.

You do not need to enter the £30,000 tax-free portion of redundancy payments anywhere in the 'Tax allowable amounts' section - enter the whole amount received, and TaxCalc will deduct the correct amount automatically.

Note
Although any 'compensation for loss of office' above £30,000 is taxable in itself, it is ignored when working out what rate of tax you should pay on your savings income. The Inland Revenue has an alternative tax calculation guide for people with income of this kind. TaxCalc takes this into account in working out your tax bill.


Income from maintenance

Tax Guide

Tax Tips

Original order

Amount received

Claim exemption

Maintenance payments are tax-free unless they were originally made under 'old rules' applying (broadly speaking) before 15 March 1988 and the person making them has not opted to move the payments to the 'new rules' applying for post-March 1988 payments. If so, the maintenance is taxable and you should complete this section. If you receive maintenance under more than one such order, you should enter them separately in the Table so that TaxCalc can work out the taxable amount correctly.

For more information, see Inland Revenue leaflet IR93, Separation, divorce & maintenance payments.

Original order

Enter the date of the original legal order or agreement under which this maintenance is received. This is not needed for the tax return, but TaxCalc requires a reference for identification purposes.

Amount received

The amount of taxable maintenance is pegged forever to the amount on which you were charged tax in 1988-89 - any increases above that amount are tax-free. Enter the gross amount received in the 1988-89 tax year and the gross amount received under the same order or agreement (or one replacing it) in the 1998-99 tax year, and TaxCalc will work out the taxable amount for you.

Claim exemption

Even if you received taxable payments under the 'old rules', if you are an ex-spouse who has not remarried the first £1,900 of your maintenance is exempt from tax. So you will only pay any tax if the amount you received in 1988-89 was more than £1,900. You do not qualify for the exemption in other circumstances, for example if you receive maintenance from a parent. Click here if you qualify for the exemption: TaxCalc will take it into account in the calculations and enter the appropriate figure in tax return. Note that the figure appearing in your tax return printout may be less than £1,900 if your taxable maintenance income was smaller than the exemption.


Income from pensions

Tax Guide

Tax Tips

State pension

Widow's pension

Industrial death benefit pension

FSAVC/AVC surplus repayment

Other pensions and retirement annuities:

- Exemption/deduction

Enter here any taxable pension income received - ignore tax-free pension income such as the lump sum from an employer's scheme.

State retirement pension

Enter here your state retirement pension (including the age addition if over 80), graduated pension, and SERPS pension (from the State Earnings Related Pension Scheme). Also include here any incapacity addition or addition for a dependant adult and any increases paid by the DSS due to an uprate on a guaranteed minimum pension. Do not include the £10 Christmas bonus, winter fuel payment or attendance allowance, none of which are taxable.

Remember to take into account any changes in the amount of pension received, e.g. if the amount was reduced during a stay in hospital. If you are unsure of exactly how much you received, ask your Benefit Office for form B735 (specifying the period from 6 April 1998 to 5 April 1999).

Note
A married woman's pension counts as her own income, even if it is based on her husband's contributions. However, any adult dependency addition a husband gets with his pension while his wife is under 60 counts, for income tax purposes, as his income.

Widow's pension

Enter the full amount of widow's pension to which you were entitled during 1998-99, including any earnings related additional pension. If you are unsure of exactly how much you received, ask your Benefit Office for form B735 (specifying the period from 6 April 1998 to 5 April 1999).

Industrial death benefit pension

This benefit has not been available to new claimants since 1988, but if you are still getting it, it is taxable. Enter the annual pension to which you are entitled but do not include Industrial Death Benefit Child Allowance if you get it - this is tax-free.

FSAVC/AVC surplus repayment

When you retire, you may find that your Additional Voluntary Contributions or Free-Standing AVCs to an employer's pension scheme have taken you over the Inland Revenue limits on pension benefits. If so, you can get back the excess funds after tax has been deducted by your pension provider. You cannot reclaim this tax, although if you are a lower- or basic-rate taxpayer there is no further tax to pay. You should not enter here any refund of contributions received because you left an employer's pension scheme within the first two years' of qualifying service - any tax due has already been deducted from the amount you receive.

Enter the repayment you actually received from your pension provider, and the notional tax deducted. Your certificate from your pension provider will give this information.

If you are a higher-rate taxpayer there will be extra tax due on this type of payment. TaxCalc will take this into account. Note, though, that special calculations have to be applied which mean that when you come to look at TaxCalc's workings, you will see the special 'lump sums' summary on the 'View' menu of TaxCalc (refunded AVCs are categorised with 'lump sums' for calculation purposes).

Other pensions and retirement annuities

Enter here the total of any other pensions you received in the 1998-99 tax year, for example from an ex-employer, a personal pension plan or retirement annuity contract. If you want to use TaxCalc to record and add up all your individual distributions of this type for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

Enter here the total gross amount you received before-tax from all your pensions of this type, plus the total tax deducted (for example, any tax deducted under the PAYE system). If you receive a pension that is exempt from tax, you may not be taxed on the whole amount, see 'Exemption/deduction' below. If you have income from more than one pension and want to use TaxCalc to record and add them up for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the totals in the boxes on this screen.

Exemption/deduction

Some pensions may be exempt from tax in full or part, or qualify for a 10 per cent deduction.

Exemption

If you are a former employee who has been awarded a pension on retirement because you were disabled by injury on duty or have a work-related illness, and if that pension is more than you would have been given had you retired at the same time on ordinary ill-health grounds, then the extra is exempt from income tax. Do not include it in either the 'Gross amount' or the 'Exemption/deduction' box.

Note that if you are claiming that a pension qualifies for tax relief under a Double taxation agreement the UK has with another country, you should not enter the tax relief here. Claim it on either the Non-residence or Dual residence screens in the Non-residence section of TaxCalc, as appropriate.

Deduction

Pensions from an overseas employer or pension fund qualify for a ten per cent deduction so that only 90 per cent of the pension is liable to UK income tax. These pensions should be entered in the 'Foreign' section of TaxCalc, not here, but some UK pensions for service to an overseas government also qualify for this deduction. In this case, enter the full amount of the pension in the 'Gross amount' box and 10 per cent of the full pension in the 'Exemption/deduction' box.

To qualify for this deduction these UK pensions have to be paid by or through any public department, officer or agent of the government of the overseas territory and be paid to:

a person who has been employed in the service of the Crown or in service under the government of the territory, or

their widow/widower, child, relative or dependants.

The territories concerned are:

any country forming part of Her Majesty's dominions

any Commonwealth country (other than the UK)

any territory under Her Majesty's protection.


Income from property contents

Tax Guide

Furnished holiday lets

Other property income


Income from self-employment contents

Tax Guide

Business details

Income and expenses

Allowances and adjustments

Losses

Class 4 National Insurance contributions

Other income and deductions

Balance sheet


Income from trusts & estates

Tax Guide

Tax Tips

Income from trusts

Income from settlements

-Taxed at basic rate

- Taxed at the rate applicable to trusts

- Taxed at lower rate

Income from estates

Limited interest

Absolute interest

Foreign estates

Foreign tax

Income from trusts

If you receive an income from a trust, you first need to work out what sort of a trust it is, in order to decide whether you have to enter it here or not. Do not enter here:

income from a bare trust, that is one where you have an absolute right to the income and capital of a trust fund. This counts as belonging to you and not to the trustees: enter it in the section of TaxCalc that deals with the type of income or gains concerned

income from a foreign or non-resident trust. This should go on the foreign screens unless you are claiming (under extra-statutory concession B18) to have the income treated as if paid from a UK resident trust. In this case, contact the Financial Intermediaries and Claims Office.

any scrip dividends or foreign income dividends from UK companies, UK authorised unit trusts or open-ended investment companies (OEICs) - even if they are paid to you from the trust after deduction from tax. Include these with other investments of this type in the Savings and Investments section of TaxCalc.

If you do have income to enter, which box to enter it in depends on how much tax has been deducted. Beneficiaries receive income from trusts which is treated as net of at least some tax, because the trust has already paid some tax. How much tax is deducted varies - it is 34 per cent if income is received from a discretionary trust ('the rate applicable for trusts'), 20 per cent if it is income from savings and investments ('the lower rate'), 23 per cent ('the basic rate') in other cases. You can reclaim this tax if you are due to pay less than has been deducted, but may have to pay more if you are a higher-rate taxpayer. TaxCalc will work this out for you.

Note
You should enter on this screen only income which is received after deduction of tax. Income received before-tax should be entered on the screen relating to the source of income, for example, the property screens if the income came from property.

Income from settlements

If you have set up a trust, covenant or agreement to pay someone else an income or to hand over capital, part (or all) of the amounts involved will continue to count as your income - on which you have to pay tax - in certain situations. The main situations are:

The settlement is a covenant to charity for a period which cannot exceed three years.

Capital or income from the settlement benefits your own unmarried child or stepchild and the child is under 18 (unless the total income from all the settlements in favour of your child is no more than £100 gross in a year).

You or your husband or wife can at any time benefit from the income or capital of the settlement.

You or your husband or wife have received a loan or repayment of a loan from the trustees of the settlement.

This income should also be entered in this section, but the amount you should enter depends on whether or not the trust document gives you an absolute entitlement to the income of the trust. See Inland Revenue Help Sheet IR270 Trusts and settlements - income treated as settlor's (from the Inland Revenue Orderline, 0645 000404).

Taxed at the basic rate

Enter here any income which has attracted tax at the basic rate (23 per cent). Enter the amount you actually received - TaxCalc will automatically work out the other figures needed for the tax return. If you want to use TaxCalc to record and add up a number of payments of this type, leave the box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

Taxed at the rate applicable to trusts

Enter here any income which has attracted tax at the rate applicable to trusts (34 per cent). Enter the amount you actually received - TaxCalc will automatically work out the other figures needed for the tax return. If you want to use TaxCalc to record and add up a number of payments of this type, leave the box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

Taxed at lower rate

Enter here any income which has attracted tax at the lower rate of 20 per cent (i.e. income from savings or investments). Enter the amount you actually received - TaxCalc will automatically work out the other figures needed for the tax return. If you want to use TaxCalc to record and add up a number of payments of this type, leave the box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

Income from estates

The personal representatives of someone who has died (eg the executors, or administrators if there was no will) are liable to tax on any income received by the estate of the deceased person. The income they then pay out to you, if you are a beneficiary, has therefore already had some tax deducted, and this affects in which of the four boxes in this section the income should be entered. 'Non-repayable' refers to the fact that whereas some income is regarded as having already borne tax, so that no further tax is payable unless you pay tax at a higher rate than that deducted, you cannot claim back this tax even if you are a non-taxpayer.

Where to enter the income also depends on whether you have a 'limited interest' or an 'absolute interest' in the residue of the estate. The residue is the amount remaining after the executors have paid or provided for all legacies and expenses of the estate. You should receive a statement from the personal representatives saying how much tax, and of which kind, has been deducted. This will help you to decide where to enter the income. TaxCalc will then add this income to any other income you have within each category for the purposes of working out your tax bill. Also enter the name of the estate as additional information. Use the 'Additional information' button at the bottom of this screen.

If you received income from the estate of someone who has died, give the details requested in the correct box. Enter the amount you actually received - TaxCalc will automatically work out the other figures needed for the tax return. If you want to use TaxCalc to record and add up a number of payments of this type, leave the box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

You do not need to include specific legacies you were left. Any income or gains arising from such legacies should be entered in the appropriate income or gains screens, depending on the source, not here.

Limited interest

This means you only have an interest in income provided by the residue (not any capital), for example, you are a life tenant or a life-renter. If this applies to you, enter income received for 1998-99 liable to basic-rate and lower-rate tax in the boxes entitled 'income bearing basic-rate tax' and 'Income bearing lower-rate tax'. Which tax rate has been applied to which income should be identified on the statement prepared by the deceased's personal representatives.

Absolute interest

If you are a beneficiary who has an interest in both the income and the capital of the residue you must enter the income you received, but do not enter your share of the capital of the estate.

If you received payments in 1998-99 your income will either be the payments you actually received during the year, or the income you have been receiving since the income began (if this has not been taken into account in earlier years). The lower of these two amounts is the amount you must declare in this section.

The personal representatives will supply you with a statement showing the amount of income which should be included. The statement will show whether the income has been taxed at the basic or lower rate of tax and, if appropriate, whether the tax at either or both rates is not repayable. Enter the income in the relevant sections.

Foreign estates

If you received income from a 'foreign' estate (either one where the presonal residents are not resident or ordinarily resident in the UK, or where the deceased was not domiciled in the UK), income received from overseas may not have borne full UK tax. If so, you may need to adjust the figures you enter, and TaxCalc may not be able to deal with your situation: see the Inland Revenue notes accompanying the Trusts etc. supplementary sheet.

Note
Income that was due to the deceased person during their lifetime but was paid after their death may end up being included as part of their estate for both inheritance tax and income tax purposes. If you are treated as having received income from an estate where this has happened, and you are a higher-rate taxpayer, you may be able to claim a special relief. Contact your tax office or tax adviser.

Foreign tax

If you received income from trusts and estates which is chargeable to UK tax but which has also been taxed in a foreign country, you may be entitled to claim 'tax credit relief' for the foreign tax paid. If you wish to do this you must complete the Foreign screens. As an alternative, you can claim to deduct the amount of foreign tax paid. Tax credit relief is usually the best option, but if you do not want to claim it, enter here any foreign tax you have paid on this type of income and TaxCalc will deduct it from your taxable income from this source.


Income from shares & unit trusts
Shares & unit trusts

Tax Guide

Tax Tips

Dividends and other qualifying distributions from UK companies

Dividend distributions from UK unit trusts/OEICs

Scrip dividends from UK companies

Foreign income dividends

Interest income

Non qualifying distributions

Loans written off

Dividends and other qualifying distributions from UK companies

Enter here the total dividends you received as a shareholder in a UK company during the 1998-99 tax year. Enter the actual dividend received - TaxCalc will automatically work out the other figures needed for the tax return. If you want to use TaxCalc to record and add up all your individual share dividends of this type for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

Do not include any dividends from shares held in a Personal Equity Plan (PEP): these are tax-free. However, you should include other taxable amounts arising from your shares, for example, the 'qualifying distribution' which may arise if the company

sold you an asset at less than market value or

paid interest at more than a commercial rate on money you had loaned it.

Note
If you have included income from a qualifying distribution in your return give details of the circumstances in which the distribution arose under additional information. Use the 'Additional information' button on the Tax already paid screen under the Other information section.

Dividend distributions from UK unit trusts/OEICs

The income from unit trusts is often called a 'distribution'. 'OEICs' stands for 'Open-Ended Investment Company'. Enter here the total income of this kind which you received during the 1998-99 tax year. Enter the actual amount received - TaxCalc will automatically work out the other figures needed for the tax return. If you want to use TaxCalc to record and add up all your individual distributions of this type for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

Do not include income from unit trusts held in a PEP: this is tax-free. Nor should you enter income shown on your dividend voucher as an 'equalisation': this is a repayment of your capital and is not taxable. But do include income earned on 'accumulation' units or shares - this is automatically reinvested in the unit trust/OEIC for you, but is still taxable in the year it is earned.

Scrip dividends from UK companies

A scrip dividend is one where you have chosen to take shares in lieu of cash. If so, the gross value of shares received is taxable. You get a notional tax credit.

Enter the total cash value of all scrip dividends received during the 1998-99 tax year and the amount of your notional tax credits for them.(which should be shown on the tax vouchers accompanying the dividends). If you want to use TaxCalc to record and add up all your individual dividends of this type for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

Note
Scrip dividends are also known as stock dividends.

Foreign income dividends

These are a type of dividend which UK companies, unit trusts and OEICs (Open-Ended Investment Companies) with earnings from overseas may issue (until 5 April 1999). They come with a notional tax credit.

Enter the total cash value of all foreign income dividends received during the 1998-99 tax year and the amount of your notional tax credits for them (which should be shown on the tax vouchers accompanying the dividends). If you want to use TaxCalc to record and add up all your individual dividends of this type for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

Do not include income from investments held in a PEP: this is tax-free. Nor should you enter unit trust income shown on your dividend voucher as an 'equalisation': this is a repayment of your capital and is not taxable. But do include income earned on 'accumulation' units or shares - this is automatically reinvested in the unit trust/OEIC for you, but is still taxable in the year it is earned.

Interest income

Unit trusts and OEICs (Open-Ended Investment Companies) which invest in interest-producing assets, such as British Government stocks, can choose to issue an 'interest' distribution. This is treated like interest.

Enter the total cash value of all such interest received from unit trusts or OEICs during the 1998-99 tax year and the amount of tax deducted from them (which should be shown on the tax vouchers accompanying the dividends). If you want to use TaxCalc to record and add up all your individual distributions of this type for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

Do not include income from investments held in a PEP: this is tax-free. Nor should you enter income shown on your dividend voucher as an 'equalisation': this is a repayment of your capital and is not taxable. But do include income earned on 'accumulation' units or shares - this is automatically reinvested in the unit trust/OEIC for you, but is still taxable in the year it is earned.

Non-qualifying distributions

These include:

a bonus issue by a company of securities or redeemable shares (except a bonus issue giving rise to a qualifying distribution), or

the paying on of such a bonus issue by a company which has itself received it.

If you receive such a bonus issue the amount you should enter is the nominal value of the redeemable shares, or, for securities, the amount of the principal secured plus any premium payable. You can deduct any payment you may have made for that issue.

TaxCalc will automatically calculate the tax which is treated as already having been paid on this income.

Loans written off

If a loan made by a company has wholly or partly been written off, it may be taxable. If so, the amount written off is treated as a net amount of income received after deduction of tax at the lower rate. Enter the amount of the loan written off - TaxCalc will automatically calculate the tax treated as having been paid on this income.


Income from work abroad

Tax Guide

Foreign earnings not taxable in the UK

Foreign earnings deduction

Foreign tax for which tax credit relief not claimed

Broadly speaking, if you are resident or ordinarily resident in the UK, you are liable to UK tax on foreign earnings, even if your permanent home (your 'domicile') is elsewhere. The Non-residence section of TaxCalc will help you decide whether you need to enter your foreign earnings. However, even if you do, there are some situations in which part of your foreign earnings can be tax-free, or in which tax can be deferred. Inland Revenue Help Sheet IR211 Employment - residence and domicile issues (from the Inland Revenue Orderline, Tel: 0645 000404) will help you work out what deductions you can claim.

If you need to enter your earnings from a job abroad in the Employment section of TaxCalc, you must enter them in the 'gross income' box on the Employment Details screen, even if you know that they are tax-free. Any tax-free amounts should also be entered in the relevant boxes on this Work abroad screen: TaxCalc will deduct these from your gross income from employment in order to work out your tax liability.

Remember to include any income from working abroad in an earlier tax year, which was not taxable at the time but is taxable now (for example because you have only just brought it back to the UK).

Foreign earnings not taxable in the UK

You should enter here the tax-free amount of any foreign earnings. Note that if you are making a non-residence claim, you should also complete the Non-residence section of TaxCalc (unless the income relates to a previous year in which you claimed to be non-resident, or to a future year in which you think you will make such a claim).

You can also enter here any foreign earnings which you received abroad but which you could not bring to the UK because of exchange controls or a shortage of foreign currency in that country - these earnings are only taxed when you are eventually free to bring them back to the UK.

Foreign earnings deduction

This deduction is now available only if you are a 'seafarer', i.e. 'someone who performs their employment duties on a ship'. A gas or oil rig, however mobile, does not count as a ship.

Whether you qualify for the deduction depends broadly on how long you spent outside the UK (which means working on a vessel on a voyage, or part voyage, which begins or ends outside the UK). The rules are complex but you must have been away for a ‘continuous period’ of 365 days or more (not necessarily coinciding with the tax year). This period can include visits back to the UK, providing they are for no more than 183 days or one-half of the days in a.qualifying period'. For how to work out whether you have met the requirements, see Inland Revenue Help Sheet Help Sheet IR205(S) Foreign earnings deductions: Seafarers (available from the Inland Revenue Orderline, Tel: 0645 000404).

If you qualify, enter here the amount you earned during the qualifying period from working overseas, minus any tax-allowable pension contributions, expenses, and capital allowances (you should already have entered these on earlier screens).

Note
The foreign earnings deduction for everyone apart from seafarers was abolished for earnings received after 16 March 1998.

Foreign tax for which tax credit relief is not claimed

If you cannot claim tax-free status for your foreign earnings, but have paid foreign tax on them, there are special reliefs which prevent you paying both UK and overseas tax. In most cases, tax credit relief is the best form of tax relief: to claim this, you must complete the Entered elsewhere screens in the Foreign section of TaxCalc. However, you can instead claim to deduct the amount of foreign tax from your taxable income. If you want to do this, enter the amount of foreign tax here.


Life insurance gains
Life insurance

Tax Guide

Tax Tips

Gains with notional tax

Top-slicing relief

Policy

Duration

Gains without notional tax

Deficiency relief

More than one policy/gain

Taxable profits on life insurance policies are called 'chargeable event gains' in tax-speak, but for tax purposes they are treated as income. You do not need to enter any gains received from life insurance policies that are treated as non-taxable. The insurance company should be able to tell you how much of the gain is taxable: you may receive a 'chargeable event' certificate with this information. For more information on life insurance policy gains see Inland Revenue Help Sheet IR320, Gains on UK Life Insurance Policies (available on the 'Help' menu of TaxCalc).

Note that if you have gains of this type, special tax rules for 'lump sums' come into play. This means that when you come to check how TaxCalc has worked out your tax bill, you will see the tax summary on the 'View' menu of TaxCalc is based on the Revenue's lump sums tax calculation guide.

If you have gains from a policy from an overseas insurer, or which counts as part of the 'Overseas life assurance business' of a UK insurer, it should be entered on the Other foreign income screen.

Gains with notional tax

Virtually all taxable insurance gains fall within this category (the insurance company should able to tell you). Life insurance funds pay tax, and because of this, policyholders are regarded as already having paid 'notional' tax equivalent to 23 per cent of the taxable gain. TaxCalc will automatically work out the notional tax for you and enter it in the appropriate box in the tax return.

Top-slicing relief

A special type of tax relief (called top-slicing relief) can operate on taxable life insurance gains to reduce the amount of higher-rate tax which may be due.

It works, broadly, by spreading the gain over the lifetime of the policy (or over the number of years since the last chargeable gain took place).TaxCalc automatically works out whether top-slicing relief will save you tax and allows it where necessary.

Policy

Enter here a reference for each policy: this is not needed for the tax return but TaxCalc requires at least a one-character reference for identification purposes.

Duration

So that TaxCalc can correctly work out the top-slicing relief on any tax bill, you need to enter the number of years over which the taxable gain should be spread. Enter the number of complete years since you took out the policy (look at the policy commencement date), or the number of complete years since the last chargeable gain took place (eg if in one year you drew more than your tax-free allowance). If partial withdrawals are made every year enter '1'.

Gains without notional tax

A few gains are not treated as having suffered basic-rate tax - these are the exceptions and include:

a friendly society policy written as part of the society's tax-exempt business

certain life annuity policies.

Enter these gains in the box entitled 'Life insurance gains without notional tax'.

Deficiency relief

Very occasionally a relief may be due when a life assurance policy, life annuity contract or capital redemption policy comes to an end, if you have withdrawn benefits from the policy during its term. This is not a relief for a 'loss' but a relief to ensure that the total amount treated as investment income is never more than the total gain made under the policy or contract. If you are unsure if this relief applies to you, check with your tax office or the insurance company which provided the policy or contract. Also see Inland Revenue Help Sheet IR320, Gains on UK Life Insurance Policies (available on the 'Help' menu of TaxCalc).

More than one policy/gain

If you received a chargeable gain from more than one life insurance policy enter the details of each policy in this section.

Note
As requested by the Inland Revenue, also enter under 'Additional information' on the Tax already paid screen in the Other information section of TaxCalc, the amount of the gain, the notional tax and the number of years for each policy.

If the gains you have received are from a 'cluster' of policies (ie, identical policies and identical gains), treat them as one gain for the purposes of the tax return and enter the total here.


Loan to buy or improve property you let
Loans to buy or improve property which you let

If you are letting furnished property, you can deduct the loan interest from your rental income as a business expense. If so, enter it as an expense under 'Finance charges including interest'. If the deduction leaves you with a minus figure, you have effectively made a loss which can be treated like other losses from rental income.

You cannot get this sort of relief if you are already getting mortgage interest relief because this is your only or main home. However, you may be able to choose which sort of relief you prefer - contact your tax office. Since mortgage interest relief is available at only 10 per cent on the first £30,000 borrowed (and will be abolished in April 2000), setting the whole interest against rental income will normally be preferable unless your rental income is small.


Losses

Tax Guide

Tax Tips

Loss offset against other income for 1998-99

Loss to carry back

Loss to carry forward

Losses brought forward from last year

If you have made a loss from this partnership in the 1998-99 tax year, this will appear in Box 3.80 on page 3 of the Self-employment supplementary pages. Complete this screen to tell the Revenue how you want to use it.  To see the effect of the various options for using your losses, you can try entering your losses in alternative boxes, to see which of the options open to you will save you the most tax.

Warning
You do not have to claim your loss immediately. You can wait, and tell the Revenue your choice later, by letter. But you must claim your loss by 31 January 2001 (31 January 2005 if carrrying losses made in 1998-99 forward to future years), otherwise you will lose them. Where your loss can be claimed against more than one category of income, and is sufficiently large, you can choose the order in which it is set against the various categories of income, but the whole of that category of income must be reduced to zero before you claim relief against another category. Inland Revenue Help Sheet IR227: Losses (available on the 'Help' menu of TaxCalc) includes a working sheet which shows how you can set off your losses.

Loss offset against other income for 1998-99

If you want to offset part of any loss made in 1998-99 against other income, enter the amount here. TaxCalc will deduct this amount from your overall tax liability. If the loss is more than is needed to reduce your other income to zero, and you have taxable capital gains, you can offset part or all of the excess loss against the gain. To do this, enter the excess in the 'Income losses etc.' box on the Losses screen in the Capital gains section of TaxCalc.

Loss to carry back

You can carry back losses to set against profits from the previous three tax years, but only if you are running your partnership commercially for profit and:

your business is in its first four years of tax assessment (ie, it started up after 5 April 1995) or,

your business ceased in 1998-99 (in which case you can set the loss only against earlier profits from the same business).

If you want to take this option, enter the amount of loss here. If you have already claimed to offset this loss you should still include it here, and provide details in additional information, using the 'Additional information' button on the Details screen.

TaxCalc will ignore any amount entered here for the purposes of calculating your 1998-99 tax liability.

Loss to carry forward

Enter here any part of the losses sustained during 1998-99 which you wish to carry forward to set against profits of future years.

TaxCalc will ignore any amount entered here for the purpose of calculating your 1998-99 tax liability.

Losses brought forward from last year

Enter here any losses you made in a previous year which you have already claimed to carry forward and have not already used. Any amount entered here will be deducted from your net profit figure. Note that losses brought forward can only be set against profits from the same trade: they cannot be set against income from other sources or capital gains. So if your losses brought forward are more than you need to reduce your 1998-99 net profits from this business to zero, remember to enter the unused amount in the 'losses to carry forward' box.


Lump sums calculation

Introduction

Tax Summary

Tax Calculation Working Sheet

Lower-rate tax calculation

Basic-rate tax calculation

What to do next

Disagreements about the tax due

Introduction

Working out your tax is particularly complex if, in 1998-99, you received:

a taxable lump sum on leaving a job, or

a refund of surplus contributions to an AVC scheme, or

a taxable gain on a life insurance policy which has a basic-rate notional tax credit (virtually all do).

These one-off lump sums can push the rest of your income into a higher tax band. A further complication is that you pay tax on insurance gains at a minimum of 23 per cent, even if you are a non-taxpayer or lower-rate taxpayer.

The calculation sorts out an order of priority in which the various types of income should be set against your allowances and tax bands, in order to make best use of them.

Tax Summary

This gives a brief summary of your tax in 12 steps. If you want to see how a particular figure in this summary was arrived at, click on the relevant highlighted links to go to the tax calculation working sheet.

Note
TaxCalc will not give you the right answer if you have not entered details of tax owing from previous years, tax refunds, or PAYE adjustments. Go to the Tax already paid screen in the Other information section of TaxCalc to check the amounts you entered.

Tax Calculation Working sheet

TaxCalc bases its calculations on the 'tax calculation working sheets' used by the Inland Revenue. The basic working sheet is sent out with the tax return, but there are alternative versions for people in various circumstances e.g. people who have taxable capital gains or lump sums from life insurance or employment. TaxCalc uses the right one for you and follows the same box reference system, although not necessarily in the same order. In particular subsidiary calculations are shown at the end of the working sheet (with links to them from the earlier totals). Explanations of some of the boxes are given below.

We recommend that you have a copy of the appropriate Inland Revenue working sheet to hand for reference (copies are available from the Inland Revenue Orderline, Tel: 0645 000404, e-mail: saorderline.ir@gtnet.gov.uk). The notes accompanying the working sheets also give useful explanations of how the tax is worked out.

Lower-rate tax calculation

Some types of income have non-repayable (notional) tax deducted at 20 per cent, others (notably life insurance gains) at 23 per cent, and other savings income has repayable tax deducted at 20 per cent. In order to make best use of your lower-rate tax band, an order of priority for the various types of income and gains has to be worked out in this section.

Basic-rate tax calculation

This section calculates the amount of income you have above the lower-rate limit (£4,300). It excludes savings income (on which no basic-rate tax is due) and taxable life insurance gains (which are treated separately at L45). If part of your income falls within the lower-rate band, and part in the basic-rate band, it makes a further calculation at L46 to work out the most beneficial order in which the various types of income should be pushed into the basic-rate band. (See the notes to the Inland Revenue tax calculation guide for more information.)

L1 to L21 Income and deductions

L23 and L24 Pension/training payments made net

L25 and L26 Allowances given as a deduction from income

L59 Extra tax on savings income

L61 Top-slicing relief

L63 VCTs and EIS subscriptions

L65 Allowances and reliefs given in terms of tax

L66 Notional tax

L67 Tax credit relief

L70 Recoverable tax on charitable covenants, annuities and gift aid payments

L71 Class 4 National Insurance contributions

L73 Unpaid tax for earlier years included in PAYE code for 1998-99

L75 Tax paid at source

L76 Tax due for 1998-99 included in next year's PAYE code

L82 Payments already made

L86 Tax of under £1,000 to be collected by PAYE

L92 Payments on account

Amount due on 31 March 2000

Savings breakdown

What to do next

Before you send your return off, please check that you have given all the necessary information, in particular:

if you are due a tax repayment, whether you want it paid out to you rather than set against future tax bills (on the Claim tax repayment screen in the Other information section). See Paying your tax

if you want to tell the Revenue the amount of tax you owe, rather than getting the Revenue to calculate it as well and using TaxCalc's figure only as a check (on the Personal details screen)

if you are taxed under are PAYE and you are sending your return in before 30 September 1999, if you want any tax owed (under £1,000) collected through your PAYE code (on the Personal details screen)

if you want to claim to change your payment on account - if so you must also enter the appropriate alternative figure in the Tax already paid screen in the Other information section of TaxCalc.

If you want to find out more about self assessment and how it affects the way in which you pay tax, see 'Dealing with the Inland Revenue'.


Married couple's allowance

Tax Guide

Tax Tips

Spouse's full name/tax reference

Separated but wholly supporting my wife

Allocation of allowances

Transfer of surplus allowance

Complete this screen if you are a married man or woman, in order to claim the married couple's allowance: note that it is essential to click on the appropriate button in the 'Allocation of allowances' box. Although a married couple can split the allowance, the husband remains formally responsible for claiming it: he can only claim it if he has lived with his wife for all or part of the tax year or he was separated before 6 April 1990 but is wholly maintaining her.

In order to make the most of TaxCalc, both husband and wife should enter data in their own file. Then, open both files together and go to either the tax summaries or the tax return on the 'View' menu of TaxCalc: TaxCalc will give you any tax-saving tips that apply in your case.

Married couple's allowance is worth 15 per cent of £1,900 in 1998-99, ie £285, deducted from your tax bill. A higher allowance is paid if either you or your wife were aged 65 or more at any time in the 1998-99 tax year. TaxCalc will work it all out for you and give you the appropriate amount, if you complete this screen and the Personal details screen in the Personal section of TaxCalc.

For further information, see Inland Revenue leaflets IR80, Income tax and married couples, and IR121, Income tax and pensioners. The full text of these leaflets is available on TaxCalc's 'Help' menu.

Note
If you are getting additional personal allowance in the year of marriage, you can carry on getting it that year instead of married couple's allowance. This is worth doing since you get the whole allowance whatever your date of marriage, whereas you get only one-twelfth of the married couple's allowance for each month of marriage. If you want to do this, do not enter anything in this screen. Complete the Additional personal allowance screen instead.

Spouse's full name/tax reference

Enter your spouse's name and TaxCalc will enter this in the correct place in the tax return. The tax reference is optional.

Separated but wholly supporting my wife

Click on the box if you are a married man, and:

you separated from your wife before 6 April 1990 and were still married to her on 6 April 1998, and

she has not remarried and you have wholly supported her since separation until at least 6 April 1998 with voluntary maintenance payments.

In these circumstances you can claim married couple's allowance - TaxCalc will make the necessary entries in your tax return.

Allocation of allowances

Married couple's allowance is given automatically to the husband, unless you elect to split it between you or give it all to the wife. If you qualify for the higher, age-related allowance, you can only transfer the basic allowance which does not depend on your age. You can only apply to transfer allowances before a tax year begins, so it is too late to do it for 1998-99 or 1999-2000 (and the allowance will be abolished from 6 April 2000 unless you reach 65 before that date).

If you did not elect to transfer allowance to the wife, click on 'all to me' if you are the husband, and 'all to spouse' if you are the wife: if you made an election, click on whichever button applies. Note that the married couple's allowance is always given wholly to the husband in the year of his death, regardless of any election (with any unused amount transferred as below).

However, if you did not make the election in time, and it turns out that whoever had the allowance did not make full use of it, all is not lost. You can still ask for the unused allowance to be transferred to the other spouse - see Transfer of surplus allowance.

Transfer of surplus allowance

If you claimed the married couple's allowance during 1998-99 but you did not have enough income during the year to make use of any or all of it, you can ask for the surplus to be transferred to your spouse. TaxCalc will tell you whether you should make this election when you go to either the tax return or the tax summary on the 'View' menu of TaxCalc. You must tell your tax inspector that you want to make the election within five years of the 31 January following the end of the relevant tax year - ie before 31 January 2005 for the 1998-99 tax year.

Click on the button which applies to you - depending on whether you are transferring the surplus to your spouse, or you are asking for the surplus to be transferred to you.

If the surplus is to be transferred to you also enter the amount to be transferred. You can find this out by asking your spouse to run TaxCalc with his or her own data: your spouse should then go to either the tax return or the tax summary on the 'View' menu of TaxCalc. The same applies if you want to transfer your unused allowances to your spouse: open your own TaxCalc file and go to either the tax return or the tax summary on the 'View' menu of TaxCalc. You do not need to enter the amount in your file, but your spouse should enter it in his or her file.

Additional information
If you want your spouse to have any surplus married couple's allowance you should enter your spouse's name, address, tax reference, National Insurance number and tax office under 'additional information' on the Transitional allowance screen. You should also do this if you are the person claiming the unused allowance.


National Savings accounts

Tax Guide

Tax Tips

Ordinary Account

Capital Bonds

Income Bonds

Investment Account

Deposit Bonds

Pensioners' Bonds

First Option Bonds

The National Savings investments listed are all taxable but paid out before tax (with the exception of First Option Bonds, where tax is deducted first). All other National Savings investments are tax-free. You are taxed on the income earned on the account during the 1998-99 tax year. If you have a passbook on your account you may need to send it away to find out how much interest you have earned.

Ordinary Account

The first £70 of interest received from a National Savings Ordinary Account is tax-free - enter the full amount received and TaxCalc will automatically deduct £70.

Capital Bonds

Capital Bonds give a guaranteed rate of interest for a five-year period, the interest being added to the Bond each year. Interest is paid gross but taxable either through PAYE or your payments on account. Enter the total amount received in 1998-99 here and any tax paid on account in the Tax paid screen of TaxCalc.

Note
Remember to include any tax you may have already paid through your payments on account in the Tax already paid screen in the Other information section of TaxCalc. If you are taxed through PAYE, tax on your National Savings investments may have been collected through PAYE - if so, this will be entered together with any other PAYE, eg in the Employment details or Pensions screens.

Income Bonds

Interest on Income Bonds is paid monthly, either by post or direct into a bank account. Interest is paid gross but taxable either through PAYE or your payments on account. Enter the total amount received in 1998-99 here and any tax paid on account in the Tax already paid screen of TaxCalc.

Investment Account

The Investment Account has interest credited annually on 31 December. Interest is paid gross but taxable either through PAYE or your payments on account. Enter the total amount received in 1998-99 here and any tax paid on account in the Tax already paid screen of TaxCalc.

Deposit Bonds

You can no longer buy Deposit Bonds as they were withdrawn from sale in November 1988. However, if you bought bonds before that date you can continue to hold them and withdraw part, or all, of your savings. Interest is paid gross but taxable either through PAYE or your payments on account. Enter the total amount received in 1998-99 here and any tax paid on account in the Tax already paid screen of TaxCalc.

Pensioners' Bonds

These are similar to the ordinary Income Bonds, but instead of a variable rate of interest they carry a guaranteed rate of interest, payable into a bank or building society account. Interest is paid gross but taxable either through PAYE or your payments on account. Enter the total amount received in 1998-99 here and any tax paid on account in the Tax already paid screen of TaxCalc.

First Option Bonds

This National Savings investment pays out interest after deduction of tax at the basic rate. Non-taxpayers or lower-rate taxpayers can reclaim tax, higher-rate taxpayers will have to pay more - TaxCalc will take this into account. Enter the amount actually received and TaxCalc will automatically work out the other figures for you (including the tax already paid - you do not need to enter this tax yourself).


Net relevant earnings

Your profits for tax purposes after allowable expenses and deductions (if self-employed) or your total before-tax pay, including most taxable fringe benefits (if you are an employee). Used to work out your maximum contributions to personal pension plans.


Other income from abroad

Tax Guide

Tax Tips

Pensions

Social security benefits

Income received by overseas trust/company etc

Country

Unremittable income

Amount before tax

UK tax

Foreign tax

Amount chargeable

Tax credit relief

Relevant deductions

Disposals of offshore funds

Income etc. relating to non-resident trusts

Overseas trusts/companies

Click if you have omitted income

Warning
The taxation of income from abroad can be complex and TaxCalc cannot anticipate every exceptional case. Not all your overseas income may be taxable in the UK (or special rules may apply) if you count as not resident, not ordinarily resident or not domiciled in the UK. Fuller information is given in the Inland Revenue notes accompanying the ‘Foreign’ supplementary pages. Also see Inland Revenue leaflets IR20 Residents and non-residents and IR139 Income from abroad? If you are in any doubt about what to enter, ask your tax office or tax adviser for help.

Pensions

Enter in this table the sterling equivalent of any pension or annuity from outside the UK (even if it is paid through someone in the UK). Note that if the amount received in 1998-99 includes arrears for previous years, you may be able to claim to have these arrears treated as income for earlier years. Ask your tax office about Extra Statutory Concession A55.

The following income from overseas pensions is tax-free:

any extra pension from a former employer received because you were disabled by a work-related injury or illness (in excess of any ordinary ill-health pension)

war widows’ pensions and some pensions to other dependants of deceased forces and Merchant Navy personnel. See IR Help Sheet IR310: War widow’s and dependant’s pensions

some pensions payable under special German and Austrian laws, including payments to victims of Nazi persecution. If you received the pension for the first time in 1998-99, attach the document awarding you the pension to your tax return

one-tenth of a pension or annuity from an overseas employer or pension fund.

In these cases, you should enter the whole amount of the pension received under ‘Amount before tax’, deduct any tax-free amount and enter the result under ‘Amount chargeable’.

Note
If you expect to start getting a pension or annuity from abroad before 6 April 2000, enter the details in the 'Additional information' section on this screen, so that your tax office can adjust your PAYE code if necessary.

Social security benefits

Any benefits received under the social security legislation of a foreign government are treated in a similar way to UK benefits. This means that while some benefits are taxable, those overseas benefits which are equivalent to tax-free UK benefits are also tax-free. Overseas benefits corresponding to the following UK benefits are tax-free and do not need to be entered here:

incapacity benefit paid during the first six months of your incapacity, or for a period of incapacity beginning before 13 April 1996

attendance allowance

disability living allowance

severe disablement allowance

maternity allowance

widow’s payments

child special allowance

guardian’s allowance

child benefit.

Enter the sterling equivalent of any benefits which are not tax-free - if in doubt, ask your tax office.

Income received by overseas trust/company

Special anti-avoidance rules seek to tax transfers you have made to trusts, companies or other legal entities overseas, if you or your husband or wife can still benefit from them, and you are ordinarily resident in the UK. (The same may apply if someone else has made a transfer which you benefit from, but in this case enter the income under Benefits from trusts/companies abroad, not here.)

You should enter the sterling equivalent of any taxable amount here, unless you can show that the purpose of the transfer was not to avoid tax. Even so, you must click on the 'Omitted income relating to offshore funds' box at the bottom of this screen if you are omitting income for this reason. If you think you may be affected by these rules, you are likely to need help from a suitably qualified tax adviser.

Country

Enter here the name of the country in which the income or gain arose.

Unremittable income

If you have income arising outside the UK that you were unable to transfer (or ‘remit’) to the UK, because of exchange controls or a shortage of foreign currency in the overseas country, then you can claim that the unremittable income should not be taxed until it is possible to transfer it.

If you have unremittable income, you should still tell the Revenue about the income by entering the country, amount before tax and foreign tax, but be sure to click on the ‘Unremittable income’ box and leave the ‘Amount chargeable’ box empty. In this case only, enter the income and foreign tax in the foreign currency rather than converting it to sterling. After you have printed out the tax return, cross out the £ sign pre-printed on the form.

Amount before tax

Enter the sterling equivalent amount credited to you (or remitted, if previously unremittable), before deducting any UK or foreign tax, but after deducting any unremittable income. The information should be shown on any documentation received with the income.

UK tax

Your foreign income may be paid to you through an agent in the UK (e.g. a bank). The agent will normally deduct tax before passing the money on to you. In this case, you should enter the amount deducted here: TaxCalc will take it into account when working out your final tax bill.

If you have already paid some tax on this income through your payments on account, enter this on the Tax already paid screen in the Other information section of TaxCalc, not here.

Foreign tax

Enter here the amount of any foreign tax you have already paid on the item of income. For example, some foreign tax may have been deducted before the income was paid to you (in which case it is known as ‘withholding tax’). TaxCalc will take the foreign tax into account when deciding how much further UK tax is due. However, you cannot take into account any tax in excess of the amount set out in any Double Taxation Agreement between the UK and the foreign country. If you paid more, you should enter here only the minimum amount to which you were liable and approach the overseas tax authority for a refund of the excess. Further information on the amount of foreign tax you can set against your UK tax bill is given in the notes to the ‘Foreign’ supplementary pages.

Amount chargeable

The figure to enter here depends on whether you have entered an item of unremittable income and on whether or not you are claiming tax credit relief.

If you have entered an item of unremittable income it is not taxable. Do not enter anything in the ‘amount chargeable’ box.

If you have decided to claim tax credit relief, you can also leave the ‘amount chargeable’ box blank, providing you have entered the before-tax amount. TaxCalc will calculate the relief for you separately, providing the ‘tax credit relief’ box for the item is ticked.

If you are not claiming tax credit relief, take the before-tax amount, deduct the foreign tax, and enter the result at ‘Amount chargeable’.  Remember to click on the tax credit relief button to remove the tick.

If you receive a foreign pension part of which is tax-free, enter the amount received, less the tax-free amount, less (if you are not claiming tax credit relief) the foreign tax.

Tax credit relief

To avoid paying two lots of tax on your foreign income, both overseas and in the UK, you can just deduct the foreign tax from the before-tax amount, and then work out your UK tax on the amount you are left with. However, claiming tax credit relief instead will usually result in a lower tax bill, because it provides relief if the foreign income pushes you into a higher tax bracket.

For this reason, the ‘tax credit relief’ button will remain ticked unless you click on it. However, you can see what difference it makes by running TaxCalc both with and without the ‘tax credit relief’ button ticked to see which produces the smallest tax bill. In particular, tax credit relief is likely to be less advantageous if you would have no UK tax to pay on the item in any case.

If you decide not to claim tax credit relief, or cannot (see Note below), or if the income is unremittable, you should click on the ‘tax credit relief’ button to remove the tick, deduct the foreign tax from the before-tax amount of income, and enter the result in the ‘Amount chargeable’ box.

Note that if you eventually get a refund of some of the foreign tax on which you are claiming relief now, you have to notify the Inland Revenue who will claw back some of the relief.

Note
Tax credit relief is not always available, for example it is not available on dividend income from the Isle of Man. You should always check the position for any country from which you receive foreign income or gains, in case there are any limitations or special rules to observe. Note, too, that while TaxCalc works out tax credit relief for you in most cases, it cannot deal with special rules if as well as foreign income you have taxable lump sums from an employer or from a life insurance policy, or if you have taxable capital gains. Special tax calculation guides are available from the Inland Revenue Orderline (0645 000404) if this affects you. Ask your tax office or tax adviser.

Relevant deductions

The calculation of tax credit relief can be affected by tax relief you have claimed on payments such as personal pension contributions or charitable covenants. If any of the payments you have claimed under the Reliefs section of TaxCalc relate specifically to, and depend upon the amount of, a particular item of foreign income, you should enter the amount of the payment as a ‘Relevant deduction’. An example might be personal pension contributions you make, on the basis of foreign earnings. If only part of the payment is related to the foreign income, you should enter only the relevant part.

Disposals of offshore funds

Any dividends or other such income from offshore funds should be entered on the Savings screen in the Foreign section of TaxCalc, not here. However, special rules mean that in some cases, any gain you make when you sell or otherwise dispose of your investment may be taxed as income rather than as capital gains - it is these gains which you should enter here.

For the purpose of these special rules, an offshore fund is defined as a means of investing in a non-UK-resident company, a foreign unit trust, or any other such ‘co-ownership’ investment scheme, in which you have a ‘material interest’. You have a ‘material’ interest if, at the time you acquired your investment, you might reasonably expect to be able to realise it (e.g. sell it) within the following seven years, at about the market value of the fund’s assets that your share represents.

Exactly what you need to enter depends on whether your fund has been granted ‘distributor’ status (which the fund managers should be able to tell you). Distributor status is granted to funds which regularly distribute the bulk of their income to investors rather than rolling up the income in the fund until investors dispose of their holding.

If your fund has not been granted distributor status, all your gains from disposing of your investment are taxed as income. Enter the full amount of the gain

If your fund has been granted distributor status, your gains will be subject to capital gains tax and should be entered in the Capital gains section of TaxCalc, not here. The only exception is if the fund operates ‘equalisation arrangements’. In this case, part of the gain will be taxed as income and should be entered here. This part will normally be shown on the redemption voucher given to you by the fund manager.

Income etc. relating to non-resident trusts

If you have an absolute entitlement to the income from a non-UK resident trust, enter here any income taxed as yours - but only if it arises from a non-UK source. If the income arose from a UK source you should enter it in the Savings and investments section of TaxCalc.

If you have received a discretionary payment from a non-UK resident trust, you should also enter the amount here. However, Extra-Statutory Concession B18 may allow you to claim a tax credit for UK tax already paid by the trustees - if you think this may apply contact the Inland Revenue at the Financial Intermediaries and Claims Office.

Overseas trusts/companies.

If you receive income or some types of insurance gain from trusts, companies or other legal entities overseas, you may be caught by special anti-avoidance rules to the extent that the trust/company has 'unexpended income' (income which has not otherwise been spent by the trust/company). You should enter the taxable amount here, unless you can show that the purpose of the transfer and any related transactions was not to avoid tax. Even so, you must click on the 'Omitted income relating to offshore funds' box at the bottom of this screen if you are omitting income for this reason.

If you think you may be affected by these rules, see the notes on page F10 of the Foreign supplementary pages accompanying your tax return. You can get further help from the Revenue's Financial Intermediaries and Claims Office regarding transfers to an overseas trust: on transfers of assets to an overseas company or other entity contact:

Special Compliance Office (Section 739 Group)

The Triad

Stanley Road

Bootle

Merseyside L69 9EJ.

Tel: 0151-300 4037

Note
Also enter the full name of the trust, or the name and address of the company or other body concerned, under 'Additional information'.

Click if you have omitted income

If you have received a benefit from a trust or company abroad, or you have transferred assets to an overseas trust/company which has resulted in income, but have decided not to enter the income/benefit on this screen because it does not arise as a result of tax avoidance, click here.


Other income/deductions
Other income and deductions

Tax Guide

Tax Tips

Other business income

Deductions made by contractors on account of tax

Any other tax

Other business income

There are some types of income which are counted as part of your business profits for tax purposes, but which cannot be reduced by business losses. An example might be Enterprise Allowance or some other forms of business start-up grants. Enter here the amount of any such income received in the period 6 April 1998 to 5 April 1999 (i.e. the tax year, not your accounting period).

If you unsure whether business income you receive falls within this category, speak to your tax inspector or a Tax Enquiry Centre before completing.

Deductions made by contractors on account of tax

You only need to complete this box if you are a subcontractor in the building industry. Subcontractors may have received some payments under the Construction Industry Tax Deduction Scheme. If so, enter here the total of the deductions made on account of tax from payments made to you during the period 6 April 1998 to 5 April 1999 (i.e. the tax year, not your accounting period).

These tax deductions should be shown on forms SC60, which you should have received from the businesses or organisations you have worked for. Your SC60s must be sent with your tax return to the Inland Revenue. If you do not have an SC60 and cannot get one from the contractor, you should enter details of the payments and the name of the contractor in the Additional Information  box on the Details screen. If you show SC60 tax deducted and do not either attach the SC60s or provide the information, you return is likely to be rejected which could lead to a late filing penalty if the deadline is close.

Any other tax

Enter here any tax deducted from your trading income which you have not already entered. Enter figures for the period 6 April 1998 to 5 April 1999 (i.e. the tax year, not your accounting period). Do not enter here SC60 deductions if you are a subcontractor in the building industry: this goes in the box above. Nor should you enter here tax deducted from savings income such as bank or building society interest.


Other information contents

Tax Guide

Tax paid

Claim tax repayment

Additional information


Interest & other investments

Tax Guide

Tax Tips

UK bank and building society interest

Other investment income

UK bank and building society interest

Interest of this kind is paid out after deduction of tax at 20 per cent unless:

you are a non-taxpayer and have registered to receive interest gross, or

the interest is paid on certificates of deposit (including 'paperless' certificates) and sterling or foreign currency time deposits, providing the loan is not less than £50,000 and is repayable within five years

the account is at the non-UK branch of a UK bank or building society

you are not ordinarily resident in the UK.

If the interest was paid after deduction of tax, enter the actual amount credited to your account in the 1998-99 in the 'Interest where tax has been deducted' box: - TaxCalc will automatically work out the other figures needed for the tax return. If you received bank or building society interest before deduction of tax, remember to enter it in the 'Interest where no tax has been deducted' box.

This information should be on any statements you receive, otherwise contact the bank or building society. If you want to use TaxCalc to record and add up interest from a number of accounts, or a number of interest payments from one account, leave the boxes empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

Other investment income

Enter here any other investment income received during the 1998-99 tax year which you have not already entered elsewhere. Either enter any after-tax income, the tax deducted and the before-tax (gross) income, or if you want to use TaxCalc to record and add up for you all the individual payments of this type, leave these three boxes empty and click on the button to the right of the box for a calculator: TaxCalc will enter the totals in the boxes on this screen.

Income you might have to enter here includes:

British Government stock (including stocks bought through the National Savings Stock Register)

Accrued income

Relevant discounted securities

Gilt strips

Transfer of income from securities

Purchased life annuities

interest on loans to an individual or organisation

interest from a credit union or friendly society

interest from Enterprise Zone Trusts (but not any rents, which should be entered in the Property section of TaxCalc).

British Government stock (gilts)

This may be paid out either before or after deduction of tax. It is paid gross if you acquired the stock after 5 April 1998, or before that date but you have elected to be paid gross. It is always paid gross if you bought through the National Savings Stock Register (although you can choose to have it paid out after 20 per cent tax). Otherwise it is paid out after tax. If you received the income after deduction of tax, enter the after-tax amount, the tax deducted, and the amount before tax: if paid gross, enter the amount received in the 'Amount before tax' box and enter nothing in the other two boxes.

Note that from 6 April 1998 interest from all British Government stocks is tax-free in the UK if you are not ordinarily resident in the UK.

Accrued income

The accrued income scheme applies if you bought or sold interest-bearing bonds and loan stock, for example British Government stock, building society Permanent Interest-Bearing Shares (PIBS), local authority bonds or company debentures, and the next interest payment date fell due during the 1998-99 tax year. It does not apply if the nominal value of all the securities held by you does not exceed £5,000 either in the tax year in which the next interest payment on the securities falls due, or in the previous tax year. So you are exempt for this tax year if your total holdings did not exceed £5,000 at any time during 1997-98 or 1998-99.

When you buy and sell investments within the accrued income scheme, part of the price you pay may include a proportion of the next interest payment (the 'accrued income'). When you buy or sell stocks in the scheme, the contract note should show the accrued interest. How it is treated for tax purposes depends on whether you are selling or buying the right to the next dividend ('cum dividend') or without the right to the next dividend ('ex dividend').

If you sell cum dividend or buy ex dividend, the accrued income is a charge on which you are taxed

If you buy cum dividend or sell ex dividend, the accrued income is an allowance on which you get tax relief.

You should calculate charges or reliefs for securities you have bought, sold or transferred where the next interest payment after your purchase or sale fell between 6 April 1998 and 5 April 1999. For each kind of security, combine the charges and reliefs to produce a net figure:

If the charges exceed the reliefs enter the excess in the 'Amount before tax' box

If the reliefs exceed the charges for a kind of security, deduct the excess from the interest received for that kind of security and enter the reduced amount of interest in the 'Amount before tax' box.

For more information see Inland Revenue leaflet IR68, Accrued Income Scheme. Taxing securities on transfer.

Relevant discounted securities

Relevant discounted securities have replaced those types of securities previously termed 'deep discount bonds' and 'deep gain securities'. Broadly, these are securities where the investor's return is mainly made up of a discount or premium payable on redemption of the bond, rather than by interest payable over the life of the bond.

The discount or premium must be capable of being more than:

15 per cent of the issue price or, if smaller,

half a per cent of the issue price for each year of the bond's life.

For example, in the case of a ten year bond, any discount of five per cent or more would mean it was a discounted bond.

A security with an uncertain yield, for example, linked to the Retail Prices Index, will normally be a relevant discounted security.

A security linked to the value of assets which would be chargeable assets under the capital gains rules (for example, a security linked to the FTSE index) will not normally be a relevant discounted security.

If you hold a relevant discounted security you will generally be chargeable to tax only when you dispose of the security in any way or it is redeemed at that time. You will be charged on the difference between the amount paid for the security and the amount you received when you redeemed or sold it. Tax is not deducted from the payment, so the gross amount of the discount should be entered at 'Amount before tax'.

Gilt strips

Gilt strips are also considered relevant discounted securities, but in contrast to the usual rules there will be a charge on the discount each year, even if you do not dispose of the securities during the year. The discount is worked out by comparing the market value of the gilt strips on 5 April with their market value a year earlier or with the price you paid for them if you bought them during the tax year. The amount of the discount should be entered as the gross amount. Leave the other boxes blank.

Transfer of income from securities

If you sell or transfer the right to receive dividends or interest but do not dispose of the underlying securities, the income from those securities is treated as your taxable income. Enter the amount of income paid out (even if you have not received it) in the 'Amount before tax' box.

Purchased life annuities

These are annuities which you buy yourself, not the annuities bought with a pension fund (which should be entered on the Pensions screen). Only part of the income from a purchased life annuity is taxable: the rest is regarded as a repayment of your capital and is tax-free. Enter only the taxable part under gross amount - the insurance company should be able to tell you how much this is. If the income is paid after deduction of tax (as it will be in most cases), also enter the tax deducted and the after-tax amount actually received.


Other outgoings
Other reliefs

Tax Guide

Tax Tips

Payments for vocational training

Venture Capital Trusts

Enterprise Investment Scheme

Expenses paid after ceasing in business

Losses on discounted securities

Payments to trade union or friendly society

All the boxes on this screen relate to various payments which qualify for tax relief. On some types of payment you get partial tax relief, on others you get full tax relief. TaxCalc takes into account all the different rules for each type. If you are not resident in the UK, the payments may not qualify for tax relief.

Payments for vocational training

You can claim tax relief on fees paid for training leading to a National or Scottish Vocational qualification. Only tuition fees qualify. You cannot claim if you are receiving financial assistance under a government scheme or local authority grant. For full details see Inland Revenue leaflet IR119 Tax relief for vocational training (from the Revenue Orderline 0645 000404).

Enter the amount you actually paid towards fees during 1998-99. This will have been paid net of basic-rate tax - don’t enter the tax relief given at source, only the amount you paid. If you are a lower or basic-rate taxpayer there is no further tax relief due. However, further relief of 17 per cent will be given if you paid tax at the higher-rate.

Venture Capital Trusts

You can invest in qualifying unquoted trading companies by buying shares in Venture Capital Trusts (VCTs).

You are eligible for income tax relief at 20 per cent on investments up to £100,000, however, relief is withdrawn if shares are disposed of within five years unless they are given to your spouse (or the disposal is due to the death of the holder). The relief will also be withdrawn if the VCT loses its qualifying status within the five year period.

Enter the gross amount invested in the VCT during the 1998-99 tax year.

Enterprise Investment Scheme

The scheme covers investment in shares in qualifying unquoted companies. You get tax relief at 20 per cent on investments up to £150,000 a year: the gains are free of Capital Gains Tax if you hold the shares for at least five years, and any losses can be set against either income or Capital Gains Tax.

Tax relief is given in the tax year in which the shares are purchased, but one-half of the amount subscribed before 6 October in any tax year can be carried back for relief to the previous tax year. The maximum carry-back is £25,000. If you wish to claim carry-back, speak to your tax office before sending in your tax return.

Enter the gross amount invested in a qualifying EIS company in the 1998-99 tax year (even if you have already received tax relief on it), minus anything you are claiming to carry back. You should only enter investments for which you have received a form EIS3 or EIS5 from the company you have invested in.

Note
You should enter details of each investment to an EIS in additional information. Use the 'Additional information' button on the Tax already paid screen (in the Other information section of TaxCalc).

Expenses paid after ceasing in business

You may be able to get tax relief for expenses you pay after you cease in business, if those expenses are closely related to that business.

The payments must be made within seven years of the business ceasing, and must be amounts spent:

in remedying, or as damages for, defective work done, goods supplied, or services rendered in the course of the former business activity

for legal or other professional services in connection with any claim that the work, goods or services were defective

for insurance against any expenses described above

in recovering debts which have been taken into account in calculating the business profits before it ceased.

Additionally, relief is available for debts owed to the business which have been taken into account in calculating the profits or gains of the business before it ceased but which, within seven years of the business ceasing are:

shown to be bad or

released under a formal voluntary arrangement.

Enter here the amount of relief you are claiming against 1998-99 income.

You can also claim against capital gains incurred in 1998-99 - but don’t enter that amount here, see the section on capital gains tax for more information.

Losses on discounted securities

If you have incurred a loss in the year ended 5 April 1999 on the disposal of any relevant discounted security, or the deemed disposal of a gilt strip, you can claim tax relief for that against income in 1998-99. Enter the amount you wish to claim here.

Relevant discounted securities have replaced those type of securities previously termed ‘deep discount bonds’ and ‘deep gain securities’. Broadly, these are securities where the investor’s return is mainly made up of a discount or premium payable on redemption of the bond rather than by interest payable over the life of the bond.

Payments to trade union or friendly society

You get tax relief on what you pay into certain combined life insurance and sickness policies issued by friendly societies (check with the society if you think you have a policy which might qualify), where the total premium is no more than £25 per month.

You may also get tax relief on that part of a trade union subscription which is for superannuation (ie a pension), funeral or life insurance benefits: and on some compulsory payments you have to make (for example, as a condition of your employment) for an annuity which pays out on your death to your wife and children.

The relief is calculated as half of that part of your subscription or premium which went to provide the superannuation, life assurance, funeral or death benefit. Your union representative or friendly society will be able to tell you how much, if any of your subscription or premium was for these benefits.

Enter the actual amount of contribution which was related to death or superannuation. TaxCalc will take half of the amount entered as qualifying for tax relief.


Other property income

Tax Guide

Tax Tips

Rent a Room scheme

Rents and other property income

Chargeable premiums

Tax deducted

Pooled expenses from one estate election

Expenses

Losses

 - Brought forward

 - Offset against total income

Tax adjustments

 - Private use

 - Capital allowances & balancing charges

 - 10% wear & tear

 - Rent a Room exempt

Jointly-owned property

You should use this section for any land or property income which is not classed as furnished holiday lettings. But if all your property income falls within the Rent a Room scheme you need only click the button at the top of the screen: you can ignore the rest of the boxes. If you have some rental income which qualifies for Rent a Room relief, and some which does not, you need to total up your income, expenses etc. from all the sources before you enter them in the relevant boxes. TaxCalc will make entries in the appropriate boxes on the tax return.

If renting out a property counts as a trade (for example, you run a guest house), you should not enter the income here: enter it here in the Self-employment section of TaxCalc (or Partnership, if the business is set up as a partnership).

Rent a Room scheme

If you let furnished rooms in your only or main home in the UK you can get the first £4,250 tax free under the Rent a Room scheme (£2,125 per person if two people receive rent from one property). For full details see Inland Revenue leaflet IR87 Letting and your home (full text available under 'Leaflets' on TaxCalc's Help menu).

If you elect to be in the scheme, any charge you make for meals, laundry etc must be added to the rent received when calculating the gross rent. You cannot deduct expenses or capital allowances from the rent received, and if you make a loss from renting, you cannot use the loss to reduce your other taxable income.

If your total income from this sort of letting does not exceed £4,250 in 1998-99 (or £2,125 if you are sharing the income with someone else) you will be exempt from tax under the Rent a Room scheme and you will have nothing to lose by being in the scheme. If you choose this option, and you have no other income from property, you need only click the first box on this screen ('Total income is within Rent a Room scheme). You can leave the rest of the boxes empty.

Rents exceeding £4,250 (or £2,125)

If your rents which qualify for Rent a Room relief exceed £4,250 (or £2,125), you can choose between either paying tax on only the amount above the limit, but ignoring any expenses, or staying out of the scheme altogether. Which is better for you depends on what you expenses you can claim:

if your expenses are low, consider claiming the Rent a Room exempt amount on the first £4,250 of your rent from this type of letting (or £2,125) and paying tax on the balance. If you choose this route, enter the amount of your Rent a Room exemption in the 'Tax adjustments' section (TaxCalc will deduct the relief from your gross rental income) but do not enter any expenses or capital allowances relating to this letting.

if your expenses are high, you can ignore the Rent a Room exemption altogether and calculate your gross profit on this type of letting in the normal way - that is, your gross income from rents paid less all allowable expenses and capital allowances. If you choose this route, leave the 'Rent a Room exempt amount' box in the Tax adjustments section empty, but complete any other relevant boxes, in particular those for allowable expenses.

If you are not sure which of these two options to choose, TaxCalc can help. Fill in the whole screen, entering your Rent a Room exempt amount but no expenses, then go to the Land and Property pages under 'Tax return forms' on the 'View' menu of TaxCalc to see the profit this produces at box 5.40. Compare this with the figure you get if you delete the Rent a Room amount and enter expenses instead. Note though, that this only works if you enter income just for the one property. If you have other rental income, you will need to set up another file, excluding the other rental income.

Rents and other property income

Total up all income (whether it is paid in cash or kind) due to you in the 1998-99 tax year, even if you do not receive the money or goods until later. Include any rent arrears that may be paid to you after April 5 1999, but which fell due in the tax year ending 5 April 1999 but exclude any rent you may have received in advance (ie any rent relating to the period beginning 6 April 1999 and beyond). Enter chargeable premiums separately.

Include rent from fixed caravans or permanently moored houseboats in this section (provided they are not classed as furnished holiday lettings).

If you provide services such as meals, laundry, gardening etc, any income you receive should be included here. If you own the property with someone else, see Jointly-owned property below for what to enter.

Chargeable premiums

The rental income you receive may include premiums paid for the grant of a lease and certain other payments given in connection with right to possession of a property. Enter any taxable payments of this kind here.

Chargeable premiums are taxable on a special basis. Broadly, for leases over 50 years the entire premium is treated as capital received and so does not form part of your income. For leases up to 50 years the premium is treated as partly capital and partly rent and only the rent is taxable.

To calculate the taxable proportion of your chargeable receipt:

multiply the premium received by the number of complete periods of 12 months in the lease (the first 12 months of the lease can be ignored)

divide the result by 50 and deduct from the premium received

the result is the taxable portion of your chargeable premium.

Tax deducted

This section only applies if your tenant deducted tax from the rent (on behalf of the Revenue) before paying it to you. This is likely to happen only if you are an overseas landlord. If so, you should enter the whole amount to which you were entitled in the 'Rents and other property income' box (including the tax deducted): also enter the tax here.

You may well already have paid some tax on your 1998-99 rental income through your payments on account. If so, remember to enter your payments in the Tax already paid screen in the Other information section and TaxCalc will take these into account.

Pooled expenses

This box is only relevant if you own an agricultural estate or an estate over which there exists a 'one estate election'. Land managed as one estate has special rules for expenses and you will need to refer to Inland Revenue Help Sheet IR251, Agricultural Land and Land Managed as One Estate (from the Inland Revenue Orderline, Tel: 0645 000404) before you enter anything in this box. Any amount entered here will be transferred to the relevant box on the Land and Property Supplementary Pages, but does not affect your tax calculations for 1998-99.

Expenses

You can deduct certain expenses from your income. A loan to buy or improve property which you let may also be deductible. If your total rents before deducting expenses are £15,000 a year or more, you must provide a breakdown of your expenses under the appropriate headings in the 'Expenses if income is £15,000 or more': otherwise just enter the total expenses under 'Other expenses'.

If only part of the property is let, or for only part of the year, you may be able to claim only whatever part of the expense is in line with the proportion of the letting. Enter the correct proportion of your expenses in the appropriate box.

Losses

If you have made a loss from owning land and property in 1998-99, it is usually carried forward to future years to set against other income from property. However, if you claimed capital allowances this year, you can claim to set some of your losses against your total income from all sources. If you have unused losses to carry forward to next year, TaxCalc will work out the amount for you and enter it at box 5.45 on the Land and Property supplementary sheets.

Losses brought forward from last year

Enter here any losses you may have made in previous years on land or property that you wish to offset against this year's rental income. Include losses made on all lettings, but exclude from the total any losses brought forward from last year which you are now setting against total income (not just rental income).

Losses offset against total income

The loss you can offset against your total income (as opposed to just against rental income) is the lowest of:

the amount of capital allowances you have claimed (excluding capital allowances on equipment let to non-traders), less any balancing charges

the amount of the loss made on your total rental income (box 5.41 on the Land and property supplementary pages)

the amount of general income available.

So, if your capital allowances do not exceed the balancing charges (or if you are not entitled to claim capital allowances) you cannot offset a loss against other income and you should leave this box blank.

Tax adjustments

To arrive at your 'taxable' income (or loss) from property, you need to make certain adjustments to the net profit or loss which arose during the tax year.

Private use

Private and personal expenses are not allowable. If you spend money on something which is only partly used in the renting of the property(ies) or land you own, and partly for your own private use you must either:

put the proportion of the expense which relates to the rental property under 'expenses', or

put the whole amount of the expense in the 'expenses' section and also enter the proportion of the expense which relates to private use under 'tax adjustments'.

For example, you employ a gardener who works for three hours a week on your own garden at home and three hours a week maintaining the garden in a property on which you receive rental income. You could either claim 50 per cent of the wages you pay under 'expenses' or you can put 100 per cent of the wage bill into 'expenses' and 50 per cent under 'tax adjustments - private use'. It does not matter which method you choose as long as you only claim the expenses due to you for the rented property (or land).

Capital allowances and balancing charges

When you work out your profits from furnished holiday lettings or other property income, you must not deduct:

the cost of buying, altering, building or installing or improving fixed assets (for example, property and machinery), or

depreciation or any losses which arise when you sell them.

Instead you may in a few cases be able to claim capital allowances. These reduce a profit or increase a loss. An adjustment, known as a balancing charge, may arise when you sell an item, give it away or stop using it. Balancing charges increase your profits or reduce your loss. For more information ask for Inland Revenue Help Sheet IR250 Capital Allowances and Balancing Charges in a Rental Business. Note that you cannot claim capital allowances for a property on which you are claiming Rent a Room relief: nor can you claim capital allowances for equipment in a 'dwelling house' or flat.

10% wear & tear

You can claim a deduction for 'wear and tear' if you let furnished property in the UK (but not furnished holiday accommodation - capital allowances are available on this type of property instead). You may claim a deduction for either:

the net cost of replacing a particular item of furniture or furnishings but not the cost of the original purchase, or

an allowance amounting to ten per cent of the rent received after deducting charges or services which would normally be borne by a tenant but which are, in fact, borne by you (for example, Council Tax).

If you have the option of claiming either capital allowances or wear and tear you must choose one or the other - you cannot have both.

Rent a Room exempt amount

Complete this if you are claiming part of the rent you receive under the Rent a Room scheme, and part as ordinary property income. Enter £4,250 if you are the only person receiving the rent, £2,125 if there are two of you. Note that you cannot claim any expenses on the exempt amount if you are doing this.

Jointly-owned property

If you own and let either holiday property or other types of land and property jointly with one or more people, you should include only your share of the income on the tax return. Also, put your share of the allowable expenses and losses etc, in the relevant sections. If you receive notice of your share after expenses have been deducted, enter your income share as normal but leave boxes in the 'expenses' section blank. Make sure you tick the relevant box about jointly-owned property.

Note
You must also include, under additional information, the name and address of the person who has been nominated to keep records of the lettings. Use the 'Additional information' button on the Furnished Holiday Lets screen.


Loans & mortgages

Tax Guide

Tax Tips

Mortgage for only or main home

Other loans qualifying for tax relief

Mortgage to buy an annuity

Mortgage for your only or main home

Enter information here only if your mortgage is not covered by the MIRAS scheme, or if you are claiming extra tax relief on a cheap or free loan from your employer. The Revenue do not require details of other loans in the MIRAS scheme to be given on the tax return. For more information, see Inland Revenue Help Sheets IR340, Relief on loans not in MIRAS (from the Inland Revenue Orderline 0645 000404) and leaflet IR145 Low-interest loans provided by employers (available on the 'Help' menu of TaxCalc).

Enter the amount of interest which qualifies for tax relief (your lender should give you a ‘certificate of interest paid’ which contains this information). You get tax relief, for 1998-99, at 10 per cent of the interest on the first £30,000 of the loan (the relief will continue at 10 per cent until it is abolished altogether from 6 April 2000). If you want to use TaxCalc to record and add up all your interest payments of this type for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

Remember only to include the amount of interest which qualifies for tax relief. Note that if you have interest arrears of up to £1,000 that are added to your loan, you can still claim tax relief on the full amount outstanding, providing the loan (before arrears) was less than £30,000. However, you cannot normally get tax relief on a loan which has to be repaid within 12 months of being taken out, or on a bank overdraft or credit card debt. Relief may also not be available if you are not resident and not ordinarily resident in the UK.

The relief due is set against your tax bill. If your income is low, you may not pay enough tax to receive all the tax relief you are due. You may still be able to get the relief by writing, with details of your mortgage to the MIRAS unit (Advice on Schemes) at the Revenue's Financial Intermediaries and Claims Office (FICO).

Other loans qualifying for tax relief

If you have any loans which qualify for tax relief, other than a mortgage to buy your only or main home, enter the amount of interest paid which qualified for tax relief in the 1998-99 tax year. If you have a joint loan with someone else, only enter the amount of interest for which you personally are claiming tax relief. You can use TaxCalc to record and add up all your interest payments of this type for you, by leaving this box empty and clicking on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

The following loans qualify for relief:

a loan to buy a stake in (or lend to) a ‘close’ company, for example, a family business

a loan to buy a share in a partnership, or in a co-operative or employee-controlled company where you are employed more or less full-time

in some cases, a loan to buy plant or machinery for your work

a loan to pay inheritance tax if you pay before probate is granted.

See Inland Revenue Help Sheets IR340, Relief on loans not in MIRAS. Do not enter loans for business purposes in this section, unless covered in the list above - in most cases, the interest on such loans should be entered as a business expense in the Self-employment section of TaxCalc. Interest on loans to buy or improve rental properties should go in the Property section. Note that you cannot get relief on credit card or overdraft interest.

Mortgage to buy an annuity

You get tax relief on a loan to buy an annuity providing you are aged 65 or over, the loan is secured on your home, and no less than 10 per cent of the loan is taken as cash. Schemes of this sort are often called ‘home income plans’. In most cases, tax relief is given through the MIRAS scheme - only enter interest here if your loans is not in MIRAS.

Enter the amount of interest which qualifies for tax relief (your lender should give you a ‘certificate of interest paid’ which contains this information). The tax relief is limited to 23 per cent of interest on the first £30,000 borrowed. However, this is in addition to the £30,000 to buy your only or main home, and you get the tax relief even if your income is too low for you to pay tax. For more information, see Inland Revenue Help Sheet IR340, Relief on loans not in MIRAS.

Since the tax relief on other mortgages is restricted to 10 per cent, the interest you enter is adjusted upwards to give you the extra tax relief to which you are entitled. TaxCalc will do this automatically, and you will see the amount entered, multiplied by 23/10, when you come to check TaxCalc's workings in the detailed tax summary on the 'View' menu.

Joint loans
The general rule is that you get tax relief on the interest which you have paid on a qualifying loan. If you have a joint home loan, tax relief will normally be split evenly between you, so you should each enter half the interest, but if you are married to the other person you can choose the proportions in which you get the interest relief by filling in Form 15 (from your tax office). You can choose to split the relief in the way which is most beneficial - for example, one of you can elect to have all the relief even if the loan in one person's name. However, this has little practical effect since mortgage interest relief is given as a straightforward subsidy. The only time when it is worth changing the election is when the loan is not in MIRAS and one of you has too little income to set against the loan interest. In this case the one with the highest tax bill should claim the relief.


Reliefs - maintenance

Tax Guide

Tax Tips

Date of order

Opted to switch to new rules

Ex-spouse has remarried

New rules - post-March 1988

Paid to ex-spouse

Payments to DSS

Old rules - pre-March 1988

Paid to ex-spouse

Paid to children

To get tax relief, maintenance payments must be enforceable. This means they must be made under a court order, a legally-binding written agreement, or an assessment from the Child Support Agency. Payments made under any other arrangements are regarded as voluntary payments for tax purposes and will not qualify for tax relief. Enforceable maintenance arrangements set up for the first time since 15 March 1988 are taxed differently from those made before then.

Under the 'new' (post-March 1988) rules, ex-spouses who receive maintenance pay no tax on it at all; and the person who pays the maintenance gets tax relief on payments only up to a given limit. If you are covered by the old rules, the ex-spouse receiving maintenance may have some tax to pay; but the payer receives tax relief on some or all of the payments. Payments made directly to children qualify for tax relief under the old rules (within the overall limits) but not the new rules.

For more information, see Inland Revenue leaflet IR93, Separation, divorce & maintenance payments. The full text of this leaflet is available under 'Leaflets' on TaxCalc's Help menu.

Date of order

Enter the date of the order or agreement in force at the current time and, if applicable, any previous order.

Note
This information is also required under additional information on page 8 of your tax return. Please use the 'Additional information' button on the Tax already paid screen in the Other information section of TaxCalc.

Opted to switch to new rules

Click this button if you are paying maintenance under a pre-March 1988 order or agreement, but have opted to move to the post-March 1988 rules (ie by claiming the maintenance deduction).

Ex-spouse has remarried

If your ex-spouse has remarried, you lose the tax relief on payments under orders or agreements set up on or after 15 March 1988. So only enter payments made during the tax year before the date of marriage. Click this box if your spouse has remarried.

New rules - post-March 1988

If you make enforceable maintenance payments covered by the new rules, you will receive an extra tax-free allowance - the maintenance deduction. This allows tax relief of 15 per cent of payments up to a limit of £1,900 in the 1998-99 tax year, ie a maximum reduction in your tax bill of £285. When you come to check TaxCalc's workings in the tax summary on the 'View' menu, this will appear in the 'Allowances and reliefs given in terms of tax' section.

Paid to ex-spouse - new rules

Enter the amount you actually paid between 6 April 1998 and 5 April 1999 - TaxCalc will work out the maximum you can claim.

Payments to DSS

You may be required by a Child Support Agency assessment to make payments to the DSS to cover income support paid by the DSS to your ex-spouse. If so, enter the amount paid here. You get tax relief in the same way as if such payments were made direct to your ex-spouse.

If you make payments to the DSS enter here the amount you actually paid between 6 April 1998 and 5 April 1999.

Old rules - pre-March 1988

The amount of relief you get will be limited to the amount of maintenance on which you had relief in the 1988-89 tax year. So, if you paid £2,000 to your ex-spouse in 1988-89, you will get tax relief only up to a maximum of £2,000 in future tax years, even if you increase your payments later. Tax relief on the first £1,900 you pay is limited to 15 per cent, ie £285 deducted from your tax bill. On any amount that you pay above £1,900 you will get tax relief at your highest rate of tax. This is the reason why, when you come to check TaxCalc's workings in the tax summary on the 'View' menu, you will see the first £1,900  in the 'Allowances and reliefs given in terms of tax' section: only the excess will appear under 'Maintenance and alimony' on page 3 of the Tax Calculation working sheet.

Paid to ex-spouse - old rules

Enter the actual amount you paid to your ex-spouse during 1998-99 and also for the tax year 1988-1989 - TaxCalc will work out the maximum you can claim.

Direct to children - old rules

Enter the amount you paid direct to your children during 1998-99 and also for the tax year 1988-89 - TaxCalc will work out the maximum you can claim.


Personal pension contributions

Tax Guide

Tax Tips

Self-employed contributions to personal pensions

Employee contributions to personal pensions

Payments made in 1998-99

1998-99 payments to be carried back

1998-99 payments used in an earlier year

Payments brought back from 1998-99

Life insurance

Enter here any contributions you made to a personal pension plan in 1998-99 (contributions to retirement annuity contracts, a similar type of plan not available after 1 July 1988, should be entered on the Other pension contributions screen, not here). You get tax relief on these  contributions, within limits (set out in the Tax Guide), but you can boost your payments by claiming to carry back contributions to an earlier tax year, or by carrying forward unused relief from earlier years.

Life insurance

If you are eligible for a retirement annuity scheme or personal pension plan you can use up to five per cent of your net relevant earnings to buy life insurance linked to your scheme or plan. The premiums qualify for tax relief at your highest rate and they count towards your overall limit for pension contributions. If you pay premiums for this sort of insurance, you should include them in the amounts for the relevant plan.

Self-employed contributions to personal pensions

If you are self-employed any contributions you make to a personal pension plan are made gross, and tax relief at your highest rate of tax is claimed via your tax return. Enter your 1998-99 contributions in the appropriate box in this section.

Employee contributions to personal pensions

If you are an employee any contributions you make to a personal pension plan are made net of basic-rate tax relief (23 per cent for 1997-98). If you are a lower- or basic-rate taxpayer there is no further tax relief to claim, however, if you are a higher-rate taxpayer you are still due a further 17 per cent tax relief. TaxCalc will take this into account when calculating your final tax bill. Enter your 1998-99 contributions in the appropriate box in this section. If you want to use TaxCalc to record and add up all your contributions of this type for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

Payments made in 1998-99

Enter the amount you paid to each type of plan between 6 April 1998 and 5 April 1999. You should enter the amount actually paid: if you are an employee this will be the net amount after tax relief - TaxCalc will gross up any amount you enter. If you want to use TaxCalc to record and add up all your contributions of this type for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

1998-99 payments to be carried back

Enter the amount paid during 1998-99 that you wish to carry back to an earlier year. TaxCalc will deduct any amount entered here from your qualifying pension payments for 1998-99 and will not take them into account when calculating your 1998-99 tax liability. If you paid gross, enter the gross amount; if you paid net, enter the net amount (the amount you actually paid).

1998-99 payments used in an earlier year

Enter here any amount paid during 1998-99 for which you have already claimed relief in an earlier year (i.e. you used your 1997-98 tax return to claim to have them 'carried back' to 1997-98). TaxCalc will deduct any amount entered from your qualifying pension payments for 1998-99 and will not take them into account when calculating your 1998-99 tax liability. If you paid gross, enter the gross amount; if you paid net, enter the net amount (the amount you actually paid).

Payments brought back from 1999-2000

If you have made pension contributions after 5 April 1999, but before the date you send in your tax return, you can claim tax relief for them in the 1998-99 tax year if you wish. 'Carry back', as this is called, allows you to defer your contribution until you know what your net relevant earnings are for the year, and hence the maximum you can contribute. Enter any relevant amounts here. If you paid gross, enter the gross amount; if you paid net, enter the net amount (the amount you actually paid).

The tax relief on contributions carried back from 1999-2000 to 1998-99 is calculated as if you had actually paid the contributions in the earlier year. Note that you cannot reduce your overall tax liability for the year by using these contributions, as it would have the effect of reducing your 'payments on account' (if you pay them), for the following tax year. But you can still offset these contributions against your actual tax bill - they are treated as a 'tax credit', to be set against future payments of tax.

If you enter an amount here, TaxCalc will calculate the amount of tax relief due on it, deduct the relief from your tax payments, and enter the tax relief in the appropriate place (box 18.9 of the tax return). You will also see the amount of tax relief you are due under a '1999-2000 repayment' on the penultimate page of the tax summary on the 'View' menu of TaxCalc.

Example


P11D

A P11D informs the Revenue about taxable benefits and expenses paid to an employee who earns at a rate of £8,500 or more (form P9D gives similar information for employees who earn less). All employers have to provide copies of forms P11D or P9D to employees by 6 July following the end of the tax year. For the 1998-99 tax year you should get your copy of the relevant form by 6 July 1999.


P60

A P60 is a certificate of pay and tax deducted for the tax year. Employers must provide their employees with their P60 by 31 May following the tax year. So you should get your P60 for the 1998-99 tax year by 31 May 1999

.


PAYE Settlement Agreement

This is an arrangement by which your employer can settle your income tax liability on minor benefits in kind and expenses. You do not have to enter any amount paid under a PAYE Settlement Agreement on your tax return.


Partnership Class 4 NICs

Tax Guide

Tax Tips

Exemptions to Class 4 contributions

Deferred contributions

Adjustments to profit chargeable for Class 4 contributions

Self employed people and people in partnership must pay Class 4 National Insurance contributions on profits from any trade, profession or vocation unless they are exempted. TaxCalc will calculate the amount of Class 4 contributions you should be paying. Note, though, that if you are asking the Revenue to calculate the tax, the amount of Class 4 NICs will, as the Revenue instructs, not be shown on the supplementary sheet for the individual business or partnership: you can see TaxCalc's calculation of the amount by referring to the Tax Summary.

Exemptions to Class 4 Contributions

Click here if you were:

aged under 16 at 6 April 1998 and the Contributions Agency has granted you an exemption, or

not resident in the UK for tax purposes during 1998-99, or

exempt for any other reason (e.g. some trustees, divers and diving supervisors -check with your tax office).

You are also exempt from paying Class 4 contributions for 1998-99 if you are over the state pension age, that is a man aged over 65 or a woman aged over 60 at 6 April 1998, but TaxCalc will automatically claim this exemption for you.

Note
You should give details in additional information as to why you are exempt from Class 4 contributions. Use the 'Additional information' button on the business or partnership Details screen.

Deferred contributions

Sometimes, where both Class 2 and Class 4 contributions could be due, Class 4 contributions may not be payable. In these circumstances the Contributions Agency may agree that your Class 4 contributions can be 'deferred' until such time as your overall contributions can be agreed. Only the Contributions Agency can agree to deferment and the Contributions Agency leaflet CA72 gives further details.

If your contributions for this business have been deferred tick the relevant box.

Note
You should give details under additional information as to why your contributions have been deferred (TaxCalc will do this for you if you are exempt because you are over state pension age). Use the 'Additional information' button on the business or partnership Details screen.

Adjustments to profit chargeable for Class 4 contributions

You may be able to deduct an amount here to account for any interest or trading losses of this business or partnership which you have not yet already entered as a deduction from your profits. If so you should enter the figure here. TaxCalc will reduce your profit by this amount when working out how much Class 4 NICs you are due to pay. TaxCalc will also automatically enter an adjustment here if you have another business, on which you have made a loss. See the Inland Revenue notes which accompanied the self-employment or partnership supplementary pages for more information on this adjustment, or speak to your tax office who will be able to tell you whether this adjustment applies to you.


Partnership Return - details

Tax Guide

Tax Tips

Partnership name and details

Capacity in which signing

Tax office/reference/date of issue

UK interest paid after tax

Details on page 1 of the return are wrong

Income other than from a trade or profession or UK interest

Additional information

A partnership return must be completed by one nominated partner on behalf of the partnership as a whole, and each individual partner must complete a set of partnership supplementary pages to go with their own personal tax return. TaxCalc will allow you to complete both the partnership return and the individual partner's supplementary pages.  Note, though, that TaxCalc deals with only the SHORT version of the partnership return for partnerships with only trading or professional income plus taxed income.

This screen collects general information about the partnership to go on the Partnership tax return. If you are a member of more than one partnership, you should set up a separate TaxCalc file for each partnership: if your partnership runs more than business you can enter details of these separately using the Add button on the Trade/profession details screen.

Note
If any member of the partnership is not resident in the UK, see Inland Revenue Help Sheet IR380 Partnership tax: Foreign Aspects (from the Inland Revenue Orderline 0645 000404).

Partnership name and details

Complete the name, address, postcode and telephone number of the partnership and the number of partners who were in it during the period for which information has been returned. If you use an agent (eg your accountant) give their telephone number on this screen, and type in their name and reference under 'Additional information'.

Capacity in which signing

Fill this in if the tax return printed out by TaxCalc will not be signed by the person who is responsible for it. Note that you can sign a return for somebody else only if that person is physically or mentally incapable of signing, and you have an appropriate power of attorney or you are (in Scotland) a curator bonis. You cannot sign merely because the other person is unavailable. Check the notes to the tax return for more details.

Type in the capacity in which the signatory is acting. You must also type in the signatory's name and address, and the name of the person for whom they are signing, under 'Additional information'.

Tax office/reference/date of issue

Enter the details of your tax office, the tax reference for your partnership and the date the return was issued. This information will usually be found on the front of the tax return.

UK interest paid after tax

Enter here any interest paid to the partnership from UK banks, building societies, and deposit takers. Include only interest where tax has already been deducted before the partnership received it and include the total interest received by the partnership from 6 April 1998 and 5 April 1999. Enter the amount actually received - TaxCalc will gross up this amount as necessary. If you want to use TaxCalc to record and add up all interest received for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen..

The partnership's bank, building society or deposit taker's statement or pass book will usually show you the amount of interest after tax, the amount of tax deducted and the amount of interest before tax was deducted.

If the partnership received cash or shares as a result of a building society merger or take-over then there may be a liability to either income tax or capital gains tax. The building society may be able to tell you whether there is any tax liability. If not, you should ask your Tax Office or accountant. If the partnership received cash which is liable to income tax (which is likely if it was received following a building society merger) then you can enter it here. If you are not sure whether the amount received is taxable then include it here then go to the Trade/profession details screen and tick the box called 'figures are provisional'. Then give details in the additional information section.

Details on page 1 of the return are wrong

Click this box if any of the details shown on the first page of the partnership return received from the Revenue, for example, the address, are wrong. Enter the correct details in TaxCalc.

Income other than from a trade or profession or UK interest

If you need to click on this box, it shows that you must also complete one of the supplementary pages to go with the partnership tax return. TaxCalc does not currently include these, or the full version of the partnership statement. You will need to order these from the Revenue Orderline (if you do not already have them) and complete them manually.

Additional information

Click on this box to enter any additional information you need to give to the Revenue relating to the partnership overall. Any information you enter here will be entered on page 8 of the Partnership tax return. The sort of information to include here includes:

details of any significant or unusual items (either income or expenditure) included in your figures, or

details of receipts of expenditure connected with your business which for any reason are not included in your figures, or

an explanation of any tax adjustment to your net profit when the reason is not apparent from these figures, or

an explanation of any items which are not included in the standard accounts information but which affect the partnership's taxable profits (e.g. partners' personal expenses), or

details of any estimated or provisional figures, the reason why they are estimated or provisional, and the date by which final figures will be available, or

notes if you registered or deregistered for VAT during the period, or

reasons why boxes have been left empty (e.g. if you changed from carrying on your business as a sole trader to doing so as a partner, and figures have been given in the self-employment section), or

if you are subcontracter in the building industry who is having difficulty getting an SC60, details of the dates and the amounts paid, the tax deductions and the name and address of the contractor(s), or

if profits are not divided between partners on a simple percentage basis, details of profit sharing arrangements (e.g. if one partner is paid a fixed salary).


Partnership Return Income and expenses contents
Partnership Return - income and expenses contents

Tax Guide

Turnover

Expenses


Partnership Return balance sheet
Partnership Return - balance sheet

Tax Guide

If you have accounts, they may include a balance sheet in which case you should simply copy the entries on your balance sheet to this screen. TaxCalc will transfer the information on this screen to page five of the Partnership tax return (or page four of the trading and professional income pages if you are entering more than one set of accounts).

If you do not have a balance sheet, or your turnover was less than £15,000, or you clicked the 'Full details are not required' box on the Trade/profession details screen, you do need not complete this screen.

Make sure that you have transferred all the figures to the summary and that each is included only once. Do not include any figures that do not appear on your balance sheet.

You should use your judgment to transfer the figures from your accounts to the most appropriate boxes. Depending on the circumstances of your business, certain elements in the balance sheet may appear either as assets or as liabilities. For example, a bank account with business funds in it will be an asset, while an overdrawn account will be a liability. For the former, enter the balance under 'bank/building society balances'. For the latter, enter the balance in 'loans and overdrawn bank accounts'.

Other items that might be affected in this way are most commonly the Capital Account balances and the net profit or loss. Where a balance on the Capital Account is overdrawn, or the business made a net loss in the year, you should enter the amount as a minus figure.

Any additional information which may be necessary can be entered in the 'Additional information' box on the Partnership details screen.


Partnership Return allowances & deductions
Partnership Return - allowances & deductions

Tax Guide

Tax Tips

Capital allowances

Balancing charges

If your turnover is less than £15,000

Deductions made by contractors

Any other tax

Partnership trade charges

Note
Working out the detailed rules for capital allowances can be tricky: If you have not got an accountant you should consult a good tax book. If you want TaxCalc to get as close as possible to your tax liability, you will need to enter your best estimate here. See also Inland Revenue Help Sheet IR222, How to calculate your taxable profits (available on the TaxCalc Help menu).

Capital allowances

When the partnership buys 'capital assets' such as computers or cars you cannot claim their cost as a business expense nor,  under tax rules, can you claim depreciation. Instead, for tax purposes, you claim ‘capital allowances’. Capital allowances are worked out by adding the cost of each capital asset to a 'pool of expenditure'. You can then deduct 25 per cent of the value of the pool at the end of each year from the partnership's profits as a 'writing-down allowance'. Enter the total allowances here, within the following categories:

plant and machinery, such as tools, computers and other business equipment (but not goods for sale or resale - these are claimed as business expenses). Note that for small and medium-sized businesses and partnerships buying plant and machinery higher-than-normal allowances apply for the first year: 50 per cent for purchases in the 12 months to 1 July 1998, 40 per cent for purchases since that date

motor cars - note that separate records must be kept for cars which cost £12,000 or more and there's a £3,000 maximum yearly allowance per car

agricultural buildings, industrial buildings and certain other buildings

patents, scientific research, mineral extraction, dredging and various types of 'know-how'.

You cannot claim for anything bought solely for private use, or the cost of land. You cannot claim capital allowances on things you lease (instead you can claim the leasing costs as a business expense) but you can claim allowances for things you buy on hire purchase.

Warning
In past years it was common for each partner to claim for some items of 'partnership' expenditure in their individual returns (such as the cost of using their home for business). That practice is no longer acceptable to the Revenue. Instead, you should include any such payments with the partnership allowances on this screen. If these payments have not appeared in the partnership accounts, you can make an adjustment to account for them in the calculation of each partner's share under the partnership agreement: give details under 'Additional information' in the Partnership details screen.

Balancing charges

If the partnership sells a capital asset, the sale proceeds (or original cost, if less) are deducted from the pool before the writing-down allowance is worked out. If the proceeds of all the items sold come to more than the value of the pool, the excess (called a balancing charge) is added to your profits for the year, and taxed.

If a balancing charge occurred on any of the 'pools', enter the amount in the relevant box. This will be added to the partnership's net profit.

If your turnover is less than £15,000

If the partnership's annual turnover is less than £15,000, the Inland Revenue does not require a full breakdown of income and expenditure. However, the Revenue still requires separate information about capital allowances and balancing charges, so you must enter them on this screen - do not include them with the figures you enter for Turnover and Expenses in the Income and expenses screens.

Deductions made by contractors

You only need to complete this box if the partnership is a subcontractor in the building industry. Subcontractors may have received some payments under the Construction Industry Tax Deduction Scheme. If so, enter here the total of the deductions made on account of tax from payments made to you during the period 6 April 1998 to 5 April 1999 (i.e. the tax year, not the partnership's accounting period). If you are completing more than one set of partnership details, because you have to give details of more than set of accounts, you need only enter this information on the pages for the most recent set of accounts.

These tax deductions should also be shown on forms SC60, which you should have received from the businesses or organisations you have worked for. If you want to use TaxCalc to record and add up all the SC60 deductions, you can click on the button to the right of the box for a calculator.

Your SC60s must be sent with your tax return to the Inland Revenue. If you do not have an SC60 and cannot get one from the contractor, you should enter details of the payments and the name of the contractor in the Additional Information  box on the Partnership details screen. If you show SC60 tax deducted and do not either attach the SC60s or provide the information, you return is likely to be rejected which could lead to a late filing penalty if the deadline is close.

Any other tax

Enter here any tax deducted from your trading income which you have not already entered. Enter figures for the period 6 April 1998 to 5 April 1999 (i.e. the tax year, not the partnership's accounting period).

Do not enter here SC60 deductions if the partnership is a subcontractor in the building industry: this goes in the box above. Nor should you enter here tax deducted from bank or building society interest - TaxCalc works this out automatically from the interest you enter on the Partnership details screen.

Partnership trade charges

Some partnerships make payments under a deed of covenant or in the form of an annuity, for example to pay a retiring partner for his or her share in the increased value of partnership assets. Such payments do not count as an allowable expense for the partnership, but individual partners can claim tax relief for their share.

These payments are usually made after the deduction of basic-rate tax. Enter here the net (after tax) amount paid during the period 6 April 1998 to 5 April 1999 (i.e. the tax year, not the partnership's accounting period). If you are also using TaxCalc to complete a tax return for an individual partner, remember also to enter the net amount on the Charitable gifts screen in the Reliefs section of the TaxCalc Personal tax document.


Partnership Return contents

Tax Guide

If you are a partner in a partnership, there are two main tax forms you will come across: the partnership tax return (which includes the partnership statement) and the partnership income supplementary pages: the partnership tax return is only available in TaxCalc Plus.This section relates to the partnership tax return and includes the following screens:

Partnership details

Trade/profession details

Income and expenses

Allowances & deductions

Balance sheet

Statement


Partnership Return expenses
Partnership Return - expenses

Tax Guide

Tax Tips

If your turnover is below £15,000

If your turnover is £15,000 or more

Disallowable expenses

Total expenses

Construction industry subcontractor costs

Other direct costs

Partnership charges

Warning
In past years it was common for each partner to claim for some items of  'partnership' expenditure in their individual returns (such as the cost of using their home for business). That practice is no longer acceptable to the Revenue. Instead, you should include any such payments with the partnership expenses on this screen. If these payments have not appeared in the partnership accounts, you can make an adjustment to account for them in the calculation of each partner's share under the partnership agreement: give details under 'Additional information' in the Partnership details screen.

If your turnover is below £15,000

If your annual turnover is less than £15,000, you have a choice. The Inland Revenue allows you to give only 'three-line' accounts, that is, your turnover, your allowable expenses, and your profits. You can, however, give fuller information in the table in the same way as larger businesses, if you prefer.

If you are entitled to give only three-line accounts, you need only complete the 'Total expenses' box. Include only expenses which are allowable against tax (see Main allowable business expenses). Exclude capital allowances - these should be entered on the Capital allowances screen.

If your turnover is £15,000 or more

If the partnership's annual turnover for this business is £15,000 or more you must break down the expenses as requested in the table. Enter the total amount of the expenses incurred for each category in the right-hand column. If any part of an expense included in your accounts is not allowable against tax enter this in the left-hand column. For more information see: the Partnership Tax Return Guide, in which there is a table which provides specific information on each item; Inland Revenue Help Sheet IR229 Information from your accounts; and Main allowable business expenses.

Disallowable expenses

Some of the amounts included as business expenses in the partnership accounts may not be allowable for tax purposes. As you enter the amount of expense which appears in your accounts you must also enter any part of the expense which is 'disallowable'. Sometimes an expense may be totally disallowable such as the cost of entertaining customers or depreciation of fixed assets (although the latter may be allowable as capital allowances). Sometimes only a portion of an expense may be disallowable, for example if you use your car for business and private use, part of the total expense (the part which relates to your private use) will be disallowable for tax purposes. For these type of expenses you should enter the full amount paid out in the Total expenses column and the part of the expense which you cannot claim against tax in the Disallowable expenses column.

Total expenses

You should enter the total expenses which appear in the partnership's accounts in this column, broken down into the categories shown. You can include any business expenses incurred during the relevant accounting period, according to the date they were invoiced to you (unless the Revenue has agreed that you should be taxed on a cash basis). If any part of the expense does not attract tax relief enter that part under the Disallowable expenses column - but make sure you put the total amount of the expense here.

If the business is registered for VAT, remember to enter your expenses either all on a VAT-inclusive or a VAT-exclusive basis, and check that the correct VAT box on the Turnover screen is ticked.

Construction industry subcontractor costs

Enter all payments to subcontractors in the construction industry. If any tax has been deducted on payments made to uncertified subcontractors, show the amount paid before deduction of tax. Any payments made which related to non-business work should go in the 'Disallowable expenses' column.

Other direct costs

These are expenses deducted to arrive at the partnership's gross profit which may not come under one of the other specific headings. For example, direct labour costs, carriage, machine hire, small tools and consumables, discounts allowed to customers, comissions you have paid, etc.

Depreciation of fixed assets would be entered here but note, this is not an allowable expense for tax purposes so you will also have to enter any amount for this kind of depreciation under 'Disallowable expenses'.

Partnership charges

Amounts paid under an annuity or covenant are not allowable as an expense for tax purposes, even if they are paid for wholly commercial reasons in connection with the partnership trade or profession (for example, to compensate a retiring partner). Any such amounts included in your accounts, should be entered in the last box under the 'Disallowable expenses' column. However, individual partners can claim relief for their share of any trade charges. Make sure the overall amount is entered on the Allowances/deductions screen and the individual partner's share is entered in the Charitable gifts screen in the Reliefs section of TaxCalc's personal tax document.


Partnership Return statements
Partnership Return - statements

Tax Guide

Partner details

If joined/left partnership in 1998-99

Partner's share of profits etc

Partnership trade charges

This screen summarises the figures for the 1998-99 tax year apportioned to each partner, to go on the short version of the Partnership Statement, which is included in the partnership tax return. If you are the ‘nominated' partner and have completed the partnership tax return on behalf of the partnership as a whole, you need to enter details for each of the partners within the partnership. Use one screen for each partner (including yourself) by using the ‘Add' button.

Note
Enter the basis on which the profits etc. are shared under 'Additional information' on the Partnership details screen. If this is a simple percentage basis, just give the percentage: otherwise you will need to give fuller details, for example if a partner is entitled to a fixed share or salary.

Partner details

Enter the partner's name, address, postcode, tax reference and National Insurance number.

If joined/left partnership in 1998-99

If this applies, enter the relevant date. This may affect the individual partner's 'basis period'.

Partner's share of profits etc

Enter here the relevant amounts allocated to each partner under the various headings. If you are completing more than one set of partnership trading pages (because the partnership includes more than one trade or profession, or you are submitting information from more than account), you need to complete a separate statement for each set of pages: use the drop down box to select the appropriate trade/profession or set of accounts.

The notes accompanying the Partnership tax return (pages 13 to 15) can give you more information about how to fill in the Partnership Statement. Also see the following Help topics for individual partners regarding what they are expected to enter as their share of:

profits  - you should enter here the individual partner's share of any figure in box 3.79 of the partnership tax return

losses - enter here the individual partner's share of any figure appearing in box 3.80 of the partnership tax return

UK taxed interest - enter here the individual partner's share of the gross equivalent of any UK interest received by the partnership (not the net amount you entered on the Partnership details screeen). The gross figure for the partnership as a whole will appear in box 7.9A of the partnership tax return

SC60 deductions - if the partnership is a subcontractor in the building industry, enter the partner's share of SC60 deductions (the figure for the partnership as a whole is entered on the Allowances/deductions screen and will appear in box 3.92 on the partnership return).

other tax deducted from trading income - enter here the partner's share of any other tax deducted from the partnership's trading income (the total for the partnership as a whole is entered on the Allowances/deductions screen and will be shown on box 3.120 of the partnership return)

tax deducted on interest - enter here the individual partner's share of the tax deducted at source from any UK interest received by the partnership. The figure for the partnership as a whole will appear in box 7.8A of the partnership tax return.

Partnership trade charges

Although amounts paid under an annuity or covenant are not allowable as a partnership expense for tax purposes, individual partners can claim relief for their shares of any trade charges actually paid during the tax year. You should enter here each partner's share of the net amount of trade charges paid for wholly commercial reasons in connection with the partnership trade or profession during the period 6 April 1998 to 5 April 1999 (i.e. the tax year, not the partnership's accounting period). The figure for the partnership as a whole is entered on Allowances/deductions screen and appears in box 3.110 of the partnership return.


Partnership Return turnover
Partnership Return - turnover

Tax Guide

Tax Tips

Turnover

Goods taken for personal use etc.

Other income/profits

Deductions from net profits

VAT

Foreign tax deducted

Turnover

Enter your turnover for the relevant accounting period and any other taxable business receipts on this screen. If your annual turnover is less than £15,000, you have a choice. The Inland Revenue allows you to give only 'three-line' accounts, that is, your turnover, your allowable expenses, and your profits. You can, however, give fuller information in the same way as larger businesses, if you prefer.

If you are entitled to give only three-line accounts, you need only complete the 'Turnover' box, but you should include in the figure you enter any other business income, together with the value (normal selling price) VATof all goods taken out of the business for your personal use, or for your family or friends (less anything you paid for them). Exclude balancing charges - these should be entered on the Capital allowances screen.

If your annual turnover for this business is £15,000 or more you must give the further details requested in the box.

Goods taken for personal use and other adjustments which increase profits

You must make adjustments to your profits for goods taken out of the business for your personal use, or for your family and friends. If your turnover was less than £15,000 and you are submitting 'three line' account information only, do not enter anything in this box. If your turnover was £15,000 or more, enter here the normal selling price of all goods taken out for such use, minus the price, if any, which was paid for them and has been included in the turnover figure given above.

Other income/profits

If your turnover was less than £15,000 and you are submitting 'three line' account information only, do not enter anything in this box. If your turnover was £15,000 or more, enter here any other business income, included in the partnership accounts, which you did not include as turnover in the box above but be careful - most other types of income should be entered elsewhere in the partnership section of TaxCalc.  If so, make sure you also enter it in the box 'Deductions from net profit', lower down on the screen, otherwise you will be taxed twice on it.

Deductions from net profits (other than expenses)

If your turnover was less than £15,000 and you are submitting 'three line' account information only, do not enter anything in this box. Otherwise use this box for adjustments to any amounts you took into account in arriving at the partnership's net profit or loss  but which are either not taxable receipts or are not taxed as profits from the partnership's trade or profession. Any taxable income entered in both 'Other income/profits' above and elsewhere on the partnership return, should also be put here so that you do not pay tax twice on these amounts. See the notes that accompanied your Partnership supplementary pages for more information. Any amount entered here TaxCalc will deduct from your net profit (or add to your loss if applicable).

VAT

If your turnover was less than £15,000 and you are submitting 'three line' account information only, do not enter anything in this VAT section.

Otherwise, if you are registered for VAT you can enter details of business income and allowable expenses either all net of VAT or all inclusive of VAT. If you choose to show income and expenses inclusive of VAT then include your net payment to Customs and Excise as an expense under 'Other expenses' in the Expenses screen.

Any net repayment you receive from Customs and Excise should be included as a taxable receipt in the 'Other income/profits' box on this screen.

You may have bought capital equipment on which you are claiming capital allowances instead of deducting them as expenses. If you are entering VAT-inclusive figures, you should add the VAT to the amount entered in 'Other expenses' on the Expenses screen or (if you received a net refund from Customs & Excise) deduct it from the figure entered in box 'Other income/profits' on this screen. Also write in the amount of VAT on capital items under 'additional information' on the Partnership details screen.

If you enter details of your income and expenses inclusive of VAT, make a note of the VAT payable on 'capital items'. These might include business premises, plant machinery, vehicles etc. Enter this as additional information using the 'Additional information' button on the Partnership details screen. You should also tell the Revenue, using the 'Additional Information' button, if you either registered or deregistered for VAT during the period. Give the date it took effect and whether sales and expenses while you were registered were inclusive or exclusive of VAT.

Foreign tax deducted

If you have any income which has been taxed abroad, the partners may be able to claim a credit against their UK tax bill. Enter the amount here and also give a detailed breakdown of the income in the Additional Information box on the Partnership details screen.

Note that any foreign income should be declared on Foreign supplementary pages to go with the Partnership tax return: these are not included in TaxCalc Plus. You will need to order the pages from the Inland Revenue Orderline (Tel: 0645 000404) and complete them manually.


Partnership details
Partnership income - details

Tax Guide

Tax Tips

Partnership name and reference number

Partnership trade or profession

Date appointed/date left

Amounts not in partnership accounts needed to calculate your taxable profit

Basis period

Additional information

This screen collects details to go on the partnership supplementary pages . Most of the information you need will be shown on the partnership statement: if you have more than one partnership statement for the 1998-99 (because you are a member of two partnerships, say, or your partnership runs more than one business) you need to complete a separate set of partnership pages for each, by clicking on the 'Add' button.

Partnership name and reference number

Enter the name of your partnership and the reference number which should be shown on the front of the partnership tax return. The partner nominated to complete the partnership tax return should be able to give you this reference number.

Partnership trade or profession

Enter here the nature of your trade or profession.

If you joined/left partnership

If you joined or left the partnership between 6 April 1998 and 5 April 1999, enter the relevant dates. This is needed to work out your basis period.

However if, during 1998-99, you simply changed from carrying on the same business as a sole trader to carrying it on as a partner (or vice versa) you do not need to give these dates. Whether or not you need to complete the partnership pages in this case depends on whether the accounts information for any period relating to your basis period has been included in the Partnership's tax return - see the Inland Revenue notes to the partnership or self-employment pages (from the Inland Revenue Orderline 0645 000404: the self-employment notes are also available on the 'Help' menu of TaxCalc).

Amounts not in partnership accounts needed to calculate your taxable profit

There are some types of income which are counted as part of your business profits for tax purposes, but which cannot be reduced by business losses. An example might be Enterprise Allowance or some other forms of business start-up grants. Enter the amount of any such income here. Note, though, that it is the amount received in year to 5 April 1999 which you should enter, not the amount for your tax basis period.

If you are unsure whether business income you receive falls within this category, speak to your tax inspector or a Tax Enquiry Centre before completing.

Basis period

You pay tax for 1998-99 according to the profits, or losses, for your basis period. Each individual partner is assessed on their share of partnership income as if it were from an individual business of their own. As a result, each partner has an individual basis period, instead of one basis period which applies to the partnership as a whole. This means it is possible for partners to have different basis periods and this usually happens when you start or stop being a partner.

After the first year or two in partnership your basis period will normally be the 12 month period up to the date chosen as the annual accounting date of the partnership. However, your basis period may be different if you became a partner after 5 April 1996 (there are different rules for new businesses), you stopped being a partner (when the rules for businesses which have ceased apply), the partnership changed its accounting date or if there was no accounting date between 6 April 1998 and 5 April 1999. Also see Inland Revenue Help Sheet IR222 How to calculate your taxable profits (the full text of this Help Sheet is available in TaxCalc's Help Sheets section on the Help menu).

Additional information

There may be additional information you need to give to the Revenue, or you may need to explain some of your figures in more detail. For example:

particulars of any significant or unusual items (either income or expenditure) included in your figures, or

details of receipts of expenditure connected with your business which for any reason are not included in your figures, or

an explanation of any tax adjustment to your net profit when the reason is not apparent from these figures, or

an explanation of any items which are not included in the standard accounts information but which affect the partnership's taxable profits, or

an explanation of any provisional figures, and the date by which final figures will be available, or

if you have already claimed to offset a 1998-99 loss against the loss of an earlier year, details of the loss, or

if you are claiming exemption or deferral of Class 4 National Insurance Contributions, the reason for this.


Partnership income contents

Tax Guide

If you are a partner in a partnership, there are two main tax forms you will come across: the partnership tax return (which includes the partnership statement) and the partnership income supplementary pages. This section relates to the partnership income supplementary pages and includes the following screens:

Details

Profits

Losses/deductions

Class 4 NICs


Partnership losses/deductions
Partnership losses

Tax Guide

Tax Tips

Losses and how to use them

Allowable loss for 1998-99

Share of tax deducted from interest

Share of SC60 subcontractor's deductions

Share of any other tax deducted

Loss offset against other income from 1998-99

Loss to carry back

Losses brought forward

Loss to carry forward

If you have made a loss from this partnership in the 1998-99 tax year, complete this screen to tell the Revenue how you want to use it. The amount of losses allocated to you is shown on the partnership statement. To see the effect of the various options for using your losses, you can try entering your losses in alternative boxes, to see which of the options open to you will save you the most tax.

Warning
You do not have to claim your loss immediately. You can wait and tell the Revenue your choice later, by letter. But you must claim your loss by 31 January 2001 (31 January 2005 if carrying losses made in 1998-99 forward to future years), otherwise you will lose it. Where your loss can be claimed against more than one category of income, and is sufficiently large, you can choose the order in which it is set against the various categories of income, but the whole of that category of income must be reduced to zero before you claim relief against another category. See Inland Revenue Help Sheet IR227 Losses (available on the 'Help' menu of TaxCalc), for more information.

Allowable loss for 1998-99

If the partnership made a loss for 1998-99, enter here the amount of loss apportioned to you (as shown on the partnership statement). Note that if the accounting period for the partnership is not the same as your basis period, you need to make an adjustment to the figure you enter here, as explained in Adjustment if your basis period differs. Enter the amount of the adjustment in the 'Adjustment' box on the Profits screen.

Share of tax deducted from interest

If the partnership received any interest from banks, building societies or deposit takers, where tax has been deducted, you are entitled to a share of the tax to set against your own tax bill. The amount will be shown in your copy of the partnership tax statement.

Share of SC60 subcontractor's deductions

You only need to complete this box if your partnership is a subcontractor in the building industry. Subcontractors may have received some payments under the Construction Industry Tax Deduction Scheme. If this applied to your partnership, enter here your share of any deductions made on account of tax from payments made to you during the period 6 April 1998 to 5 April 1999.

Share of any other tax deducted

If the partnership received any other trading income from which tax had already been deducted, you are entitled to a share of the tax to set against your own tax bill. The amount will be shown in your copy of the partnership tax statement.

Loss offset against other income from 1998-99

If you want to offset part of any loss made in 1998-99 against other income, enter the amount here. TaxCalc will deduct this amount from your overall tax liability. If the loss is more than is needed to reduce your other income to zero, and you have taxable capital gains, you can offset part or all of the excess loss against the gain. To do this, enter the excess in the 'Income losses etc.' box on the Losses screen in the Capital gains section of TaxCalc.

Loss to carry back

You can carry back losses to set against profits from the previous three tax years, but only if you are running your partnership commercially for profit and:

either you ceased to be a partner in 1998-99 (in which case you can set the loss only against earlier profits from the same business) or

you are in the first four tax years of being a partner (ie you became a partner after 5 April 1995).

Note
If you have already claimed to offset this loss, you should still include it here, but also enter the amount repaid under 'Additional information' on the Details screen.

Losses brought forward

Enter here any losses you made in a previous year which you have already claimed to carry forward and have not already used. Any amount entered here will be deducted from your net profit figure. Note that losses brought forward can only be set against profits from the same trade: they cannot be set against income from other sources or capital gains. So if your losses brought forward are more than you need to reduce your 1998-99 net profits from this partnership to zero, remember to enter the unused amount in the 'Losses to carry forward' box.

Loss to carry forward

Enter here any part of the losses sustained during 1998-99 which you wish to carry forward to set against profits of future years.

TaxCalc will ignore any amount entered here for the purpose of calculating your 1998-99 tax liability.


Partnership profits

Tax Guide

Tax Tips

Your share of profits for tax purposes

Your share of taxed interest

Adjustment if your basis period differs from partnership's accounting period

Adjustment for farmer's averaging

Foreign tax deductions

Overlap profit brought forward

Overlap relief used

Your share of profit for tax purposes

Enter here your share (ie the individual partner's share) of the partnership's taxable profit for the relevant accounting period. If the partnership made a loss, you should leave this box empty and enter the loss on the Losses/deductions screen. You should find these figures on the partnership statement. Note that this is not necessarily the amount on which you will pay tax - you may need to make an adjustment if your basis period differs from the partnership's accounting period.

Your share of taxed interest

If the partnership received interest from building societies, banks or deposit takers, and that interest was taxed before you received it, enter your share (ie the individual partner's share) here. You should find this figure on the partnership statement. Note that unlike your share of the profit, which is the figure for the relevant accounting period, the taxed interest shown on the statement should be the amount received in the 1998-99 tax year.

Adjustment if your basis period differs from partnership's accounting period

If the accounting period for the partnership is not the same as your basis period, you need to make an adjustment to the profits figure you have already entered, or, if the partnership made a loss, to your share of the allowable loss entered on the Losses/Deductions screen. If so, enter the adjustment here. This can be a positive or a negative figure - ie it may increase the net profit/loss apportioned to you, or reduce it. If the adjustment figure reduces the net profit/loss figure, enter the figure as a minus.

The adjustment is worked out by first averaging your profits out over the correct period, to find your profit or loss for your basis period. Then, you take the difference between this figure and the figure you have entered as your share of the partnership's profits or losses for 1998-99 (as shown on your partnership statement). The result is the adjustment you need to make. See Inland Revenue Help Sheet IR222: How to work out your taxable profits (available on the TaxCalc Help menu) for more information.

Example

Adjustment for farmer's averaging

If you are a farmer or market gardener, you may be able to claim to average two years profits. You will need Inland Revenue Help Sheet IR224: Farmers and market gardeners to help you and tell you what to enter here. As with the adjusted profit figure if you do enter an amount here and it should be deducted from your net profit instead of added, enter the figure as a minus.

Foreign tax deductions

If the partnership had income from abroad on which tax was deducted before you received it, to save you paying tax both overseas and in the UK, you are allowed to deduct the tax from your profits. Note though, that in some cases claiming a special relief called tax credit relief is a better option. If you want to claim tax credit relief, leave this box empty and go to the Entered elsewhere in the Foreign section of TaxCalc: if you want to claim to deduct the tax instead, enter it here. Check, though, that you should not be completing the full Partnership supplementary pages instead of the short version (only the short version is currently handled by TaxCalc).

Overlap profit brought forward

If the partnership's annual accounting date is not between 31 March and 5 April, when you become a partner you can end up being taxed on the same profits in two consecutive years because of the way in which your basis period can overlap with the accounting period. The same may have applied on the transition to the system of self-assessment. These profits are called 'overlap profits' and the special relief which you can claim to compensate is called 'overlap relief'.Enter here any overlap relief brought forward from previous years. - see IR Help Sheet IR222 How to calculate your taxable profits (available in the 'Help' section of TaxCalc) for how to work this out.

Overlap relief used

Enter here the amount of overlap relief you are claiming to use in 1998-99. Note though, that you can claim this relief only when you cease to be a partner, or if you change accounting date.

If the overlap relief is greater than your share of the taxable profits it creates a loss and will increase an existing loss. If you have more overlap relief brought forward than you are using in 1998-99, TaxCalc will show the rest as an amount to carry forward, on your Partnership supplementary page.

Note
Final accounts may not be available for your partnership. If so, you should enter provisional figures where necessary and click on the 'additional information' box on the Partnership income details screen to enter the reason why and give a date by which you expect to provide final figures. Also tick the 'provisional figures' box on the Tax already paid screen in the Other information section of TaxCalc. If the provisional figures mean that you find, when the full information is available, that you have paid too little tax, you will have to pay interest on the outstanding amount. However, you will have avoided the penalties and surcharges arising from not having sent your return in on time - and if it turns out that you have paid too much tax, you will receive interest on the amount overpaid.


Personal details

Tax Guide

Tax Tips

Do you want TaxCalc to calculate your tax?

Sending your tax calculation to the Revenue

Getting the Revenue to calculate your tax

If you are a PAYE taxpayer and want tax collected through your tax code

Married couples

Widows

Your personal details are needed to help TaxCalc work out which figures to ask for, and which of the main personal allowances to give. For example, if you will be 65 or over during the tax year TaxCalc will allow a higher personal allowance if your income is under a certain amount.

Do you want TaxCalc to calculate your tax for the tax return?

TaxCalc always runs the full calculations for every user. However, when it comes to printing out your tax return you still have the choice of giving the Revenue your own (TaxCalc's) figures, or letting them calculate your liability for you - and then using TaxCalc to check their figures.

TaxCalc assumes that you want your tax return completed as if you were sending your tax calculation to the Revenue, unless you tell it otherwise by removing the tick in the 'Do you want TaxCalc to calculate your tax for the tax return?' box.

Sending your tax calculation to the Revenue

If you decide you want to do this, then leave the tick in the 'Do you want TaxCalc to calculate your tax for the tax return?' box. Once your 1998-99 tax liability has been calculated, TaxCalc will put this amount in the appropriate box of your tax return (box 18.3 on page 7) and complete the rest of the Return as requested by the Revenue.

You have until 31 January 2000 to send back your tax return if you choose this route - although you must also make sure you pay any balance of tax due by this date, otherwise you will start paying interest and surcharges.

Getting the Revenue to do your tax calculation

If you decide you would rather let the Revenue do the calculations and use TaxCalc to check them, remove the tick in the 'Do you want TaxCalc to calculate your tax for the tax return?' box. TaxCalc will work out your 1998-99 tax liability, but the relevant section of your tax return (question 18 on page 7) will be left blank and the Revenue will do the tax calculations for you. If you choose this route you must send your tax return back to the Revenue by 30 September 1999.

Once you've finished running TaxCalc, go to the tax summary on the 'View' menu of TaxCalc. You can print out this document if you wish, as your note of TaxCalc's assessment of your 1998-99 tax bill. Save your .tax file and keep it.

You will receive a statement from the Revenue confirming your 1998-99 tax liability, which you can check with TaxCalc's figures. There may be small differences, due to rounding. When you enter figures, you are entitled to round in your favour, ie by rounding income down to the nearest £, and deductions (which reduce your tax) up to the nearest £, but TaxCalc and the Revenue's own computers work in pounds and pence.

If you are a PAYE taxpayer and want tax collected through your tax code

If you pay tax through PAYE and the amount you owe for 1998-99 is less than £1,000 the Revenue will normally agree to collect this through your PAYE code. This is usually a good idea because it spreads out your tax bill over the year. However, you must usually return your tax return form to them by 30 September 1999 for this to happen. If you send your return in after 30 September 1999, there may not be time for your tax office to organise it, and if you send in your return after the end of November 1999 it will definitely not be possible.

Click on this box if you want tax you owe collected in this way. Your tax office should tell you if, for some reason, they cannot collect the tax through PAYE and you need to pay the tax due on 31 January 2000.

Married couples

Enter the appropriate information in the 'Marital status' box and complete the Married couples screen in the Allowances section, and TaxCalc will automatically work out how much allowance is due. Note that although the tax system generally taxes husband and wife as separate individuals, there are still ways in which married couples may be able to save tax, eg by transferring between them allowances or various income-producing assets. The transfer of allowances applies even in the year of separation or of one spouse's death. In these situations you should complete one file for each spouse if possible.

Note
To find out if you could save tax in this way, you should complete a TaxCalc file for each of you. (The 'Tile' command on the Window menu in TaxCalc enables you to see, and work on, both forms at the same time.) When you have finished and saved the files, open both at the same time and view the Tax Summary (on the 'View' menu). Any relevant tips will appear in TaxCalc's Messages file.

Widows

If your husband died after 5 April 1997 and before 6 April 1999, enter the date of his death in the box which will appear when you select your marital status. This is because you get the widow's bereavement allowance for the year of your husband's death, and the following tax year, provided you lived with your husband for at least part of the tax year in which he died, and did not remarry before 6 April 1998. For 1998-99 the allowance is worth 15 per cent of £1,900, ie £285, deducted from your tax bill.

TaxCalc will automatically give you the allowance, if you are eligible. But if your husband died after 5 April 1998 and before 6 April 1999, you may also be entitled to any of the married couple's allowance not used against your husband's income. To make sure that TaxCalc takes this into account, you need to enter the unused amount of your husband's allowance in the married couple's allowance screen (and blind person's allowance screen if there is unused blind person's allowance to transfer). To get the most out of TaxCalc you should also complete a separate TaxCalc file for your husband, and then follow the steps in the Note above to see if there are any relevant messages.


Personal details contents

Tax Guide

Personal details

Tax return details

Non-residence contents


Reliefs contents

Tax Guide

Loans & mortgages

Pension contributions contents

Maintenance

Charitable gifts

Other reliefs


Indexation factor

You work out the indexation allowance by multiplying the amount you spent by the indexation factor for the month in which you acquired the asset or incurred the expense. So the indexation factor for the initial value of an asset you acquired in June 1989 is 0.409. Indexation allowance is not available for gains after April 1998.

	1982	1983	1984	1985	1986	1987	1988	1989	1990
Jan	n/a	0.968	0.872	0.783	0.689	0.626	0.574	0.465	0.361
Feb	n/a	0.960	0.865	0.769	0.683	0.620	0.568	0.454	0.353
Mar	1.047	0.956	0.859	0.752	0.681	0.616	0.562	0.448	0.339
Apr	1.006	0.929	0.834	0.716	0.665	0.597	0.537	0.423	0.300
May	0.992	0.921	0.828	0.708	0.662	0.596	0.531	0.414	0.288
Jun	0.987	0.917	0.823	0.704	0.663	0.596	0.525	0.409	0.283
Jul	0.986	0.906	0.825	0.707	0.667	0.597	0.524	0.408	0.282
Aug	0.985	0.898	0.808	0.703	0.662	0.593	0.507	0.404	0.269
Sep	0.987	0.889	0.804	0.704	0.654	0.588	0.500	0.395	0.258
Oct	0.977	0.883	0.793	0.701	0.652	0.580	0.485	0.384	0.248
Nov	0.967	0.876	0.788	0.695	0.638	0.573	0.478	0.372	0.251
Dec	0.971	0.871	0.789	0.693	0.632	0.574	0.474	0.369	0.252
	1991	1992	1993	1994	1995	1996	1997	1998
Jan	0.249	0.199	0.179	0.151	0.114	0.083	0.053	0.019
Feb	0.242	0.193	0.171	0.144	0.107	0.078	0.049	0.014
Mar	0.237	0.189	0.167	0.141	0.102	0.073	0.046	0.011
Apr	0.222	0.171	0.156	0.128	0.091	0.066	0.040	n/a
May	0.218	0.167	0.152	0.124	0.087	0.063	0.036	n/a
Jun	0.213	0.167	0.153	0.124	0.085	0.063	0.032	n/a
Jul	0.215	0.171	0.156	0.129	0.091	0.067	0.032	n/a
Aug	0.213	0.171	0.151	0.124	0.085	0.062	0.026	n/a
Sep	0.208	0.166	0.146	0.121	0.080	0.057	0.021	n/a
Oct	0.204	0.162	0.147	0.120	0.085	0.057	0.019	n/a
Nov	0.199	0.164	0.148	0.119	0.085	0.057	0.019	n/a
Dec	0.198	0.168	0.146	0.114	0.079	0.053	0.016	n/a


Retirement relief

Relieves gains made on disposal of a business by an individual aged 50 or over. See Inland Revenue Help Sheet IR289 Retirement relief and capital gains tax. Note that retirement relief is being phased out, starting from the 1999-2000 tax year, and will cease altogether for disposals made after 5 April 2003. Instead taper relief will be applied against gains on business assets.


Roll-over relief

Allows gains on the disposal of business assets to be deferred if replacement assets are acquired. See also Inland Revenue Help Sheet IR290 Business asset roll-over relief.


Savings & investments contents

Tax Guide

National Savings accounts

Shares & unit trusts

Life insurance

Interest & other investments


Savings and investments breakdown

Savings breakdown

If you have entered anything in the Savings and investments section of TaxCalc, this report will give you a breakdown of what you entered and the totals in each category. The categories follow those on page 3 of the tax return. Note that overseas savings and investments are not shown because these are itemised in the 'Foreign' supplementary sheet on the 'Forms' menu of TaxCalc. If you used the 'mini-calculators' on the Savings and Investments screens to record details of income received in each category, you can print out a list of what you entered from the mini-calculators themselves.


Self-employment - business details

Tax Guide

Tax Tips

Business name and description

Accounting period

Basis period

Accounts do not run from last accounting date

Date business commenced

Date business ceased

Business details have changed

Not required to give full details

Accounts don't run from last accounting date

Accounting date has changed

A second or further change of accounting date

Figures are provisional

Special rules for certain trades apply

Additional information

Note
Further information on self-employment is given in the Inland Revenue's Notes on self-employment which accompany the self-employment supplementary pages. These notes are available under the TaxCalc 'Help' menu.

The documents and papers you will need to complete the self-employment section are:

your business accounts covering your basis period for the 1998-99 tax year

your books and records, if you do not have accounts.

You do not have to send your business accounts with your tax return - but you must have records of all your business transactions. You must keep these until at least 31 January 2005 in case your Tax Office asks to see them.

Warning
Even if you - and your customers - think of you as self-employed, the Revenue may class you as an employee: see leaflet IR56 Employed or self-employed? (available from tax offices).

Business name and description

If you were self-employed as a sole trader during 1998-99, enter here your business name and address and what the nature of your business is. If you have more than one business, enter details for each separately by using the 'Add' button.

If you were a member of a partnership, you need to complete the Partnership supplementary pages instead: to do this, go to the Partnership income section of TaxCalc instead. The partnership as a whole also has to fill in a tax return. If you have TaxCalc Plus, you can complete a Partnership tax return by going to the Partnership tax document. And if you were a director of a company, you should enter any drawings in the form of salary in the Employment section, and any dividends under Savings and investments.

Accounting period

You may not need to have accounts prepared for your business each year. If you do not, and you do not have an accountant, Inland Revenue Help Sheet IR222 How to calculate your taxable profits (available on the 'Help' menu of TaxCalc) will help you to work out your taxable profits. However, you do need to understand what is meant by 'accounting period'. This is simply the period for which you provide details of your business income and expenses: your 'accounting date' is the date on which this period ended. Enter this as the end date on this screen. Your start date is usually the day after the previous accounting date. For example, if accounts are drawn up each year to 31 December, the accounting period for the 1998-99 tax year is the 12 month period 1st January 1998 to 31st December 1997 and the accounting date is 31st December 1999.

You pay tax for 1998-99 according to the profits, or losses, for your basis period. For most businesses, the period covered by your accounts is likely to be the same as your basis period. If this is not the case, it is most likely you will have to complete a separate set of Self Employment Supplementary Pages for each accounting period: follow the steps below to decide how many sets of supplementary pages you need to complete.

Step 1 - work out the basis period for your business

Step 2 - work out how many sets of accounts fall within your basis period.

Step 3 - if any of the information on the accounts within your basis period was entered in last year's tax return, you do not need to provide the same information again. Click the Not required to give full details box.

Step 4 - if you have only one set of accounts for the basis period fill in the self-employment screens for the whole of the basis period - all the information you enter should relate to income, expenses, etc in that basis period. Otherwise, you must complete a separate set of self-employment pages for each set of accounts, see more than one set of accounts.

If you are unsure about which accounting period and/or basis period applies to this Return, speak to your Tax Office.

Basis period

After the first two or three years in business your basis period will be the 12 month period up to the date you choose as your annual accounting date unless you change it or your business ceases. However, your basis period may be different if your business started after 5 April 1996 (there are different rules for new businesses), your business ceased, you changed your accounting date or didn't have an accounting date between 6 April 1998 and 5 April 1999. Also see Inland Revenue Help Sheet IR222 How to calculate your taxable profits (the full text of this Help Sheet is available on TaxCalc's Help menu).

Date business commenced

You only need to click here if your business commenced on or after 6 April 1996. This will tell the Revenue whether or not the special rules for working out the basis period for new businesses apply.

Date business ceased

Only complete this if this business ceased to trade before the end of the tax year, i.e. before 6 April 1999.

Business details have changed

Click here if the name or address of your business has changed since your last tax return.

Not required to give full details

Click here if you have already entered details of this accounting period's figures in last year's tax return. In this case, you do not need to provide the same information again, and can leave the Turnover, Expenses, Capital allowances and Balance sheet screens empty.

Accounts do not run from last accounting date

Click this box if there is a gap between the end of your previous accounting period and the beginning of this one. You will need to explain why in the 'Additional information' section.

Accounting date has changed

Click here if you have changed your accounting date for tax purposes, and you want it to be a permanent change. This may affect your basis period. See Inland Revenue Help Sheet IR222 How to calculate your taxable profits (the full text of this Help Sheet is available in TaxCalc's Help Sheets section).

A second or further change of accounting date

Click this box if you have changed your accounting date before, and explain why it has changed, in the 'Additional information' section. A change of accounting date may not be effective for tax purposes - for example if it is your second accounting change for tax purposes within five years, you have to be able to show that the change is made for bona fide commercial reasons.

Figures are provisional

Final accounts may not be available for your business. If so, you should enter provisional figures where necessary, and click on the 'Additional information' box to enter the reason why. Also give a date by which you expect to provide final figures. If the provisional figures mean that you find, when the full information is available, that you have paid too little tax, you will have to pay interest on the outstanding amount. However, you will have avoided the penalties and surcharges arising from not having sent your return in on time - and if it turns out that you have paid too much tax, you will receive interest on the amount overpaid.

Special rules for certain trades apply

The Inland Revenue does not require foster carers and adult carers who have an arrangement with their Tax Office to complete the whole of the self-employment supplementary sheet. In this case, you need only click here, complete the Business details screen (except for the 'basis period' box), the Class 4 NICs screen, and enter your taxable profits in the 'Turnover' box on the Turnover screen.

Special rules also apply to people who carry on a trade or profession wholly overseas and who are resident but not domiciled in the UK, and who are therefore taxed on the remittance basis (i.e. only on money you send back to the UK). In this case, enter the same information as for carers above, but also include details of your basis period on the Business details screen. When completing the Class 4 NICs screen, remember to click the button to show that you are exempt.

Additional information

Click on this button to enter any relevant additional information. Any text you type in here will be entered in the relevant section of your Self Employed Supplementary Page. For example:

gaps in accounting periods

notes if you registered or deregistered for VAT during the period

details of receipts of expenditure connected with your business which for any reason are not included in your figures, or

an explanation of any tax adjustment to your net profit when the reason is not apparent from these figures, or

an explanation of any items which are not included in the standard accounts information but which affect your taxable profits, such as the spreading of artistic profits, or

an explanation of 'any other business income' you enter on the Other income and deductions screen

an explanation of any provisional figures, and the date by which final figures will be available

details of any articles gifted under the Millennium Gift Aid scheme, and to which charities. You will probably already have received tax relief on these through your accounts, but the Inland Revenue asks you to give them details

details of any overlap relief claimed for an amount on which you claimed tax credit relief in an earlier year. See Inland Revenue Help Sheet IR260 Overlap (from the Inland Revenue Orderline, 0645 000404)

if you have already claimed to offset a 1998-99 loss against the loss of an earlier year, details of the loss

if you are claiming exemption or deferral of Class 4 National Insurance Contributions, the reason for this

if you are subcontracter in the building industry who is having difficulty getting an SC60, details of the dates and the amounts paid, the tax deductions and the name and address of the contractor(s).


Share schemes - approved discretionary

Tax Guide

Taxable event

If shares are unlisted

Date option was granted

Amount paid for option

Number of shares bought

Exercise price/price per option

Market value per share at date option exercised

Taxable amount

Amount received for cancellation/release

Any of the taxable amount already entered elsewhere

Two types of scheme fall within this category:

company share option plans

executive share option plans. These preceded company share option plans, but existing options held under these schemes are still tax-free providing the various conditions are met.

Under both schemes your employer can give you options to buy shares at a set price at some point in the future. The option is tax-free provided certain conditions are met - you only need to enter details here if a 'taxable event' in 1998-99 occurred because you breached those conditions. Nor should you enter here any dividends from shares you received through the scheme, or capital gains on selling them - these are taxed just like other dividends or gains and should be entered in the Savings and investments section or Capital Gains section of TaxCalc, as appropriate.

For full information on how these schemes work, see Inland Revenue leaflet IR101: Approved Company Share Option Plans. An outline for employees (from the Inland Revenue Orderline, Tel: 0645 000404).

Note
If you are claiming to be not resident or not ordinarily resident in the UK for tax purposes, the tax rules for the treatment of share schemes may be different. See Inland Revenue Help Sheet IR211 Employment - resident and domicile issues (available on the 'Help' menu of TaxCalc.

Taxable event

Enter here a brief reference for each taxable occasion which occurred in relation to this type of scheme in 1998-99. This is not needed for the return but TaxCalc requires at least a one-character reference for identification purposes.

You are never taxed on the grant of an option in an approved share option scheme. A ‘taxable event’ occurs only if one of the following applies:

you exercise the option less than three years after being granted it

you exercise the option more than 10 years after being granted it

it is less than three years since you last exercised an option under any discretionary share option plan

you received something in return for cancelling, releasing or transferring your option, or if you receive something for agreeing not to exercise your option

the scheme had ceased to be approved by the time you exercised your options.

If any of these 'taxable events' took place in the 1998-99 tax year, you need to enter each event separately, using the ‘Add’ button: for example, if you exercised options to buy shares in two separate companies.

If shares are unlisted

The calculation of the taxable amount depends on the market value of the shares. If the shares are not listed on the Stock Exchange, the market value has to be agreed with the Revenue. Click here if this applies. Your employer may be able to tell you if any value has been agreed. If it has not, you should still submit your tax return using estimates, but remember to tick the 'Click here if any figures you have given are provisional' box on the Tax already paid screen in the Other information section of TaxCalc.

Date option was granted

This should be shown on the share option certificate, or other correspondence from your employer.

Amount paid for option

If you were required to pay something for the option itself (not the amount it cost you to exercise it, i.e. buy the shares), enter the amount here. You can deduct this from the value of the option when it comes to working out the taxable amount.

Number of shares bought

This is needed to calculate the taxable amount. You may not actually have bought all the shares you were entitled to buy - if so, enter only the number bought.

Exercise price/option price per share

Enter here the price at which you eventually bought each share, for example, £2 per share. This will have been set at the time the option was granted and will usually be the market value at that time. In some cases, the option price may have been set at a discount to the market value.

The exercise price should be shown on the share option certificate or other correspondence from your employer. Type in the price in pounds and pence, for example, £4.50 should be typed in as 4.50.

Market value per share at date option exercised

This is the price you might reasonably expect to get for the shares if you sold them on the open market (your employer should be able to help you if you are unsure what this is). For example, if you bought at £4.50 per share, type in 4.50.

Taxable amount

If the ‘taxable event’ arises because, during the 1998-99 tax year, you exercised your option outside the time limits, or you exercised options in a scheme which had become unapproved, enter the taxable amount here. The taxable amount is the difference between the market value of the shares at the time the option is exercised and the amount paid for the shares, less any amount paid for the option.

If the market value of the shares at the time the option is exercised is £3 per share, for example, and you paid £2, you are taxed on £3 - £2 = £1 per share. If you buy 400 shares, the taxable amount is £400 less anything you paid for the option.

A working sheet helping you to work out the taxable amount is given in the Inland Revenue’s notes accompanying the ‘Share schemes’ supplementary pages.

Taxable amount - amount received on cancellation/release

If you receive something in return for cancelling, releasing or transferring your option, or if you receive something for agreeing not to exercise your option, enter here the amount you received. You pay tax on this amount less anything you paid for the option (which you should already have entered at the top of the screen). TaxCalc will take the amount you enter here, deduct anything you paid for the option, and enter the result in the correct place on the ‘Share Schemes’ supplementary pages.

Any of the taxable amount already entered elsewhere

In some circumstances, your employer may deduct PAYE from what any taxable amount you receive through a share scheme. If so, this taxable amount will have been included on your P60 (or P45) and should have been entered on the Employer details screen. To ensure that this amount is not taxed twice, you should also enter it here. See Inland Revenue Help Sheet IR218 Shares acquired: Operation of Pay As You Earn (PAYE).


Share schemes - approved savings-related
Approved savings-related share schemes

Tax Guide

Taxable event

If shares are unlisted

Date option was granted

Number of shares bought

Exercise price/option per share

Market value per share at date option exercised

Taxable amount

Amount received for cancellation/release

Any of the taxable amount already entered elsewhere

Approved savings-related share option schemes give you an option to buy shares in your employer’s company at a price that is fixed when you are granted the option. At the same time as you are granted the option, you start saving a monthly amount in a special ‘Save As You Earn’ savings account run either by National Savings or by a bank or building society. With this type of share option scheme you do not pay anything for the option itself. After five or seven years (or three years if you joined the scheme on or after 30 April 1996), you can use the money in your savings account to exercise your option to buy shares. You do not have to exercise your option - you can simply withdraw your cash and the interest earned on it.

The option is tax-free provided certain conditions are met - you only need to enter details here if a 'taxable event' in 1998-99 occurred because you breached those conditions. Nor should you enter here any dividends from shares you received through the scheme, or capital gains on selling them - these are taxed just like other dividends or gains and should be entered in the Savings and investments section or Capital Gains section of TaxCalc, as appropriate.

For full information on how these schemes work, see Inland Revenue leaflet IR97: Approved Save As You Earn share option schemes. An outline for employees (from the Inland Revenue Orderline, Tel: 0645 000404).

Note
If you are claiming to be not resident or not ordinarily resident in the UK for tax purposes, the tax rules for the treatment of share schemes may be different. See Inland Revenue Help Sheet IR211 Employment - resident and domicile issues (available on the 'Help' menu of TaxCalc.

Taxable event

Enter here a brief reference for each taxable occasion which occurred in relation to this type of scheme in 1998-99. This is not needed for the return but TaxCalc requires at least a one-character reference for identification purposes.

You are never taxed on the grant of an option in an approved savings-related share option scheme. A ‘taxable event’ occurs only if:

you exercise the option within three years of receiving it, because the company, or the part of the business, you work for, is sold or taken over or

you receive something in return for cancelling, releasing or transferring your option, or if you receive something for agreeing not to exercise your option.

You only need to complete this screen if either of these two events took place in the 1998-99 tax year. You need to enter each ‘taxable event’ separately, using the ‘Add’ button: for example, if you exercised options to buy shares in two separate companies.

If shares are unlisted

The calculation of the taxable amount depends on the market value of the shares. If the shares are not listed on the Stock Exchange, the market value has to be agreed with the Revenue. Click here if this applies. Your employer may be able to tell you if any value has been agreed. If it has not, you should still submit your tax return using estimates, but remember to tick the 'Click here if any figures you have given are provisional' box on the Tax already paid screen in the Other information section of TaxCalc.

Date option was granted

This should be shown on the share option certificate, or other correspondence from your employer.

Number of shares bought

This is needed so that the Revenue can check your calculation of the taxable amount. It will depend on the amount you save.

Exercise price/option price per share

Enter here the price at which you eventually bought each share, for example, £2 per share. This will have been set at the time the option was granted and will usually be either the market value at that time or the market price minus a discount of up to 20 per cent. This should be shown on the share option certificate or other correspondence from your employer. Type in the price in pounds and pence, for example, £4.50 should be typed in as 4.50.

Market value per share at date option exercised

This is the price you might reasonably expect to get for the shares if you sold them on the open market (your employer should be able to help you if you are unsure what this is). For example, if you bought at £4.50 per share, type in 4.50.

Taxable amount

If the ‘taxable event’ arises because, during the 1998-99 tax year, you exercised your option within three years of receiving it, enter the taxable amount here. The taxable amount is the difference between the market value of the shares at the time the option is exercised and the amount paid for the shares.

If the market value of the shares at the time the option is exercised is £3 per share, for example, and you paid £2, you are taxed on £3 - £2 = £1 per share. If you buy 400 shares, the taxable amount is £400.

A working sheet helping you to work out the taxable amount is given in the Inland Revenue’s notes accompanying the ‘Share schemes’ supplementary pages.

Taxable amount - amount received on cancellation/release

If you receive something in return for cancelling, releasing or transferring your option, or if you receive something for agreeing not to exercise your option, enter here the amount you received. This is the amount on which you will be taxed.

Remember that if PAYE was deducted from the sum you received, you should enter the sum to which the PAYE related under  Any of the taxable amount already entered elsewhere.

Any of the taxable amount already entered elsewhere

In some circumstances, your employer may deduct PAYE from what any taxable amount you receive through a share scheme. If so, this taxable amount will have been included on your P60 (or P45) and should have been entered on the Employer details screen. To ensure that this amount is not taxed twice, you should also enter it here. See Inland Revenue Help Sheet IR218 Shares acquired: Operation of Pay As You Earn (PAYE).


Share schemes - shares acquired

Tax Guide

Taxable event

If shares are unlisted

Acquiring shares as payment from your job

Acquiring shares as a benefit of your job

Arising from shares you already own

Date shares acquired

Amount paid per share

Market value per share

Any of the taxable amount already entered elsewhere

Details of post-acquisition charge

If your employer gives you free or cheap shares (or interests in shares) in the company, the ‘taxable value’ of the shares is taxed as part of your income from employment and should be entered on this screen. A distinction is made between shares you receive as part of your earnings (‘shares from your job’) and those you receive as a fringe benefit of a job: this can make quite a difference to the tax treatment so check with your employer or your tax office which category yours fall within.

If you are given shares, and their value to you is later is increased, for example because any rights or restrictions are lifted, this also counts as a taxable benefit.

However if you receive the shares as part of a public offer, in which you are given a priority allocation, you are not taxed providing you pay the same price for your shares as the general public (any discount on the share price is taxable). Nor should you enter here any dividends from shares you received through the scheme, or capital gains on selling them - these are taxed just like other dividends or gains and should be entered in the Savings and investments section or Capital Gains section of TaxCalc, as appropriate.

For full information on how free or cheap shares are taxed, see Inland Revenue leaflet IR16: Share acquisitions by directors and employees.

Note
If you are claiming to be not resident or not ordinarily resident in the UK for tax purposes, the tax rules for the treatment of share schemes may be different. See Inland Revenue Help Sheets IR211 Employment - resident and domicile issues (available on the 'Help' menu of TaxCalc) and IR216 Shares as benefits (from the Inland Revenue Orderline, Tel: 0645 000404).

Taxable event

Enter here a brief reference for each taxable occasion which occurred in relation to free or cheap shares acquired in 1998-99. This is not needed for the return but TaxCalc requires at least a one-character reference for identification purposes.

A ‘taxable event’ occurs if you receive free or cheap shares either from your job or as a benefit, or if you already have free or cheap shares and their value is enhanced, e.g. because you receive benefits such as a bonus or rights issue of shares.

If you acquire shares which may be forfeit at some future time if certain conditions are not met, these may also be taxable - see Inland Revenue Help Sheet IR219 Shares acquired from your employment. If the risk of forfeiture can last more than five years, the 'taxable event' occurs when you acquire them, so enter them under Acquiring shares as payment from your job. If the risk of forfeiture lasts five years or less, the taxable event arises when the risk of forfeiture is lifted, or when you dispose of them if earlier: enter them as Arising from shares you already own  unless they were acquired before 17 March 1998, in which case do not enter them here at all - instead you should tell your tax office how you acquired the shares by clicking on the 'Additional information' button.

You only need to complete this screen if any of these events took place in the 1998-99 tax year. You need to enter each ‘taxable event’ separately, using the ‘Add taxable event’ button: for example, if you received shares in two separate companies.

If shares are unlisted

The calculation of the taxable amount depends on the market value of the shares. If the shares are not listed on the Stock Exchange, the market value has to be agreed with the Revenue. Click here if this applies. Your employer may be able to tell you if any value has been agreed. If it has not, you should still submit your tax return using estimates, but remember to tick the 'Click here if any figures you have given are provisional' box on the Tax already paid screen in the Other information section of TaxCalc.

Acquiring shares as payment from your job

If you receive shares, or an interest in shares, because of your position as an employee or director of the company, the shares are taxable in the same way as other income from employment. This does not apply if you receive the shares as part of a public offer, at the same price as the public.

If you received shares in these circumstances during the 1998-99 tax year, click on the appropriate button, complete the details requested, and enter the taxable amount. The taxable amount of the shares is the market value of the shares at the time you acquired them, less anything you paid for them. A working sheet helping you to work out the taxable amount is given in the Inland Revenue’s notes accompanying the ‘Share schemes’ supplementary pages.

If the shares are taxable because they are subject to a risk of forfeiture lasting for more than five years, the taxable value is the difference between the amount you paid for them and their value (taking into account all the restrictions on them, including forfeiture). There is a working sheet to help you work this out in Inland Revenue Help Sheet IR219 Shares acquired from your employment.

Acquiring shares as a benefit of your job

The sorts of shares you should enter here include those which you are allowed to pay for in instalments (partly-paid shares), or those where part of the purchase price is deferred, and which do not count as ‘shares from your job’. If in doubt check with your employer.

If you received shares in these circumstances during the 1998-99 tax year, click on the appropriate button, complete the details requested, and enter the taxable amount. You are taxed as if you received an interest-free ‘loan’ from your employer, the amount of the loan being the market value of the shares at the time when you acquired them, less anything you paid for them. The taxable amount is the interest that would have been payable on a loan of this amount, worked out at the Inland Revenue’s ‘official rate’ of interest. The good news is that you are not taxed at all if you earn more than £8,500 over a year, and the total amount of the ‘loan’, plus any other loans (real and ‘notional’) received because of your job, does not exceed £5,000 at any point in the tax year. Nor are you taxed if your earnings, over a whole year, would amount to less than £8,500 and you are not a director.

A working sheet helping you to work out the taxable amount is given in the Inland Revenue’s Help Sheet IR 216: Shares as benefits.

Note that your employer may already have deducted the tax due under PAYE from your earnings. If this applies, see Any of the taxable amount already entered elsewhere.

Arising from shares you already own

Even after you have received shares (or an interest in them) because of your job, you may be regarded as having received a further taxable benefit from them if one of the following applies:

the value of your shares is increased because any rights or restrictions attached to them are altered, for example, restrictions on sale are lifted

the shares were subject to a risk of forfeiture within five years from acquisition, that risk has been lifted (or you have disposed of the shares), and the shares were acquired after 16 March 1998

the shares are in some ‘dependent subsidiary’ companies. You are charged tax on the seventh anniversary of receiving the shares, or when you sell them, if earlier

special shareholder benefits are received, such as bonus or rights issues, cash, and vouchers or tokens.

If you received taxable benefits in these circumstances during the 1998-99 tax year, click on the appropriate button, complete the details requested (except for Amount paid per share which you can ignore) and enter the taxable amount. Also enter the nature of the taxable event in the 'Details of post-acquisition charges' box. A working sheet helping you to work out the taxable amount is given in the Inland Revenue’s Help Sheet IR 217: Shares acquired: post acquisition charges.

If your shares were subject to a risk of forfeiture and that risk has been lifted (or you have disposed of them), there is a working sheet to help you work out the taxable amount in Inland Revenue Help Sheet IR219 Shares acquired from your employment.

Date shares acquired

Enter here the date the shares were first acquired, even if the taxable event is a ‘post-acquisition charge’.

Amount paid per share

This is the amount you paid when you first acquired the shares. It only applies if you acquired the shares during the 1998-99 tax year - otherwise you can leave this box blank.

Market value per share

Enter the market value of the shares at the date they were first acquired. This is the price you might reasonably expect to get for the shares if you sold them on the open market (your employer should be able to help you if you are unsure what this is). Type in the price in pounds and pence, for example, £4.50 should be typed in as 4.50.

Any of the taxable amount already entered elsewhere

In some circumstances, your employer may deduct PAYE from what any taxable amount you receive through a share scheme. If so, this taxable amount will have been included on your P60 (or P45) and should have been entered on the Employer details screen. To ensure that this amount is not taxed twice, you should also enter it here. See Inland Revenue Help Sheet IR218 Shares acquired: Operation of Pay As You Earn (PAYE).

Details of post-acquisition charge

Type in here details of the nature of the taxable event, e.g. rights issue, shares in subsidiary company, removal of restrictions, lifting of risk of forfeiture.


Share schemes - unapproved share options

Tax Guide

Taxable event

If shares are unlisted

Date option was granted

Amount paid for option

Tax credit relief

Number of shares granted/bought

Exercise price/option price per share

Market value per share

Taxable amount - grant of an option

Amount received for cancellation/release

Taxable amount - exercise of an option

Any of the taxable amount already entered elsewhere

You should complete this screen if you received an option to buy shares in your employer’s company at a set price at some point in the future, through a scheme which is not 'approved' for tax purposes. You should not enter here any dividends from shares you received through the scheme, or capital gains on selling them - these are taxed just like other dividends or gains and should be entered in the Savings and investments section or Capital Gains section of TaxCalc, as appropriate.

Because unapproved schemes do not have to comply with the various conditions required for approval, they may be set up in a number of different ways. They all involve the right to buy shares in employer’s company at a set price, at some point in the future. But, for example, your option may give you the right to buy shares at a discount to the market price, or you may be required to pay something for the option. These differences affect how the options are taxed: you may be taxed when the option is granted, when you exercise it, and if you give up your right to exercise it in return for some payment.

For full information on how unapproved share options are taxed, see Inland Revenue leaflet IR16: Share acquisitions by directors and employees.

Note
If you are claiming to be not resident or not ordinarily resident in the UK for tax purposes, the tax rules for the treatment of share schemes may be different. See Inland Revenue Help Sheets IR211 Employment - resident and domicile issues (available on the 'Help' menu of TaxCalc) and IR216 Shares as benefits (from the Inland Revenue Orderline, Tel: 0645 000404).

Taxable event

Enter here a brief reference for each taxable occasion which occurred in relation to this type of scheme in 1998-99. This is not needed for the return but TaxCalc requires at least a one-character reference for identification purposes.

A ‘taxable event’ occurs if any of the following applies:

you are granted an option which allows you to buy shares more than 10 years in the future, at a price which is less than the market value of the shares at the date the option is granted

you exercise the option

you receive something in return for cancelling, releasing or transferring your option, or if you receive something for agreeing not to exercise your option.

You only need to complete this screen if any of these events took place in the 1998-99 tax year. You need to enter each ‘taxable event’ separately, using the ‘Add’ button: for example, if you exercised options to buy shares in two separate companies.

If shares are unlisted

The calculation of the taxable amount depends on the market value of the shares. If the shares are not listed on the Stock Exchange, the market value has to be agreed with the Revenue. Click here if this applies. Your employer may be able to tell you if any value has been agreed. If it has not, you should still submit your tax return using estimates, but remember to tick the 'Click here if any figures you have given are provisional' box on the Tax already paid screen in the Other information section of TaxCalc.

Date option was granted

This should be shown on the share option certificate, or other correspondence from your employer.

Amount paid for option

If you were required to pay something for the option itself (not the amount it cost you to exercise it, i.e. buy the shares), enter the amount here. You can deduct this from the value of the option when it comes to working out the taxable amount.

Tax credit relief

If you exercised your option in 1998-99, and paid tax on the option at the time it was granted, you can set the tax paid then against your overall tax bill for 1998-99.  Enter the amount of tax credit relief here. If you received something in return for cancelling your option, or otherwise agreeing not to exercise it, tax may have been deducted under PAYE: if so, enter the taxable amount under Any of the taxable amount already entered elsewhere,  not here.

Working out the tax credit relief

The amount of ‘tax credit relief’, as the Revenue calls it, cannot exceed the amount of tax you would have to pay on the exercise or cancellation so first you need to find out how much this is. To do this, enter and save all your data for the tax year, except for this particular taxable event (the exercise or cancellation of the option), then go to the tax summary (on the 'View' menu) and check the amount of income tax due. Now go back to the Share schemes section and enter all the information relating to this particular taxable event. The increase in the income tax shown when you return to the tax summary is the tax on this particular taxable event.

The amount you should enter under ‘tax credit relief’ is the lower of:

the tax now due on the exercise/cancellation of the option or,

the tax you paid at the time the option was granted.

TaxCalc will automatically deduct the tax credit relief from your tax bill at the appropriate point: make sure that the amount is entered under ‘additional information’ as the Revenue requests.

Number of shares granted/bought

This is needed so that the Revenue can check your calculation of the taxable amount. It will depend on the amount you save.

Exercise price/option price per share

Enter here the price at which you eventually bought each share, for example, £2 per share. This will have been set at the time the option was granted and will usually be either the market value at that time or the market price minus a discount. This should be shown on the share option certificate or other correspondence from your employer. Type in the price in pounds and pence, for example, £4.50 should be typed in as 4.50.

Market value per share

If the taxable event was the grant of an option, enter the market value per share at the date it was granted. If the taxable event was the exercise of an option, enter the market value per share at the date it was exercised. The market value is the price you might reasonably expect to get for the shares if you sold them on the open market (your employer should be able to help you if you are unsure what this is). Type in the price in pounds and pence, for example, £4.50 should be typed in as 4.50.

Taxable amount - grant of an option

In some cases, the grant of an option will be tax-free. You only have to pay tax on the grant of an option which allows you to buy shares more than 10 years in the future, at a price which is less than the market value of the shares at the time of the grant. So, an option to buy shares at the market value at the time of the grant is not taxable. If, in the 1998-99 tax year, you were granted an option which is not tax-free, enter the taxable amount here.

The taxable amount is the difference between the market value of the shares at the time the option is granted and the option price at which you are permitted to buy the shares, less any amount paid for the option. If, in future years, you exercise the option, you can set the tax paid when the option was granted against your tax bill at the time, by claiming tax credit relief.

If the market value of the shares at the time the option is granted is £3 per share, for example, and you are granted the option to buy at £2, you are taxed on £3 - £2 = £1 per share. If you have the right to buy 400 shares, the taxable amount is £400 less anything you paid for the option.

A working sheet helping you to work out the taxable amount is given in the Inland Revenue’s notes accompanying the ‘Share schemes’ supplementary pages.

Taxable amount - amount received for cancellation/release

If you receive something in return for cancelling, releasing or transferring your option, or if you receive something for agreeing not to exercise your option, enter here the amount you received. You pay tax on this amount less anything you paid for the option (which you should already have entered at the top of the screen). TaxCalc will take the amount you enter here, deduct anything you paid for the option, and enter the result in the correct place on the ‘Share Schemes’ supplementary pages.

Remember that if PAYE was deducted from the sum you received, you should enter the sum to which the PAYE related under Any of the taxable amount already entered elsewhere.

Taxable amount - exercise of an option

If, during the 1998-99 tax year, you exercised an unapproved share option, or you exercised options in a scheme which had become unapproved, enter the taxable amount here. The taxable amount is the difference between the market value of the shares at the time the option is exercised and the amount paid for the shares, less any amount paid for the option.

If the market value of the shares at the time the option is exercised is £3 per share, for example, and you paid £2, you are taxed on £3 - £2 = £1 per share. If you buy 400 shares, the taxable amount is £400 less anything you paid for the option. Remember that if you paid tax at the time the option was granted, you can set this against your overall tax bill for 1998-99 - see Tax credit relief for what to enter.

A working sheet helping you to work out the taxable amount is given in the Inland Revenue’s notes accompanying the share schemes supplementary pages.

Remember that if PAYE was deducted from the sum you received, you should enter the sum to which the PAYE related under Any of the taxable amount already entered elsewhere.

Any of the taxable amount already entered elsewhere

In some circumstances, your employer may deduct PAYE from what any taxable amount you receive through a share scheme. If so, this taxable amount will have been included on your P60 (or P45) and should have been entered on the Employer details screen. To ensure that this amount is not taxed twice, you should also enter it here. See Inland Revenue Help Sheet IR218 Shares acquired: Operation of Pay As You Earn (PAYE).


Share schemes contents

Tax Guide

Approved savings-related

Approved discretionary

Unapproved share options

Shares acquired


Tax Return & supplementary pages

Which pages to choose

How to print and submit your return

R40

Under self assessment there is one main eight page tax return form (with alternative versions for different types of taxpayer, including partnerships), plus several different Supplementary Pages for taxpayers with particular sources of income. You can view them using the 'Tax Return' drop-down menu under 'View' on the toolbar.

Which pages to choose

Choose the appropriate version of the TaxCalc facsimile for the main eight page tax return and the supplementary pages which cover the income and capital gains which you received in the 1998-99 tax year.

Warning
You are required by law to give information of any taxable income you receive, even if you are not sent a tax return, or even if the income you receive is not specifically covered by the tax return you are sent.

How to print and submit your Return

If you wish to print your Return on coloured paper (so as to be able to readily distinguish originals from photocopies, for instance), it will be acceptable for a cream or other pale pastel coloured paper to be used. It is important, though, that all printed matter (background text and data entries) is clear and easy to read on coloured paper. The form must be suitable for producing clear photocopies. Dark or bright colours of paper must be avoided. The Inland Revenue are happy to advise on the acceptability of any coloured paper which you might be considering, if a specimen printed page can be supplied prior to usage.

Important Note
TaxCalc offers you the facility of printing out a draft return form. You can use this for your records or for checking the figures, however, it will not be acceptable to the Inland Revenue as a tax return form.

You must send them either a colour or black and white copy of the facsimile form, which has been approved.

You should print your return form on A4-sized paper.

The sheets must be assembled in the correct sequence and be wire-stapled together. Loose sheets will not be acceptable to the Revenue. Stapling should be in the top left-hand corner or in the left-hand margin. Care should be taken to ensure that all text on each page is visible after printing.

R40

If you are not sent a self-assessment tax return, but need to tell the Revenue about your income so that you can claim back tax overpaid, you can use the R40 'Claim for Repayment' form. This covers much the same ground as the tax return. You can either print out a blank copy from an empty TaxCalc file to fill in yourself by hand, or enter all your data in TaxCalc and then print out a copy completed by TaxCalc.

Note, though, that if you print out a copy completed by TaxCalc, you should check the printout particularly careful. The R40 is designed on quite different lines from the self-assessment tax return and there will be parts that you will need to complete by hand.

Crown copyright forms are reproduced with the permission of the Controller of Her Majesty's Stationery Office.


Tax already paid

Tax Guide

Tax Tips

Payments on account for 1998-99

1998-99 tax refunded

Unpaid tax for earlier years included in your tax code for 1998-99

Tax due in 1998-99 included in next year's tax code

Unpaid tax for earlier years

Overpaid tax for earlier years

1999-2000 tax you are reclaiming now

Claiming to reduce your payments on account

New pension or benefit for next year

Provisional figures

Claim other reliefs

Extra relief to be deducted

You must complete this screen to be sure that TaxCalc calculates correctly the amount you owe to the Revenue. It accounts for any tax you have already paid for the tax year, refunds you have already had, and any adjustments that the Revenue has already made to your tax outstanding through your PAYE code. Please be careful not to enter here any tax you have already entered elsewhere in TaxCalc.

For information on your PAYE coding notice see Inland Revenue Help Sheet IR208 Payslips and coding notices (available on the 'Help' menu of TaxCalc).

Payments on account for 1998-99

For some types of income not taxed before receipt you may make payments on account. For the 1998-99 tax year, you make these payments on account (if they apply) on 31 January 1999 and 31 July 2000 - so, if you are using this programme before 31 July 1999 you will have just one payment on account to include, and if you are using it after that date you will have two payments.

You can get this information from the statements of account the Revenue sends you. However, you should not include payments which have been set against interest, penalties or surcharges (these do not count, of course, as tax paid). Nor should you include tax arising from earlier years which appears on your statement of account (enter this under 'Unpaid tax for earlier years').

1998-99 tax refunded

It is possible that the Revenue (or your DSS Benefit Office) may have refunded tax you have already paid for 1998-99. This might apply, for example, if you are a non-taxpayer who has reclaimed tax credits on share dividends part-way through the year, or if your DSS office has refunded tax following a period of unemployment. If this is the case enter the amount refunded here - but only if it relates to tax paid in the 1998-99 tax year.

Unpaid tax for earlier years included in your tax code for 1998-99

If you pay tax through PAYE, the Inland Revenue tries to keep your tax code in line with your circumstances so that you pay the correct amount of tax. However, your tax code for 1998-99 may have been adjusted to collect unpaid tax from previous tax years. If so, your form P2 Coding Notice for 1998-99 (which you should have received early in 1998) will show the amount of the tax that is being collected in this way. Enter this figure here.

If you no longer have your P2 Coding Notice, but you think this may apply to you, speak to your tax office who will be able to help you and give you the relevant figure.

Tax due for 1998-99 already included in your tax code for next year (1999-2000)

If your tax code for 1998-99 was reduced during 1998-99 there may have been an underpayment of tax for the months before the code was reduced.  If this happened, arrangements will have been made to collect this underpayment through your tax code for 1999-2000. The amount of the underpayment will have been notified to you on a P2 Coding Notice issued to you in 1998-99. You should copy the figure entitled 'estimated underpayment' shown on the bottom of the last P2 Coding Notice you received for 1998-99.

Unpaid tax for earlier years

You may have rearranged your affairs in a way which means that you have paid too little tax for earlier years, for example if you are claiming to carry back income from a business which has ceased to a previous year. Use this box to enter any such unpaid tax from previous tax years NOT accounted for in a PAYE code.

Overpaid tax for earlier years

You may have rearranged your affairs in a way which means that you have overpaid tax in earlier years - for example, if you are claiming to carry back losses or pension contributions to 1997-98, or claiming farmer's averaging for 1998-99 which would save 1997-98 tax. If so, you will need to work out how much tax or Class 4 NICs you overpaid, by reference to the tax rates and your circumstances for that particular tax year. Enter the amount of any overpaid tax here, and also under 'Additional information' on the next screen, Claim tax repayment.

1999-2000 tax you are reclaiming now

You may have made various payments or losses after 5 April 1999 which you are claiming to treat as if made in the 1998-99 tax year. If you are claiming to carry back personal pension or retirement annuity contributions do not enter the saving here - as long as you have entered the contributions in the Pension contributions screens in the Reliefs section, TaxCalc will work out the relief and enter it for you automatically. However, if you are claiming to carry back a trading loss or capital loss made after 5 April 1999 you need to work out the tax saving yourself and enter the amount of the saving here.

Claiming to reduce your payments on account

If you have to make payments on account, and you have told TaxCalc that you want to send in its calculations of tax due to the Revenue with your tax return (see the Personal details screen), TaxCalc will enter in your tax return the amount of your payments on account for 1998-99. You can see what this is by going to the tax summary on the 'View' menu of TaxCalc. Each payment is equal to half of the income tax and Class 4 National Insurance contribution liability for 1998-99. The first payment is due on 31 January 2000 and the second on 31 July 2000.

You can reduce your payments on account if you have good reason for doing so. This might happen if:

you expect your income in 1999-2000 to be lower than your income in 1998-99, or

you expect your allowances or reliefs to be higher, or

you expect more of your income will be taxed at source in 1999-2000.

You must make a reasonable estimate on the basis of the information you have now of your expected tax liability for 1999-2000, and if you end up paying too little you will have to pay interest..

If you want to reduce your payments on account, tick the box and enter the amount of each reduced payment on account you wish to pay.

Example

Note
Put the reason you have reduced your payments on account in the additional information section. Use the button on the screen Claim tax repayment in the Other information section of TaxCalc.

Warning
If your overall tax liability for 1999-2000 turns out to be higher than you have estimated, and you have paid less than you needed to, you will be charged interest on the difference between the amount you should have paid (ie 50 per cent of your 1998-99 income tax and Class 4 NICs liability), and the amount you did pay. If you pay too much you will receive interest on your overpayment, but the rate of interest charged on underpaid tax is roughly twice as much as that earned on overpaid tax. So be careful in your estimate for next year.

New pension or benefit for next year

Click this box if you expect to start receiving a pension or social security benefit during 1999-2000. This allows the Revenue to adjust your PAYE code if necessary.

Provisional figures

You should not delay sending in your tax return because you don't have all the information you need. You must try to get hold of all the relevant information, but if you cannot provide final figures then you may estimate the amount. If any figures given in your tax return are estimates, click this box. You will then need to give details under 'Additional information' on the Claim tax repayment screen as follows:

say which figures are provisional (refer to the appropriate numbers in the tax return)

say why you couldn't give final figures

say when you expect to be able to give final figures.

The Revenue will not normally regard a tax return as incomplete simply because it contains provisional figures, provided you have taken all reasonable steps to get the final figures, and you make sure you send them to the Revenue as soon as they are available.

Other reliefs

There are some other special circumstances which may apply to you and which you need to notify the Revenue of. Click this box and enter further information in the 'Additional information' box on the Claim tax repayment screen if you are claiming any of the following reliefs:

relief now for 1998-99 trading losses - enter the amount of the loss and year for which you are claiming relief in the 'Additional information' box.

if you want post-cessation or other business receipts taxed as income of an earlier year. Enter the amount and year in the 'Additional information' box.

if you want to spread literary or artistic income to earlier or later years. Enter details of any amounts spread back to last year, and, if appropriate the year before, in the 'Additional information' box.

Even if you want to claim these reliefs, you cannot take any tax savings into account in the calculation of your formal 1998-99 liability.

Extra relief to be deducted

If you have to make a compulsory payment to an employer's scheme to provide a widow's or orphans' pension and you have not already had the relief under PAYE, you can claim relief on up to £100 of any payment for which you have not already had relief, at 23 per cent. Tick the 'Other reliefs' box and enter the amount of relief here. Also enter the amount of payment under 'Additional information' on the Claim tax repayment screen.

You can also use this box to claim relief for:

higher rate relief you are entitled to following the redemption of bonus securities or redeemable shares

any income tax paid on the grant of an option under a share scheme.

Enter the amount of relief here. Also enter the amount of payment under 'Additional information' on the Claim tax repayment screen.


Tax document contents

Tax Guide

Personal Details

Personal details

Tax office details

Non-residence

Non-residence

Not ordinarily resident

Non-domiciled

Dual residence

Income

Income from employment

Employer

Benefits and expenses

Company cars

Fringe benefits

Expenses

Lump sums

Work abroad

Share schemes

Approved savings-related

Approved discretionary

Unapproved share options

Shares acquired

Income from self-employment

Business details

Income and expenses

Turnover

Business expenses

Allowances and adjustments

Capital allowances

Adjustment to arrive at profit/loss

Losses

Class 4 National Insurance contributions

Other income and deductions

Balance sheet

Partnership income

Details

Profits

Losses/deductions

Class 4 NICs

Income from savings and investments

National Savings accounts

Shares & unit trusts

Life insurance

Interest & other investments

Foreign income

Savings

Property

Other income from abroad

Entered elsewhere

Income from benefits

Benefits

Income from pensions

Pensions

Income from property

Furnished holiday lets

Other property income

Other income

Trusts & estates

Maintenance

All other income

Reliefs

Loans & Mortgages

Pension contributions

Maintenance

Charitable gifts

Other reliefs

Allowances

Married couple's allowance

Transitional allowance

Blind person's allowance

Additional personal allowance

Capital gains tax

Disposals

Other gains

Capital losses

Other information

Tax paid

Claim tax repayment

Additional information


Tax return details

Tax Guide

Official use

National Insurance number

Capacity in which signing

Additional information

You only need to complete this screen if you intend to use TaxCalc to produce a tax return to send to the Inland Revenue.

Enter the name of your tax inspector, the address and phone number of your tax office, your tax reference number and the date of issue of your tax return as printed on the first page of the return sent to you by the Revenue. If any of the details shown on the front of the Return you receive are incorrect or out-of-date, give the correct details in TaxCalc and click the button at the bottom of the screen.

Official use

On some tax returns the Inland Revenue prints a reference number labelled 'Official use'. This appears at the top of the first page of the Return. If you see such a number on your tax return, type it in here.

National Insurance number

You can leave this blank if you do not know it.

Capacity in which signing

Fill this in if the tax return printed out by TaxCalc will not be signed by the person to whom it relates, for example if it covers the income of someone who died in the tax year. Type in the capacity in which the signatory is acting - for example, 'executor', 'receiver'. You must also type in the signatory's name and address, and the name of the person for whom they are signing, under 'Additional information'.

Note that you can sign a return for somebody else only if that person is physically or mentally incapable of signing, and you have an appropriate power of attorney or you are (in Scotland) a curator bonis. You cannot sign merely because the other person is unavailable. Check the notes to the tax return for more details.

Additional information

Click on the button and type in any additional information you want to go on the back page of the Tax Return. If you have given your agent's telephone number as the contact number on this screen, type in here your agent's name and reference.


Tax-free fringe benefits

Tax Guide

Your employer's contributions to an 'approved' or statutory pension scheme.

Life and sick pay insurance, provided the scheme meets certain conditions.

The cost of defending some legal claims against you as an employee (but not criminal fines such as parking fines), or the cost of any insurance that your employer pays to cover you against such claims.

Routine health checks or medical screening (but follow-up treatment may be taxable).

The cost of medical treatment (or insurance to cover it) while you are working abroad.

Fees and subscriptions paid by your employer to approved professional bodies.

The first 15 pence worth of luncheon vouchers each working day.

Workplace nurseries and playschemes provided by your employer (as long as it is wholly or partly responsible for financing or manageing the scheme or nursery). Childcare vouchers are taxable.

Free or subsidised canteen meals provided for employees generally.

Clothes specially needed for your work and paid for by your employer.

Reasonable removal and relocation expenses when you have to move to a new job or are transferred and need to change your main residence, up to a maximum of £8,000 per move.

Genuinely personal gifts, such as wedding or retirement gifts (but not money as a retirement gift): awards - but not money for long service of 20 years or more - within limits. See Help Sheet IR207, Non-taxable payments or benefits for employees.

Gifts costing up to £150 from business contacts, provided that the gift is not in recognition of particular services and has not been procured by your employer.

Christmas party or other similar annual function that is open to all staff and costs £75 a head or less.

The value of entertainment (eg business lunches) provided by someone other than your employer.

Shares you get through an approved profit-sharing, SAYE or executive share option scheme (within limits).

New shares bought under a preferential scheme through your job: any benefit you get from receiving more shares than members of the public will not be taxed as income provided certain conditions are met.

Prizes for certain ideas put forward through staff suggestion schemes - £5,000 maximum.

Books and fees paid for by your employer for some external training courses. Extra travel expenses and living costs may not be taxable either. See Help Sheet IR207, Non-taxable payments or benefits for employees.

In-house sports facilities available to employees generally.

Redundancy counselling services, and retraining courses for employees who are leaving (or left within the last year), provided certain conditions are met.

Taxis paid for by your employer to take you home if you occasionally work until 9pm or later (not regularly or more than 60 times a year). Public transport must have closed down or it must be unreasonable to expect you to use it.

Free car parking spaces at or near your workplace.

Living accommodation provided it is either necessary for you to do your job, or customary for someone doing your job (but it may be taxed if you are a director).

Living accommodation as part of special security arrangements if there is a threat to your security because of your job.

Essential travel, accommodation and subsistence payments if you are temporarily absent from your normal workplace for up to 24 months

Incidental overnight expenses, eg newspapers, if you are away overnight on business, provided these do not total more than £5 a night (£10 overseas). Payments over these limits are taxable in full.

Travel and subsistence payments when public transport is disrupted (eg by strikes) or for severely disabled employees incapable of using public transport (in the latter case, travelling expenses for your spouse may also be tax-free).


Tax-free gains

These are the main assets and transactions that are free of CGT, subject to certain conditions.

Gifts between husband and wife

Gains on your only or main home (unless you let it, are away for substantial periods, use part exclusively for business, or bought it exclusively for profit)

Private motor cars

Prizes and betting winnings (including Premium Bonds and National Lottery prizes)

British Government stocks, qualifying company loan stock and building society Permanent Interest Bearing shares

Sterling cash or foreign currency for your own use abroad

Most cashbacks (for example, paid as an inducement to take out a mortgage)

Gifts to charities, 'national heritage bodies', local authorities, government and universities

Proceeds from life insurance policies (unless bought second-hand)

Compensation for personal or professional wrong or injury

Compensation for mis-sold personal pensions

National Savings schemes

Personal Equity Plans

Tax Exempt Special Savings Schemes (TESSAs)

SAYE terminal bonuses

Shares in the Business Expansion Scheme, Enterprise Investment Scheme or qualifying Venture Capital Trusts

Gifts of land to a registered housing association

Personal possessions with a predicted useful life of 50 years or less (known as 'wasting assets') provided you have not used them in your business so that they qualified for capital allowances

Personal possessions with a predicted useful life of more than 50 years are tax-free if the disposal proceeds are £6,000 or less. (This £6,000 figure is separate from your tax-free slice allowed for gains during the 1998-99 tax year.) If the disposal proceeds are more than £6,000, your taxable gain is either your actual gain or 5/3 of the excess over £6,000, whichever is lower.

If the disposal proceeds are less than £6,000 and you have made a loss, you are assumed to have received £6,000. So if you buy a picture for £7,000 and sell it for £5,000 you are deemed to have made a loss of £1,000. See Inland Revenue Help Sheet IR293 Chattels and capital gains tax.

If you sell a set of articles, for example a set of matching chairs, separately, but to the same person, the Revenue is likely to treat the sales as a single sale. So if you sold six chairs for £2,000 each, you would be taxed as if you had made a single sale of £12,000 - not six sales of £2,000 each.


Tax-free income

The main sources of tax-free income you do not have to declare on your 1998-99 tax return are listed below.

Some social security benefits and a few special pensions

Council tax, housing benefit and rent rebates

Grants for improving or insulating your home

Most grants or scholarships for education

Approved adoption allowances

National Savings Certificates

Ulster Savings Certificates if you normally live in Northern Ireland and lived there when you bought the certificates or when they were repaid

National Savings Children's Bonus Bonds

Save As You Earn contracts

The proceeds of regular-premium life insurance policies (if held for ten years or three-quarters of its term, whichever is shorter)

Withdrawals from single premium life insurance policies if they do not exceed five per cent of premium per annum. The allowance can be rolled over if not used

Tax-free friendly society savings schemes

Personal Equity Plans (except for some interest on cash)

TESSAs (Tax Exempt Special Savings Accounts) unless you closed your TESSA before five years were up - for details ask your tax office for leaflet IR114 TESSA - Tax Free Interest for Taxpayers

Interest awarded by a UK court as part of an award of damages for personal injury or death

Premium Bond and gambling prizes (including the National Lottery) - unless you bet (for example, on horses) for a living

Maintenance or alimony received under a legally enforceable agreement or court order first made on or after 15 March 1988

Income from a covenant

Family income benefit life insurance policies

Strike and unemployment pay from a trade union

Interest on a tax rebate.


Transitional allowance

Tax Guide

Tax Tips

Additional information

This section will only apply to you if you are a married woman who got married to your present husband before 6 April 1990.

To get transitional allowance you need to have been eligible for transitional allowance in 1990-1991, and in every tax year since. Tick the box and enter the amount of transitional allowance you received in 1997-98, and the amount of your 1997-98 personal allowance - TaxCalc will calculate how much can be transferred, but broadly it will be the smaller of:

the amount of allowance the wife received in 1990-91 less any increase in her personal allowance and the married couple's allowance

the amount of the husband's personal allowance which he can't use himself.

Your husband must also write to his tax office asking for the allowance to be given to you.

Additional information

If you are claiming transitional allowance, give your husband's name, address, tax reference, National Insurance number and Tax Office in the 'Additional information' section on this screen.


Most common allowable expenses

These are the most common expenses you can claim to set against your income from property:

Finance charges, including mortgage/loan interest payable on the property. See Loan to buy or improve property you let

business rates, council tax, water rates, ground rent, feu duty (in Scotland)

wear and tear allowance (not available for furnished holiday accommodation)

normal repairs and decoration (only expenses necessary to prevent deterioration, not repairs necessary when you bought the property or improvements, additions or alterations to the property), and renewals if you are not claiming the wear and tear allowance

management expenses as a landlord (stationery, telephone bills etc)

cost of insurance (excluding any portion for private cover) and any necessary valuation for insurance

legal fees for renewing a tenancy agreement (for leases up to 50 years), accountancy fees

estate agent’s fees, accommodation agency fees, cost of advertising

rent you pay for a property which you, in turn, sublet (and in some cases, part of any premium paid)

cost of lighting common parts of the property

cost of services you provide including wages of people who provide such services (for example, cleaners or gardeners)

cost of maintenance and repairs made unnecessary by improvements you’ve made, as long as you haven’t changed the use of the property or the alterations are so extensive as to amount to reconstruction

cost of maintaining roads, drains, ditches etc on an estate you own, if for the benefit of the tenants

heating, lighting and tenants’ telephone bills you pay

cost of preparing an inventory.

Where possible, keep receipts for the expenses you are claiming. If your total rents before deducting expenses are £15,000 a year or more, you must provide a breakdown of your expenses in your tax return: otherwise just enter the total expenses.


Notional tax

This is tax which you are regarded by the Revenue as having paid but which you cannot reclaim, even if you are a non-taxpayer.


wear and tear on property

Wear and tear

If you let out furnished accommodation in the UK (other than as furnished holiday lettings) you cannot claim capital allowances. Instead, you can claim an allowance for wear and tear on fixtures, furniture and furnishings. You can claim either the actual cost of fixtures, furniture etc you replace during the year (called a renewals basis), or a proportion (normally ten per cent) of the rent less, if you pay them, service charges and water rates. Once you’ve chosen a basis, you must stick to it.


Additional personal allowance_1

Additional personal allowance

Briefly, an allowance you qualify for if you have a 'qualifying child' living with you and either you are not married or living with your spouse, or your husband or wife cannot look after him/herself throughout the whole of the tax year because of illness or disability.


Age-related allowances

The higher personal and married couple's allowance you may be entitled to if you (or your spouse, for the married couple's allowance) are aged 65 or more at any time in the tax year.


Allowable expense

An expense on which you get tax relief (by deducting it from your income or capital gain before the tax is worked out).


Annuity

You pay a lump sum to an insurance company for an annuity: in return, the company gives you an income, usually for the rest of your life. The amount of the income is fixed at outset. You can't usually get any of your lump sum back.


Budget summary
March 1999 Budget summary

Introduction

Tax basics

Tax and families

Tax and home

Tax and work

Tax and pensions

Tax and savings

Tax and giving

Capital gains tax

Introduction

Here we summarise the main changes in the Chancellor's March 1999 Budget.

The 1999 Budget announced on 9 March, brought changes to tax rates, bands and allowances; National Insurance; and to the way some fringe benefits are taxed. But not all the changes will take effect immediately. Here we look at both the main changes that come into force straight away and highlight differences planned for future tax years.

Tax basics

A new starting 10 per cent starting rate of income tax comes in from 6 April 1999 for the first £1,500 of income and replaces the 20 per cent lower rate (except for savings income, which remains taxable at 20 per cent).  Basic-rate tax stays at 23 per cent for the 1999-2000 tax year but reduces to 22 per cent from 6 April 2000. Married couple's allowance, additional personal allowance and widow's bereavement allowance all stay for 1999-2000 but the amount given in tax relief reduces from 15 per cent to 10 per cent. These allowances will be abolished from 6 April 2000, although pensioners where at least one spouse is aged 65 or more on or before 5 April 2000 will be able to keep the married couple's allowance. See table below for rates and allowance.

A new children's tax credit will be introduced for families who have one or more children under 16 living with them. For more details see Tax and Families.

Allowances	1998-1999	1999-2000
Personal allowance	£4,195	£4,335
Personal allowance (age 65 to 74)	£5,410	£5,720
Personal allowance (75 and over)	£5,600	£5,980
Married couple's allowance [1] [2]	£1,900	£1,970
Married couple's allowance (age 65 to 74) [1]	£3,305	£5,125
Married couple's allowance (75 and over) [1]	£3,345	£5,195
Additional personal allowance [1] [2]	£1,900	£1,970
Widow's bereavement allowance [1] [2]	£1,900	£1,970
Blind person's allowance	£1,330	£1,380
Income limit for age-related allowances	£16,200	£16,800

[1] Restricted relief allowances. Tax relief is given at the rate of 10 per cent of the allowance for 1999-2000 (down from 15 per cent in 1998-99)

[2] These allowances will be abolished from 6 April 2000 although pensioner couples where one spouse is aged 65 or more on or before 5 April 2000 will keep the married couple's allowance.

The new tax bands

1998-1999	1999-2000
Tax rate	Taxable income (£/year)	Tax rate	Taxable income (£/year)
Lower rate (20%)	0 - 4,300	Starting rate (10%) [1]	0 - 1,500
Basic rate (23%)	4,301 - 27,100	Basic rate (23%) [2]	1,501 - 28,000
Higher rate (40%)	over 27,100	Higher rate (40%)	over 28,000

[1] except for some savings, see below

[2] reduced to 22 per cent from 6 April 2000

Tax and families

A new children's tax credit, which replaces the married couple's allowance and additional personal allowance comes in from 6 April 2001. For its first year the allowance will be £4,160, but tax relief will be given at a rate of 10 per cent, reducing the tax bill of eligible families by £416 for that year.

The basic Working Families Tax Credit (WFTC), due to start in October 1999, will be worth £52.30, and the credit for children under 11 will be £19.85.

Tax relief on maintenance payments reduces to 10 per cent on payments up to £1,970 for 1999-2000, but is abolished completely after 5 April 2000, unless either (or both) parties to the marriage is aged 65 or over on 5 April 2000. Anyone still eligible for this relief on 6 April 2000 will receive it only on the basis of the post-1988 rules.

Tax and home

Mortgage interest relief on loans for home purchase of up to £30,000 will be abolished from April 2000. For 1999-2000 it stays at 10 per cent. Tax relief on interest for loans made prior to 6 April 1988 for home improvements or the purchase or improvement of property for a dependent relative or separated spouse will also be withdrawn from 6 April 2000.

Relief given on loans to buy annuities (typically from home income plans) is no longer available for new loans made after 9 March 1999. However, borrowers who currently qualify for relief will continue to receive it for the remaining period of the loan, even if this extends beyond 5 April 2000. And anyone who is currently in the process of taking out such a loan, can still claim the tax relief if the lender has, before Budget day, agreed in writing to advance the loan - even if the loan is not actually made until after 9 March 1999.

Tax and work

The Chancellor announced various changes that will affect both employed and self-employed people.  Details of changes to National Insurance contributions are given in the tables and notes, below.

Mobile phones

From 6 April 1999 employees will not pay tax on a mobile phone provided by their employers. The taxable charge was previously £200.

Loans of computers

From 6 April 1999 employees will be able to take up the loan of a computer by their employer, free of tax (it was previously a taxable fringe  benefit).

Company cars

For 1999-2000 the tax charged on company cars remains at 35 per cent of the price of the car, although the one-third/two third discounts for high business mileage and older cars are abolished. Instead, the rate charged is reduced for business mileage over 2,500 and 18,000 as well as for cars aged four years and over. From April 2002 the way company cars are taxed will be linked to the level of a car's carbon dioxide emissions. The government is still consulting on the changes to company car taxation.

New tax charge for company cars

Business Mileage	Tax Charge from 6 April 1999
less than 2,500 in tax year	35%
2,500 - 17,999 in tax year	25% (35% for second cars)
18,000 and over	15% (25% for second cars)
cars four years or older	tax charge after taking business mileage into account is further reduced by one-quarter (down from one-third in 1998-99)

Fuel for private use - taxable values

Engine size	Petrol	Diesel
	1998-1999	1999-2000	1998-1999	1999-2000
up to 1400cc	1,010	1,210	1,280	1,540
1401cc to 2000cc	1,280	1,540	1,280	1,540
2001cc and over	1,890	2,270	1,890	2,270

Self-employment

First year enhanced capital allowance rate of 40 per cent (as opposed to 25) given to small and medium-sized businesses is extended for another year.  The VAT threshold is raised from £50,000 to £51,000 from 1 April 1999.

National Insurance - employee

	From 6 April 1999
	Contracted-in	Contracted-out
First £66 (previously £64) per week [1]	nil	nil
Next £434 (previously £485) per week	10%	8.4%

[1] The level of income above which employees pay National Insurance will increase again in April 2000 and 2001 so that by the 2001-02 tax year the starting point will be the same as for income tax.

National Insurance - self-employed

	From 6 April 1999
Class 2 contributions [1]	£6.55 per week. Exemption available if net earnings are £3,770 a year or less
Class 4 contributions	6% of net profits between £7,540 and £26,000 - maximum £1,108

[1] From April 2000 Class 2 NICs reduce to £2 per week (from £6,55 per week). The rate at which Class 4 NICs are paid will increase from six to seven per cent from the same date.

Tax and pensions

The maximum level of income that can be taken into account when making payments to employers' and personal pensions (the 'earnings cap') is increased to £90,600.

Pensioners

From April 1999 pensioners will have a minimum income guarantee (including means-tested benefits) of £75 a week for single pensioners and £116.60  a week for married pensioners. From April 2000 this income guarantee will rise in line with earnings, rather than inflation. The winter allowance to help with fuel bills increases from £20 to £100 a year.

Tax and savings

For 1999-2000 tax on savings income stays at 20 per cent for taxpayers with income below the threshold for higher rate tax (£28,000 in 1999-2000), and at 40 per cent for higher rate taxpayers.

The rates for dividend income are reduced to 10 per cent for taxpayers below the higher-rate threshold and 32.5 per cent for those above it.

Tax and giving

The tax-free limit for inheritance tax was increased from £223,000 to £231,000 for tax charges arising on or after 6 April 1999.

Capital gains tax

The amount of gain that is exempt from capital gains tax (CGT) was increased to £7,100 from 6 April 1999. Capital gains in excess of this will be taxed at 20 per cent for taxpayers with income (including gains) below the higher-rate threshold and at 40 per cent for those above. Current rules tax individuals on their gains at their highest rate of tax, so this change will benefit basic rate taxpayers who will now pay tax on capital gains at 20 instead of 23 per cent.


CIT
Chartered Institute of Taxation

12 Upper Belgrave Street

LONDON

SW1X 8BB

Tel: 0171 235 9381


Capital allowances_1

Capital allowances

A deduction from your business profits (and some other types of income) if you buy certain types of equipment and building for your business.


Capital gains tax definition

Capital gains tax

A tax you may have to pay when you dispose of something for more than the cost of acquiring it.


Carry back

If you make contributions to a personal pension plan or retirement annuity, the premiums can be 'carried back' and treated as being paid in a previous tax year.


Carry forward

This facility allows an individual who has made (or intends to make) the maximum contribution to a personal pension plan for the current financial year to contribute more by carrying forward unused relief from the previous six years.


Dealing with the Inland Revenue
Tax Guide - Dealing with the Inland Revenue

Tax Tips

Pay As You Earn (PAYE)

Self-assessment

How the self-assessment is made

What happens when your return is filed?

Enquiries into tax returns

Your rights during an enquiry

Disagreements about the amount of tax due

Paying your tax

Payments on account

Tax calendar

Mistakes

Contacting your tax office

Problems with tax office administration

The Taxpayer's Charter

Where to go for tax advice

The dealings you have with the Revenue depend largely on what sorts of income you have.

Many people no longer get tax returns because most taxable income is now paid out after at least some tax has been deducted. The biggest class of income from which tax is deducted at source is that taxed under the Pay As You Earn system (PAYE). This is most income from employment, including income from most pensions.

Investments and savings accounts usually pay income after tax at the lower rate (20 per cent) has been deducted, although non-taxpayers can register to have income paid gross using form R85 (available from your bank, building society or tax office).

If you do have income from which tax has not been deducted, or your tax affairs are complex, you will fall within the system of self-assessment.

Pay As You Earn (PAYE)

The Revenue gives employers a PAYE code for each employee who earns more than the basic personal allowance. You are sent a coding notice showing how your PAYE code is worked out, usually in January or February, but you will not necessarily get one each tax year unless your circumstances change. For more about coding notices, see Inland Revenue Help Sheet IR208 Payslips and coding notices (available on the 'Help' menu of TaxCalc). Employers' pensions and pensions from personal pension plans are also usually taxed under PAYE.

Your PAYE code, together with various tax tables, enables employers to deduct the right amount of tax from employees' pay. A PAYE code consists of a letter and a number. The letter allows employers to alter employees codes automatically each year in line with budget changes. The main PAYE letters are:

L	You get the basic personal allowance.
H	You get the basic personal allowance plus either the additional personal allowance or the married couple's allowance, and are likely to pay basic-rate tax. A woman in this situation might get a T code instead.
P	You get the full age-related personal allowance for a single person aged 65 to 74
V	You are aged 65 to 74, you are likely to pay basic-rate tax, and you are entitled to both the full age-related personal and the full married couple's allowances.
K	Your allowances come to less than your deductions.
NT	You will pay no tax on this income.
BR	All your earnings from this source are taxed at the basic rate. You're most likely to get this if it's a code for a second job
DO	All your earnings from this source are taxed at the higher rate.
OT	After adjustments, you get no allowances. Tax is deducted at the lower, basic and then higher rates, depending on your income.
T	This is used in all other cases. You can ask for this code if you do not want your employer to know your age or marital status.

The number in your PAYE code tells your employer how much free-of-tax pay you're allowed in the whole tax year (unless it is a K code). The number is arrived at by working out which allowances and outgoings you are entitled to and then deducting amounts on which the Revenue wishes to collect tax - for example, a taxable fringe benefit, a state pension, or investment income received gross.

Your allowances less your deductions gives the amount of free-of-tax pay to which you're entitled in the coming tax year. The last figure of the result (always assumed to be 9) is then substituted by a letter. If, for example, your code is 419L and you are paid monthly, each month you get one-twelfth of £4,199 of tax-free pay. So £350 (£4,199 divided by 12) of your monthly pay will not be taxed.

Your deductions might come to more than your allowances. If so, you get a K code. From this your employer knows that you get no free-of-tax pay, and the figure shown by your code is added to your pay for the purposes of working out your tax bill.

Self-assessment

Under self assessment, the responsibility for creating the correct legal charge to tax (the assessment) lies with you, the taxpayer, even though the Inland Revenue can do the sums for you. Self-assessment affects everyone who completes a tax return (approximately nine million people in the UK) including the self-employed, people in partnership, directors, and employees and pensioners who pay higher rate tax or who have more complex tax affairs.

If you receive your salary or pension from your employer or pension provider with tax already deducted via the PAYE system, and you do not receive a tax return to complete, then self-assessment will not really affect you. However, even if you are not sent a tax return, you still have a legal duty to tell the Revenue about any taxable capital gain or any income which is not tax-free, including income from abroad, within six months of the end of the tax year to which the new income relates, ie by 5 October 1999 for any additional income earned in the tax year 1998-99.

Your tax return is not the Revenue's only source of information. For example, employers have to send statements of how much they have paid their employees (including, for directors or anybody earning £8,500 or more, a P11D statement of any fringe benefits given). Savings institutions have to notify the Revenue of all accounts where more than a certain amount of interest is paid. The Revenue may start a formal investigation into your affairs if it suspects fraud.

You are required to keep records relevant to your tax affairs, even if you don't normally receive a return. Employees and pensioners should keep records such as P60s, mileage records, bank statements and dividend vouchers relating to the 1998-99 tax year until 31 January 2001. The self-employed, partners and those with property income should keep records relating to the 1998-99 tax year until 31 January 2005. You can be fined if you don't comply with these requirements. For more information see self assessment leaflets SA/BK 3 and SA/BK 4.

How the self-assessment is made

You effectively make a self assessment of your tax affairs by gathering together all the relevant information relating to your income and capital gains; claiming tax reliefs and allowances against them and presenting this to the Revenue in your tax return. Tax returns are generally sent out just after the end of the tax year (5 April). For the 1998-99 tax year you must send back your return by 30 September 1999 if you want the Revenue to calculate your tax, or by 31 January 2000 if you calculate the tax bill yourself.

The self assessment tax return is designed to be tailored to individual taxpayers' circumstances and comprises a tax form and additional forms called 'supplementary pages' which are appropriate to different types of income. Therefore, a typical employee might need to complete the eight page tax return form and the 'employment pages'. The self assessment tax return must be completed fully - statements like 'as per employer' or 'as per accounts' are not allowed.

Along with the self assessment form comes a tax calculation guide which allows the taxpayer to calculate the tax due and gives full instructions of how to do this. The Revenue will  do this calculation for you if you ask them to but you will have to return your tax form to them by 30 September 1999 for the 1998-99 tax year. (This is also the deadline for those people who owe tax under £1000 and want the Revenue to collect this via their PAYE code.)

If you miss the final deadline of 31 January for sending back your form you will be charged a fixed penalty of £100. If the return is still outstanding six months later (by 31 July) you will be charged a further £100. Additional penalties of up to £60 a day can be applied in more serious cases.

What happens when your return is filed?

The Inland Revenue checks all returns for simple errors or omissions. If the Revenue finds any obvious mistakes, for example in the arithmetic, it may correct the mistake without opening an enquiry on your return. It will send you details of the corrected figures which you may challenge if you disagree. You can ask for any changes made to your self assessment to be reversed or amended.

Following the routine checks, if the Revenue thinks that your return may be incorrect, or if it thinks something requires full explanation, an enquiry may be started,.but the Revenue also has the right to open an enquiry into anyone's tax return. Most of the returns it selects for enquiry will be those it thinks might be incorrect or incomplete. This could be because of previous years' tax records, or simply because of the information given on the return.

Some 8,000 returns will be selected for full enquiry, entirely at random. The returns picked for random enquiry are chosen at the time they are despatched - it makes no difference whether you file a return early or late, if it is one of the returns randomly chosen, an enquiry will be opened on it.

So, if your return is picked, it doesn't necessarily mean that something is wrong with your return or your self assessment - it may simply be one of the returns already chosen at random.

Enquiries

There are two types of enquiry. A 'full' enquiry involves looking into the return as a whole, whilst an 'aspect' enquiry will concentrate on one or more aspects of the return, for example, the amount paid to pension schemes, or the calculation of a capital gain.

Whether a full or aspect enquiry is conducted may well depend upon the type of taxpayer you are. Apart from enquiries into the returns of large businesses, which will usually concentrate on specific aspects, most enquiries into business returns will be full enquiries. On the other hand, most enquiries into non-business returns (other than those selected at random) will be aspect enquiries.

Your rights during an enquiry

The Revenue has issued a Code of Practice that it must abide by when making an enquiry into a tax return, see Code of Practice 11, available from Tax Enquiry Centres.

Broadly it must:

tell you in writing that it intends to start an enquiry

tell you what your rights and responsibilities are

try to tell you at the same time the information it requires. If it can't do this initially, it must explain why and say when it can expect to tell you

allow you to be professionally represented if you wish.

The Revenue must tell you within twelve months of the final filing date (or the date you submit your return if later) if it intends to start an enquiry. The final filing date for 1998-99 tax returns is 31 January 2000, therefore you should hear from the Revenue by 31 January 2001 if your 1998-99 tax return is to be enquired into.

Disagreements about the amount of tax due

If your self assessment is amended	The Revenue must explain how it arrived at the amendment and will try to reach agreement. If you do not understand, contact your Tax Office immediately, asking it to explain the calculations in more detail.
If you still don't agree with the amendment	You can appeal against any amendment the Revenue makes to your self assessment, or against any other assessment the Revenue makes if you do not think it is correct. You will have 30 days from the date you are advised on the amendment. (See IR leaflet IR37 for more information.)
If you cannot reach agreement with your Tax Office following the lodging of your appeal	You can appeal to independent Appeal Commissioners. General Commissioners deal with most cases. Special Commissioners deal with cases which require expertise. You may request that your case be heard by one of these. You can be represented by, for example, a lawyer, accountant or tax specialist (such as a member of the Chartered Institute of Taxation). While this can be expensive, it may make the difference between winning and losing.
If you don't agree with the Commissioners' decision on a point of fact	No further appeal normally, but you can complain about maladministration by the Revenue if applicable.
If you don't agree with the Commissioners' decision on a point of law	You can take your case to the High Court in England and Wales (the Court of Session in Scotland or the Court of Appeal in Northern Ireland). Tell the Commissioners' Clerk in writing within 30 days, enclosing £25. Consider the possible costs of this route, along with the interest building up on any tax due.
Paying your tax

If you have over or underpaid tax during the year, the Revenue will send you a statement telling you about your tax account, after your tax return has been filed, confirming how much you owe, or how much they owe you.

The Revenue will return overpaid tax by cheque, electronic fund transfer to your bank or building society account or by offsetting the overpayment against tax you owe for a different year or on a different source of income. You will get interest on your refund, normally from the date of overpayment. The rate of interest can vary but in March 1999 it was 3 per cent. If you want the refund sent to you, be sure to complete the Claim tax repayment section of the Tax Return.

If you are taxed under the Pay As You Earn (PAYE) system, there should be no major discrepancies between the tax due and the tax paid (although differences can arise if your circumstances have changed). If tax owed is under £1,000 the Revenue will normally let you pay this via your PAYE code - but usually only if they received your tax return before 30 September. So if you think you may owe tax, get your tax return back early.

Payments on account

If you are self-employed, or receive rental income or other income not taxed at source, you will normally pay tax in two ‘payments on account'. These are due on 31 January of the tax year and 31 July just after the tax year has ended. For 1998-99, payments are due on 31 January 1999 and 31 July 1999.

If you calculate your own tax bill, then on your tax return you will notify the Revenue of the amount you intend to pay as your first payment on account for the next tax year. If the Revenue work out your tax bill for you they will send you a statement of account which confirms the amount they think you should pay as your first payment on account.

Normally the two payments on account you pay for the next tax year equal your tax liability for the current year. So, the 1999-2000 payments on account you would make would normally equal the amount of tax you were due to pay in 1998-99. However, it is possible to reduce your payments on account, if you think your tax liability for the next tax year will be lower than this year.

If you do reduce your payments on account, be careful. If you reduce your payments and your final tax bill is more than you thought, you will have to pay interest on the balance between the amount you paid and the amount you should have paid. You will pay interest on this 'underpayment' from the date due, ie from the 31 January and the 31 July of the year in question. This rate varies but in March 1999 it was 7.5 per cent per annum. If you have overpaid tax you get interest at 3 per cent.

Any balance of tax due for the year must be paid by the 31 January following the end of the tax year. This will be established once you have filed your tax return. For 1998-99 this ‘sweep-up' payment must be made by 31 January 2000, otherwise you will be charged interest, and a five per cent surcharge will be applied on any tax still unpaid by 28th February 2000. This surcharge will be increased to ten per cent if tax is still unpaid by the following 31 July. You can appeal against the penalties and surcharges if you think you have a reasonable excuse for failing to meet the deadlines, to avoid interest and surcharges on overdue tax.

If you did not reduce your payments on account, and paid the amount requested by the Revenue, you will not pay interest on any balance of tax due - provided you pay it by the 31 January deadline.

Example

Tax calendar

When	What happens	Who is affected
January 1999	PAYE Coding Notices for 1999-2000 tax year sent out	Taxpayers whose circumstances have changed, or who owe tax or are owed tax from previous years
31 January 1999	Final deadline for sending back your 1997-98 tax return and paying any remaining tax due for 1997-98. (A penalty of £100 for late return plus interest on any tax due will apply from now) First payment on account for 1998-99 tax year is due	Everyone who gets a tax return Taxpayers who make payments on account
April 1999	Self assessment tax returns for 1998-99 tax year despatched	Everyone who gets a tax return
by 31 May 1999	P60s issued (providing details of your taxable pay and tax paid for 1998-99)	All employees. Also pensioners receiving an income from a previous employer's pension scheme or private pension plan
by 6 July 1999	P11Ds issued (providing details of your taxable fringe benefits and expenses for tax year 1998-99)	Employees and directors earning £8,500 or more and receiving fringe benefits and/or expenses
31 July 1999	Second payment on account for 1998-99 tax year is due	Taxpayers who make payments on account
30 September 1999	Completed tax return for 1998-99 tax year must be back to your tax office by now if you want the Revenue to work out your tax	Taxpayers who want the Revenue to calculate their tax due for 1998-99. Also people who want underpayments of tax up to £1,000 collected via PAYE.
5 October 1999	Latest date for notifying the Revenue that you have taxable income received before tax, or any capital gain, for the 1998-99 tax year	Taxpayers who don't get a tax return but who received any taxable income before tax, or made a capital gain
31 January 2000	Final deadline for sending back your tax return and paying any outstanding tax due for 1998-99. First payment on account for 1999-2000 tax year. The Revenue must tell you by now if they intend to start an enquiry into your 1997-98 tax return.	Everyone who gets a return Taxpayers who make payments on account. Taxpayers picked at random or where there may be a problem on the return.
Mistakes

If you have paid too much tax because of a mistake that you made on your return (such as failing to claim an allowable outgoing), you can claim a rebate up to six years later. So, if you tell your tax office before 6 April 2000, you can go back to assessments made in the year ending 5 April 1994 (even if they apply to earlier years).

If you have paid too much tax because of a mistake by the Inland Revenue or any other government department, you can claim a rebate for any year affected, up to 20 years ago. In addition, if you can get the Revenue to accept it has made a serious error, for example by taking a completely unreasonable view of the law, they will pay any reasonable costs you incur as a direct result. Even if the mistake isn't serious in itself, but you are plagued by a catalogue of errors, you may get some costs.

If the Inland Revenue fail to make proper and timely use of information supplied to them, they may have to waive some or all of the tax owed, for example, if there are arrears of income tax or capital gains tax but the Revenue has received information:

from a taxpayer about his or her own income, gains or personal circumstances,

from an employer, where the information affects a taxpayer's coding, or

from the Department of Social Security about a taxpayer's state pension.

Tax will normally be given up where the taxpayer:

could reasonably have believed that his or her tax affairs were in order

was notified of the arrears more than 12 months after the end of the tax year in which the Inland Revenue received the information indicating that more tax was due, or

was notified of an over-repayment after the end of the tax year following the year in which the repayment was made.

In exceptional circumstances, the arrears of tax notified 12 months or less after the end of the relevant tax year may be given up if the Revenue:

failed more than once to make proper use of the facts they had been given about one source of income

allowed the arrears to build up over two whole tax years in succession by failing to make proper and timely use of information they had been given.

For full details see Inland Revenue leaflet Code of Practice 1, 'Mistakes by the Inland Revenue'.

Contacting your tax office

Your tax office will not necessarily be the one closest to you, especially under the following circumstances:

employees- as a general rule, your tax office will be the one which deals with the area where your employer has its head office, or, more particularly, the place from which you are paid. However, there are exceptions - for example, if you work in London your tax office may well have been moved out of London.

self-employed - If you are in business on your own, or in partnership, your tax office is usually the one nearest your business address.

pensioners - your tax affairs are likely to be dealt with by the tax office dealing with the area in which the pension scheme paying your pension has its office. If you have pensions from more than one source, each may be dealt with by a different tax office, although this is gradually changing.

income from investments - if your only sources of income are from investments, your tax office is the one that covers your home address.

unemployed - you stay with the tax office of your last employer.

Only a few tax offices can deal with some situations. For example, if you have to fill in a tax return in your capacity as a trustee, you will deal with one of the tax offices covering trusts and settlements.

There are also some specialist departments: For example, the Capital Taxes Offices deal with inheritance tax and the confusingly named Financial Intermediaries and Claims Office deals with a whole range of subjects such as the MIRAS scheme, Double Taxation Agreements and technical matters on TESSAs.

The upshot is that you may find yourself dealing with more than one tax office - although under the plans for the reorganisation of the Revenue this is likely to change in future. If you aren't sure where your tax office is, try asking anybody who pays you a salary or pension, or contact your local tax office (look in the phone book under 'Inland Revenue').

If you want to claim a tax refund and you are on PAYE or you normally complete a tax return, then you will usually deal with your own tax office. However, if you do not fall into one of these categories and you want to claim a tax refund, you will need to complete form R40, available from any tax office (and also on the 'View' menu of TaxCalc under 'Tax Return forms').

An 'Officer in Charge' is the person in charge of your tax office. He or she will be assisted by several Tax Inspectors, who specialise - for example, in Schedule D tax from the self-employed, or taxpayers taxed under PAYE. Revenue Executives come next in seniority, assisted by Revenue Officers. Revenue Assistants deal with the clerical work.

When writing to your tax office, address your letter to the Inland Revenue at the Tax District which is responsible for your tax affairs, quoting your tax reference number (which should be on any correspondence you receive from the Revenue) and/or National Insurance number. It is also helpful to head your letter with a brief reference to the subject of your letter. The Revenue aims to reply to all enquiries and letters within 28 days.

You should have the same reference numbers ready when you telephone. Always make a note of any calls, including the person you spoke to and the date. If your office is not local, and you would prefer a face-to-face discussion, you can ask for your file to be sent to a local office. However, for general enquiries, you do not have to contact your own tax office. There are a number of tax enquiry centres around the country (in your phone book under 'Inland Revenue').

Problems with tax office administration

Are you worried that too much tax is being deducted from your salary or pension, or that your allowances are wrong?	Make sure you've got the facts right about the allowances you are entitled to. Check your latest Coding notice and payslip to ensure that your employer is using the correct PAYE code.
Still puzzled?	Ring your Tax Office or local Tax Enquiry Centre to check the rules. Get it to say exactly which rules it thinks apply.
Approach your Tax Inspector	Give your name, National Insurance number and tax reference number. Take down the Tax Inspector's name. Keep copies of letters.
Have you met with delay, rudeness, maladministration or incompetence?	Remind the Inspector of your rights under the Taxpayer's Charter. More than six weeks delay is worth complaining about.
Still got nowhere?	Write to the Officer in Charge at your Tax Office whose name is on tax office letters. Head your letter 'Complaint'.
If this fails	Write to the Regional Controller for the area responsible for your Tax Office. Your Tax Office will tell you how.
No joy with the Controller?	Contact The Revenue Adjudicator's Office, Haymarket House, 28 Haymarket, London SW1Y 4SP. You can telephone them first to make sure they can look into your complaint Tel no: 0171 930 2292.
Still unhappy, or have you met with extreme delay or maladministration?	Through an MP you can complain to the Parliamentary Commissioner for Administration (the Ombudsman).
The Taxpayer's Charter

When dealing with the Revenue, remember that there is a  Taxpayer's Charter. This says that:

You are entitled to expect the Inland Revenue

To be fair

By settling your tax affairs impartially

By expecting you to pay only what is due under the law

By treating everyone with equal fairness

To help you

To get your tax affairs right

To understand your rights and obligations

By providing clear leaflets and forms

By giving you information and assistance at enquiry offices

By being courteous at all times

To provide an efficient service

By settling your tax affairs promptly and accurately

By keeping your private affairs strictly confidential

By using the information you give only as allowed by law

By keeping to a minimum your costs of complying with the law

By keeping its own costs down

To be accountable

By setting standards and publishing how well it lives up to them

If you are not satisfied

To tell you exactly how to complain

You can ask for your tax affairs to be looked at again

You can appeal to an independent tribunal

Your MP can refer your complaint to the Ombudsman

In return, you need

To be honest

To give the Revenue accurate information

To pay your tax on time

Where to go for tax advice

We have tried hard, when writing TaxCalc for Windows, to anticipate users' questions and to give appropriate advice. But it cannot tell you every possible way of saving tax, and this edition covers only the 1998-99 tax year. If you have the time to do your own research, try:

your local tax enquiry centre

the Which? Tax-Saving Guide (included in the Which? subscription) or 'Which? Way to Save Tax'

the tax books for professionals published by Tolley Publishing Co Ltd and other specialist publishers

(for the brave) finding what part of tax law applies and tackling the tax statutes themselves in your local reference library.

If you want professional help, then the most normal route is via a certified or chartered accountant. Most accountants are extremely well-versed in all aspects of tax. Some solicitors also offer a tax service within their practice.

There are other professionals known simply as 'tax consultants' or 'tax advisers' who specialise in providing tax advice, however, do note that these are nebulous titles which anybody can award themselves. Two respected and widely recognised professional qualifications for tax advisers are either, Associate of the Taxation Institute Incorporate (the Chartered Institute of Taxation), denoted by the letters ATII, or Associate of Taxation Technicians (ATT).

If your tax adviser is not a qualified accountant it may be wise to check that one of these qualifications has been obtained.

Tax Aid

There is also Tax Aid - a charitable trust dedicated to providing a free and independent tax service - offering advice, assistance and advocacy to individuals on low income and in need, who cannot afford to pay for professional advice. Tax Aid can be contacted on 0171 624 3768 between 10am and 12 noon, Monday to Thursday.


Enterprise Investment Scheme

This scheme replaced the Business Expansion Scheme from 1 January 1994. You get tax relief at 20 per cent on investments up to £150,000 a year, the gains are free of capital gains tax if you hold the shares for at least five years, and any losses can be set against either income or capital gains tax. The scheme covers investment in shares in qualifying unquoted companies. For more details see Inland Revenue leaflet IR137.


Maintenance deduction

A kind of allowance which you qualify for if you make enforceable maintenance payments under an agreement set up after 14 March 1988.


MIRAS

Non-MIRAS loan

MIRAS (Mortgage Interest Relief at Source) is the name given to the system under which tax relief is given on most loans by the borrower paying a reduced amount to the lender. You get the relief even if your income is too low for you to pay tax. The government pays the lender the difference between the amount you have paid and the interest due. A few lenders don’t have government approval to operate MIRAS. Loans may also fall outside the scheme if part of the loan is for a purpose which does not qualify for tax relief.


PAYE

Pay As You Earn - the system by which tax is deducted from most income and pensions from employment before you get them.


Payroll giving

A scheme which gives employees full tax relief on donations to charity, by deducting the payments from salaries and wages before tax is worked out.


Rent a Room scheme

If you let furnished rooms in your only or main home in the UK, you can get the first £4,250 tax-free under the Rent a Room scheme. See Inland Revenue leaflet IR87, Letting and your home (on the 'Help' menu of TaxCalc), for full details.


Tax basics
Tax Guide - Tax basics

Who pays UK tax?

The tax year

Tax law and tax changes

The Inland Revenue

Income Tax

Tax Schedules

In the UK the main taxes include:

Income tax - on earned and investment income

National Insurance - if you are an employee, self-employed, or have employees

Capital gains tax - when you dispose of an asset (such as a possession or investment), for example, by selling it or giving it away

Inheritance tax - on your estate after you die, and on some gifts that you make during your life

Council tax - charged by your local authority

Value-added tax - added to the cost of most goods and services

Excise duties - on some goods you buy, particularly alcohol and tobacco

Stamp duty - a tax on documents required for the change of ownership of property, ie houses, land, leases and shares

Insurance Premium Tax - on premiums for general insurance such as household, motor and travel policies

Corporation tax - on the profits of companies.

Taxes give the government most of its money. By far the biggest source is income tax. TaxCalc covers income tax, capital gains tax and Class 4 National Insurance Contributions..

Who pays UK tax?

Generally speaking, anyone (children included) who is domiciled or resident in the UK, or who has income which comes from the UK.

Your domicile is, broadly speaking, the country where you have chosen to end your days. It can be quite different from the country where you are living.

The tax year

Tax years run from 6 April in one year to 5 April in the following year. This edition of TaxCalc covers the 1998-99 tax year - which runs from 6 April 1998 to 5 April 1999. Your income tax bill is based on the income you receive during a tax year.

Tax law and tax changes

Tax law is set out in a series of Finance Acts - usually one for each Budget. From time to time existing tax law is gathered together and published as a new Act: this last happened for income tax in 1988, when the Income and Corporation Taxes Act 1988 was published. For capital gains tax this last happened in 1992, with the Taxation of Chargeable Gains Act 1992. Each new Finance Act makes changes to these 'consolidated' Acts (or to subsequent Finance Acts) adding new sections and deleting or altering others.

However, there is more to tax law than Finance Acts. The courts interpret the Acts, so you have to watch out for what judges have said. For example, the 1988 Income and Corporation Taxes Act (ICTA) says that you can get tax relief on expenses incurred 'wholly, exclusively and necessarily' in doing your job. But it gives very few examples - it has been left to the judges to decide exactly what qualifies.

There are also Inland Revenue statements of practice and extra-statutory concessions. Statements of practice do not have any legal force, but they tell you how the Inland Revenue will deal with different tax situations. If you want to challenge a statement of practice you'll almost certainly have to fight it in the courts. Statements of practice are listed in the Inland Revenue booklet IR131.

Extra-statutory concessions work to your advantage. In them, the Revenue says that, in certain cases, it will not collect the tax which is technically due. These concessions are listed in the Inland Revenue booklet IR1 (available from tax offices).

The Inland Revenue

This is the government department which deals with the taxes covered by TaxCalc. Your tax affairs are dealt with by a tax office - sometimes by more than one. Each tax office has a handful of tax inspectors, assisted by tax officers and others. Their job is to assess the amount of tax you pay. The Inland Revenue has started to streamline its operation, with the intention that each taxpayer should eventually have to deal with only one tax office. For the ins and outs of dealing with the Revenue, the forms you may get from them, your rights and responsibilities, see Dealing with the Inland Revenue.

Income tax

This is a tax on income you get from earnings, pensions, investments and so on. However, you're unlikely to pay tax on the whole of your income. Almost everyone can claim some 'allowances', in other words, the amount of income you can receive before you pay tax.

Allowances depend on your personal circumstances, for example, whether you are single, married or looking after a child on your own. Some allowances now give only restricted relief, so instead of deducting the whole allowance from your total income to reach 'taxable income', a fixed percentage of the allowance is deducted from your tax bill. For example, the married couple's allowance is probably the most common allowance that now gives restricted relief, although it (and similar allowances) will be abolished from 6 April 2000. For 1998-99 the married couple's allowance is £1,900 but only 15 per cent is given as relief. So, for 1998-99 the married couple's allowance is worth £285 (ie 15 per cent of £1,900) as a deduction against your tax bill - not your income.

TaxCalc calls this type of allowances 'restricted relief' allowances, although the Revenue refers to them as 'allowances given in terms of tax'. Other allowances that fall into this category are widow's bereavement allowance and the additional personal allowance.

Apart from allowances, there may also be some deductions that you can claim against income tax. Certain payments, such as allowable expenses in your job, can be deducted from your total income, but other payments (such as mortgage interest) qualify for only partial relief and are deducted from your tax bill like restricted relief allowances. Broadly, it works like this:

Your money
	ignore things which aren't income, for example:
		inheritance capital gains, eg on shares
	this leaves your:
Income
	ignore tax-free income, for example:
		dividends from shares in a Personal Equity Plan or interest from a TESSA
	this leaves your:
Income for tax purposes
	subtract deductions which qualify for full tax relief, for example:
		allowable expenses in your job
	this leaves your:
Total income
	Subtract full relief allowances, for example
		your personal allowance
	this leaves your:
Taxable income
	on which you pay tax (in 1998-99) at:
		the lower rate of 20 per cent on the first £4,300 the basic rate of 23 per cent on the next slice of £22,800 the higher rate of 40 per cent on anything over £27,100
	this leaves your:
Total tax before restricted relief allowances or outgoings
	subtract restricted relief allowances and value of deductions giving partial relief
	this leaves your:
Final tax bill

Needless to say, it is not quite this simple - otherwise you wouldn't need TaxCalc. Tax law is littered with exceptions to the rules about what you can deduct where. TaxCalc is designed to make sure these rules work in your favour.

Tax schedules

Tax Schedules go back to the earliest days of income tax and are a way of dividing income up into different types. For example, earnings from your job are taxed under Schedule E, whereas earnings from being self-employed are taxed under Schedule D. Some of the Schedules are further divided up into Cases, which are traditionally given Roman numerals, Case I, Case VI, for example.

Schedules affect the expenses you can deduct from your income before tax is worked out. Different Schedules and Cases have different rules. They also distinguish investment income from earned income. The distinction can be important. For instance, you can't claim tax relief on pension contributions by deducting them from investment income.

Schedule A

Income charged under this schedule is investment income. It covers rental income from UK land and buildings, including income from furnished holiday lettings paid to individuals (rather than companies). Although income from property is taxed as investment income it is treated broadly in the same way as business income for the purpose of deducting allowable expenses.

Schedule D Case I and Case II

This is earned income, from self-employment. Case I covers the profits of being self-employed in a trade, eg shopkeeper, manufacturer. If the profits are from a profession (eg barrister, accountant), you're taxed under Case II. However, the rules for the two cases are virtually identical.

Schedule D Case III

This covers certain types of investment income. The main items it covers are interest from taxable National Savings products and interest from loans, income from annuities and any government securities including those which used to be taxed under Schedule C. Other things taxed under this Case are annual payments you receive (eg covenants or maintenance payments).

Schedule D Case IV and Case V

This is investment income (unless it comes from carrying on a business). Both are concerned with income from abroad. Case IV covers income from foreign securities, including securities which used to be covered by Schedule C. Case V covers most other income from abroad, eg rents and dividends.

Schedule D Case VI

Case VI is a rag-bag of odd bits of income which do not fit in anywhere else. It includes income from occasional freelance work, and work after a business or partnership ends.

Schedule E

This is earned income from employment, pensions from employers, taxable social security benefits and freelance earnings under a contract of employment (rather a grey area). There are three cases, Case I covering income if you are resident and ordinarily resident in the UK, Case II earnings arising in the UK for people who normally live and work abroad, and Case III income remitted to the UK by people resident in the UK but working abroad.

Schedule F

This is investment income in the form of share dividends from companies resident in the UK, and distributions from unit trusts resident in the UK.

Note
There is no Schedule B or Schedule C. Schedule B was abolished from 1988 and Schedule C from 1996.


Tax tips

Your family

In a job?

In business?

On a low income?

Getting on in years?

Investments and life insurance

You and your home

Giving to charity?

Overseas matters

Dealing with the Revenue

Your family

Tax Guide

Are you married? Make sure you claim the married couple's allowance.

Unmarried and caring for a child? You should claim the additional personal allowance.

You can also claim the additional personal allowance if you are married to someone who cannot look after him/herself because of illness or disability and you have a dependent child.

Married this year? If you are a man (but not a woman) claiming the additional personal allowance you can choose to keep it for the tax year in which you get married instead of claiming the married couple's allowance. This is worth doing as you will get the whole allowance no matter when you got married, whereas if you marry after 5 May, the married couple's allowance is reduced by one-twelfth for each month in the tax year during which you remained single.

Paying maintenance under the old rules? You might save tax by opting for the maintenance deduction instead. Broadly, under the old rules the amount of relief you get is pegged forever to the amount on which you were getting relief in 1988-89, unless the court order provided for automatic increases in payments. If your payments have risen since then, but you are still paying less than the maximum maintenance deduction under the new rules (£1,900 in 1998-99) you will save tax by switching to the new rules. However, you need to balance against any tax relief you are getting on payments made direct to a child, which would be lost if you move to the maintenance deduction. If you are getting tax relief on more than £1,900 you should stick with the old rules, or you will lose relief. See leaflet IR93, 'Separation, divorce & maintenance payments' for more details.

Recently widowed? Make sure you claim all your allowances.

If you are married, does one of you own all the investments? Husbands and wives are taxed separately, and if one of you pays tax at a lower rate than the other there could be less tax to pay if you transferred some of the income-producing investments to the lower-income partner.

Does your child use his or her tax allowance? Any child, no matter how young, can have income of £4,195 (in 1998-99) without paying tax. But note that if you give your child assets which produce income of more than £100 a year, the income is taxed as your own.

In a job?

Tax Guide

Can you get any fringe benefits? Many are taxed at much less than their value to you.

Getting a company car? The taxation of this perk has become less favourable. Now might be the time to see whether you could save money by opting for extra pay instead of a car. Moving to a cheaper model will certainly save you tax.

Can you set any expenses against tax? For example, if you are a healthcare or fire service employee who has to wear a uniform but doesn't get laundry services provided by your employer, you can claim a fixed-rate deduction both for 1998-99 and (if relevant) the previous six tax years. Contact your tax office.

From 6 April 1998, the rules for claiming travel expenses for some employees have been simplified.

Approaching retirement? It may be worth making additional voluntary contributions to your employer's pension scheme.

Not eligible for an employer's pension scheme? You can get tax relief (at your top rate) on premiums paid into a personal pension plan. Making use of the carry forward and carry back rules can maximise the relief.

If you leave the scheme within two years of joining, your employer  will probably give you back your own contributions , but not those of your employer. Non-refundable tax at a rate of 20 per cent will have been deducted. There is no extra tax to pay if you pay a higher rate of tax, but you can avoid the 20 per cent tax altogether (if you don't want the cash) by asking the scheme trustees to pay the refund directly into a new scheme.

If you are eligible for a retirement annuity scheme or personal pension plan you can use up to five per cent of your net relevant earnings to buy life insurance linked to your scheme or plan. The premiums qualify for tax relief at your highest rate but they count towards your overall limit for pension contributions.

When you start to take a pension from a personal pension plan, you usually use your fund to buy an annuity. But provided your plan allows it, you can put off buying an annuity up to age 75 and in the meantime draw an income direct from the fund. This option may be worth considering if annuity rates are low and your pension fund is sizeable - at least £100,000. Ask your pension provider.

You do not always have to buy your annuity from your pension provider. Personal pension plans must by law allow you transfer your fund to another annuity company with better rates.

In business?

Tax Guide

Self-employed? You may be able to save tax by employing your spouse if he or she isn't working at the moment. If your spouse has no other income, you can pay them up to £4,195 in the 1998-99 tax year before any tax is due on it - but if weekly earnings exceed £64 (in 1998-99) both of you will have to pay National Insurance. Your spouse must genuinely do the work for which the pay is given. This tip also works if you are living with someone without being married.

Loans for your business? Check whether they qualify for tax relief.

Entitled to capital allowances? You do not have to claim the full capital allowances to which you are entitled, eg if they would reduce your taxable profits to below the level of your personal allowances. It will pay you not to claim more than you need to reduce your tax bill to zero, and instead to roll on the balance to succeeding years.

You can elect for many items with an expected life of less than five years - computers, say - to be treated as short-life assets for capital allowance purposes. The advantage is that if you dispose of them within five years, you get immediate tax relief.

Computer software bought at the same time as the computer counts as part of the computer for capital allowance purposes. Software bought separately counts as a business expense on which you can get immediate relief.

If you are a small or medium-sized business you can claim enhanced allowances of up to 40 per cent in the first year (up until 1 July 2000).

Are you claiming all your allowable business expenses? The rules for what counts as 'allowable' are more generous for self-employed people than for employees.

Business losses? You can use losses to reduce your overall tax liability now or in the future. They can even be used to reduce profits made in earlier tax years or carried forward to future years.

Keep track of your overlap profits. You can set them against your profits when your business ceases or earlier if you change your accounting date.

If you are setting up in business, you can choose any date as the end of your accounting period. It's simplest to end your accounting year at the same time as the end of the tax year. This reduces your overlap profits.

On a low income?

Not a taxpayer? If you've got money in a bank or building society, register to get the interest paid gross. Ask your bank, building society or tax office for form R85 (also available in Inland Revenue leaflet IR110 A guide for people with savings - the text of this leaflet is available on the 'Help' menu of TaxCalc).

Tax to claim back? Make your claim as soon as possible using the tax return (if you receive one) or form R40. Form R40 can be printed out from TaxCalc, or you can get a copy from your tax office. See Dealing with the Inland Revenue.

If you are a non-taxpayer or lower-rate taxpayer, a deed of covenant or Gift Aid may not be a suitable way to give to charity. This is because you deduct basic-rate tax relief from the gift before you hand it over to the charity, and if you are liable to less than the basic rate of tax the Revenue can claw back some of the tax relief.

From 6 April 1999, you will not be able to reclaim the tax credit on share dividends, even if you are a non-taxpayer. You may want to re-arrange your investments.

Getting on in years?

Tax Guide

Approaching 65? You can claim age-related allowances for the whole of the tax year in which you (or your spouse) reach 65: you do not have to wait for your 65th birthday.

Not getting the full age-related allowances? Consider switching some of your income-producing investments to tax-free schemes. Beware of cashing in a life insurance policy where the return is taxable.

Need more income? Remember that annuities which aren't linked to a pension produce an income which is partly tax-free.

Can you make use of your husband's National Insurance contributions? A married woman may be able to get a state retirement pension based on her husband's contributions. This is worth doing if it would give her a higher pension than she gets on her own contributions. And, since the extra is taxed as her own income (while any pension her husband gets for her is taxed as his income) it could save tax if she hasn't fully used her personal allowance.

Retiring from business? You may be able to claim retirement relief from capital gains tax.

Coming up to retirement - and with a personal pension plan? You may be able to get yourself a larger pension and cut your recent tax bills by making use of the carry back and carry forward rules.

Investments and life insurance

Tax Guide

Buying British Government stocks? From April 1998 new holders of all types of government stock will automatically receive the interest gross, rather than after deduction of tax. Previously, this only applied to stockholders who purchased stock via the National Savings Stock Register. If you are currently receiving interest net you can opt to have it paid gross.

If you are a non-taxpayer, even after taking into account gross interest received, you can apply for interest on bank and building society accounts and some annuities to be paid gross. Ask the company paying the interest or your tax office for a form R85 or use the form in Inland Revenue leaflet IR110 A guide for people with savings.

When choosing investments, consider the return after taking tax into account. A tax-free investment may provide you with a better return after tax than a taxable return with an apparently higher return.

Have you made use of the annual capital gains tax-free exemption? If you haven't, investing for capital gains, rather than income, may give you a better after-tax return.

Getting tax relief on a life insurance policy taken out before 14 March 1984? Beware of extending the policy, or of altering it to increase the benefits. You may lose your life assurance premium relief.

Self-employed, or in a job but not in an employer's pension scheme? You can get tax relief on some types of life insurance policy if they are linked to your pension.

Willing to take a risk? Venture Capital Trusts or the Enterprise Investment Scheme give you tax relief on your investments.

Made a loss when you sold some shares (not held in a PEP) or other investments? Keep a record of any losses. You may be able to use the loss to cut down any capital gains tax in this or future years. But remember that you have to claim your losses in your tax return.

From April 1999, Individual Savings Accounts replace PEPs and TESSAs as tax-free home for your money. They are worth considering if you are a taxpayer.

You and your home

Tax Guide

Letting a room in your home? The income could be tax-free under the Rent a Room scheme.

Borrowing to buy a home which you let out? There is tax relief on some loans to buy let property.

Selling your house and garden separately? Sell the garden first, because if you sell the home and retain some of the land, the gain you make on the land from the time when it stopped being part of your garden may be liable to capital gains tax.

Working at home? You may be able to claim some allowable expenses.

More than one home? Your 'main home' is free of capital gains tax, so be careful about which home you choose as your main home.

Now that mortgage interest relief is so limited and you can no longer deduct mortgage interest from your total income for the purposes of working out age-related allowances, paying off your mortgage on retirement or redundancy has become more attractive.

Moving house? You can get tax relief on two loans at once for a period.

Moving house when you marry? You may be able to get tax relief on three loans at once for a period if you are both selling your own homes and moving to a new home together.

Do you have a non-MIRAS loan to buy your only or main home? If so, and you have a low income, you may be losing tax relief. Contact your tax office about concessionary ways of getting tax relief.

Giving to charity?

If you are a taxpayer, your gift could cost you less if you pay by deed of covenant or payroll giving.

Considering a large gift to charity? Gifts of at least £250 (after basic-rate tax) under the Gift Aid scheme give the charity more at less cost to you. The minimum is reduced to £100 for certain gifts to poor countries.

If you are a non-taxpayer or lower-rate taxpayer (or become one) do not give to charity under a deed of covenant or Gift Aid. The Inland Revenue can ask you to account for the basic-rate tax you deducted before handing over your donation.

Overseas matters

If you get income from abroad on which you pay local income tax, you may be able to claim double taxation relief to save you paying both local and UK tax

If you are non-resident for UK tax purposes, tax on UK investment income is restricted to any tax deducted from the income at source. So choose investments which pay out tax-free. If you are not ordinarily resident you can claim to have any UK interest paid out before tax (ask whoever pays you the income).

British government stocks (gilts) generally have a tax-free return for anyone who is not ordinarily resident.

Even if you are non-resident, you still claim UK personal allowances if you are a British or Commonwealth citizen, a citizen of a state within the European Economic area, or in a few other circumstances.

There's a 10 per cent deduction on some overseas pensions. Don't forget to claim this.

Dealing with the Revenue

Tax Guide

Certain matters are given priority, for example repayments. So if you consider that you are entitled to a repayment, write 'repayment claim' at the top of your letter. Your claim is then more likely to be dealt with quickly.

The Inland Revenue aims to reply to enquiries or letters within 28 days. If, for no good reason, they take more than six months beyond their 28-day target, their 'Code of Practice 1' says they will waive interest on any tax you owe them, pay you interest on anything they owe you during the delay, and pay any reasonable costs you incurred because of the delay.

It is worth checking your tax bill for errors. The mistakes are as likely to be discovered by taxpayers as by the Revenue.

Mistakes - remember that you can go back six years, if you've made a mistake, or 20 years if the Inland Revenue has.


Tolleys

Tolley Publishing Co Ltd

Tolley Publishing

2 Addiscombe Road

CROYDON

Surrey

CR9 5AF

Tel: 0181-662 2000


Trust

A legal arrangement whereby property is held by trustees on behalf of one or more beneficiaries to be used in accordance with the deeds and rules of the trust.


Venture Capital Trusts

A new sort of company, broadly similar to investment trust companies but investing in small unquoted trading companies. Tax relief is available if you buy shares in a VCT.


Which? Way to Save Tax

Available from Consumers' Association - call Freephone 0800 252100.


Tax-free slice

TaxCalc uses this to mean the amount of net taxable capital gains which you can make each tax year before you have to pay capital gains tax.


Tax Guide contents

As a taxpayer you are a 'customer' of the Inland Revenue and as with any product or service it will pay you to understand the details of the system and how it works.

These help files can be printed out if you have a printer attached (use menu command File|Print Topic). As some of these files are quite long you may find it easier to read a printed copy than from the screen.

Tax basics

Dealing with the Inland Revenue

March 1999 Budget summary

Tax tips

Income from a job

Working for yourself

Tax for older people

You and your family

Income from property

Savings and investments

Building up a pension

Income from abroad

Being a non-resident

Capital gains tax


Non-residence contents

Tax Guide

Non-residence - not resident

Non-residence - not ordinarily resident

Non-residence - non-domiciled

Non-residence - dual residence


Non-residence

Tax Guide

Tax Tips

Claiming non-residence

Effects of non-residence

Relief claimed under double taxation agreement

Amount of income for which relief is claimed

Claim for personal allowances

Claiming split-year treatment

Effects of split-year treatment

Note
Further information on residence and domicile is given in the Inland Revenue's Notes on non-residence which accompany the non-residence supplementary pages. These notes are available under the TaxCalc 'Help' menu.

You only need to complete the grey areas in this screen if you are claiming non-residence (or split-year treatment, as relevant). See the Tax Guide for explanations of non-residence.

Note

Special rules may apply if you are: a crown servant (e.g. diplomat); a European Community (EC) employee; a merchant navy seafarer; a member of the armed forces (either UK or non-UK but posted here); a non-resident entertainer or sports-person; or an employee of a non-resident oil or gas exploration/extraction business. Check with your employer or the relevant Inland Revenue office (listed on page 7 of the Inland Revenue's Notes on Non-Residence, on the TaxCalc Help menu). If relevant, also see Inland Revenue Help Sheets IR205(S) Foreign earnings deduction for seafarers and IR303 Non-resident entertainers and sports persons (from the Inland Revenue Orderline, Tel: 0645 000404).

Claiming non-residence

You are either resident or non-resident in the UK for the whole of a tax year. If you are claiming non-residence, tick the box and enter all the information requested. If you are not sure whether you can claim, click on the button to the left of the box and TaxCalc will take you through the Inland Revenue rules for claiming. If you came to (or left) the UK during 1998-99, leave this box empty and see if you can claim split-year treatment instead.

Effects of non-residence

If you are non-resident, (whether or not you are ordinarily resident or domiciled in the UK) you are liable to UK tax on:

any earnings arising from an employment performed wholly or partly in the UK. Enter the taxable amount in the Employment section of TaxCalc

any pension paid by, or on behalf of, someone in the UK (but not if the pension relates to an employment carried on abroad, which is not a Crown pension). Enter in the Pensions and benefits section of TaxCalc.

any income or capital gains from a business or profession carried on wholly or partly in the UK. Enter in the Self-employment or Capital Gains sections of TaxCalc, as applicable

any investment income arising in the UK, or from a UK-resident trust (but the tax on investment income is limited to the amount of tax, if any, deducted at source). Enter in the Savings and Investments or Other Income sections of TaxCalc

any income from property in the UK. Enter in the Land and Property section of TaxCalc.

If you are non-resident but ordinarily resident and domiciled in the UK (check on the Not Ordinarily Resident screen) you are liable to UK tax on all the above, plus:

income from UK government securities. Enter in the Savings and Investments section of TaxCalc.

any capital gains, wherever they are on UK or overseas assets. Enter in the Capital Gains section of TaxCalc, but note that if you are not domiciled in the UK, gains on overseas assets only need to be entered if you actually received them in the UK in the 1998-99 tax year.

Other income and gains are broadly speaking not taxable and need not be entered in TaxCalc or your tax return, but there may be special rules, e.g. covering overseas trusts. Fuller details are given in the tables in the Inland Revenue Notes on Non-Residence (on the Help menu of TaxCalc). Also see Inland Revenue Help Sheets IR211 Employment - residence and domicile issues (available on the 'Help' menu of TaxCalc) and IR300 Non-residents and investment income (from the Inland Revenue Orderline, Tel: 0645 000404).

However, the amount of UK tax for non-residents is restricted to the amount of tax, if any, deducted at source from UK investment income plus the tax due on your income minus investments (and some social security benefits), before deducting personal allowances. TaxCalc takes this into account. Note, too, that you may still be able to claim UK personal allowances and (if you are away temporarily because of your employment) mortgage interest relief on a loan used to buy your home in the UK. If you are still paying premiums into a UK life insurance policy taken out before 14 March 1984, you may also be able to claim tax relief on any premiums paid gross - contact the Financial Intermediaries and Claims Office (International).

Relief claimed under double taxation agreement

The tax rules may mean that you are taxed twice, both by the UK and by any other country in which you are resident. To avoid this, the UK has double taxation agreements with many countries. To work out how much double taxation relief you can claim, see Inland Revenue Help Sheet IR304: Non-residents - relief under Double Taxation Agreements (from the Inland Revenue Orderline, Tel: 0645 000404). This Help Sheet also includes a claim form which you must fill in and send it in with your tax return.

Amount of income for which relief is claimed

Enter the amount of income for which you are claiming double taxation relief. Also enter this figure under 'Additional information'. You can type this in, together with any other explanatory material, by clicking on the Additional Information button at the bottom of the screen.

Claim for personal allowances

Even if you are a non-resident, you may still be able to claim UK personal allowances (e.g. married couple's allowance) to set against your taxable UK income. You can claim if you satisfy one of the categories listed on the screen. Alternatively, you can claim if you are a national of one of a list of countries (listed on page 7 of the Inland Revenue Notes on Non-Residence, on the Help menu of TaxCalc). To claim for this reason, you must have a certificate from the overseas tax authority stating that you are resident there, and have documents (e.g. a passport) to show that you are a national of that country.

Click on the appropriate box and complete any of the relevant screens in the Allowances section of TaxCalc (TaxCalc will work out your entitlement to the basic personal allowance automatically).However, married couples where the husband is non-resident cannot transfer any unused portion of the husband's married couple's allowance to the wife.

Claiming split-year treatment

This may apply either if you came to the UK in the 1998-99 tax year having previously been non-resident, or if you left the UK during the tax year and are claiming to be non-resident after that. Note, though, that in order to claim successfully after leaving the UK, you will need to be able to meet various Inland Revenue guidelines to show that your absence is likely to be long-term. If you are not sure whether you can claim, click on the button to the left of the box and TaxCalc will take you through the guidelines. Even if you qualify for split-year treatment for your income, you must meet further conditions in order to get split-year treatment for your capital gains - TaxCalc will help you decide whether you meet these conditions.

If you can claim, tick the box and enter the date on which you arrived or departed.

Effects of split-year treatment

If you qualify for split-year treatment, your tax liabilities which are affected by your residence status (see Effects of non-residence) are calculated on the basis of the period you are treated as resident here. So, for example, if you come to the UK you will not pay tax on earnings for the part of the year before you arrive here, where these are from an employment carried on wholly abroad. A welcome exception to this general rule is that if you qualify for split-year treatment, you can still claim full allowances and reliefs for the year. Other points worth noting are:

if you receive lump sum retirement benefits, relating to a job overseas, from an overseas pension or provident fund, you may qualify for full or partial exemption (remember to claim this exemption in the Lump sum screen in the Employment section of TaxCalc)

you have no tax to pay on income from UK Government securities payable during the part of the year when you were not ordinarily resident

if you have claimed capital gains hold-over relief or reinvestment relief in the past, and then become non-resident, the Inland Revenue may seek to charge tax on the asset (unless you are taking up full-time employment abroad, or become resident again within three years).


Not Ordinarily Resident

Tax Guide

Tax Tips

Claiming to be not ordinarily resident

Effects of being not ordinarily resident

Your intentions

You only need to complete the grey areas in this screen if you are claiming to be not ordinarily resident. See the Tax Guide for explanations of the terminology.

Claiming to be not ordinarily resident

If you are claiming that you were not ordinarily resident during 1998-99, tick the box and enter all the information requested. If you are not sure whether you can claim, click on the button to the left of the box and TaxCalc will take you through the Inland Revenue rules for claiming.

Effects of being not ordinarily resident

If you are not resident and not ordinarily resident, you are taxed as a non-resident.

If you are resident but not ordinarily resident, you are taxable like any UK resident, except that any overseas income you receive is liable to UK tax only to the extent that you actually bring it to the UK (the remittance basis). In addition:

income from UK Government Securities is free of UK tax

capital gains are also taxable in the UK, wherever they come from, unless you are also non-domiciled in the UK, in which case gains on overseas assets are taxable only if received in the UK.

You do no need to enter any tax-free income in TaxCalc or your UK tax return. Note that special rules sometimes apply to citizens of the Commonwealth or Republic of Ireland. And income from a business or profession carried out in the Republic of Ireland is taxable in the same way as UK income.

Your intentions

It can be difficult to establish when being ordinarily resident starts (when you move to the UK) or ceases (after you depart). You are treated as ordinarily resident in the UK from the date you arrive, whether to work here or not, if it is clear that you intend to stay for at least three years. You will also be treated as ordinarily resident if you come to the UK regularly and your visits average 91 days or more a tax year (excluding days spent in the UK for exceptional circumstances beyond your control).

If you go abroad permanently, you will be treated as not ordinarily resident from the day after the date of your departure, providing your absence has covered at least a whole tax year and, if you still make visits to the UK, these average less than 91 days or more a tax year over your absence and total no more than 183 days in any tax year. You will need to show some evidence that you intend to remain permanently, or have gone broad for a 'settled purpose'.


Not domiciled
Non-domiciled

Tax Guide

Tax Tips

What is domicile?

Is non-domicile relevant to your tax?

Have you given the Revenue full facts?

Changes in your circumstances

What is domicile?

Domicile is a general law concept. Broadly speaking, you are domiciled in the UK if this is where you have your permanent home and where you intend to end your days. See Tax Guide for more information.

Is non-domicile relevant to your tax?

The Inland Revenue takes your domicile into account only where this will affect your current tax liability. So you only need to complete this screen if you are not domiciled in the UK and this is relevant to your income tax or capital gains tax. The main implication of being not domiciled is that overseas income or capital gains are only taxable to the extent you bring them into the UK: domicile may therefore affect your tax if you get income from abroad, work abroad or make capital gains on overseas assets. Only enter taxable amounts in TaxCalc.

Click the button on the left of the tick box and TaxCalc will guide you through the Inland Revenue's tests for deciding whether or not domicile is relevant to your tax.

Have you given the Revenue full facts?

If you come to the UK for your work, you will be asked to fill in form P86 so that your residence status and domicile can be assessed. In more complex cases, you may be asked to fill in form DOM1 to establish your domicile. Click on the relevant box: if you click on 'No', you may be asked to complete a form.

Changes in your circumstances

Click here if you came to the UK before 6 April 1998 and there has been any change in your domicile which is relevant to your capital gains tax or income tax. Note that if you are UK-domiciled, it is not straightforward to establish a change of domicile. You can only have one domicile at any particular time and your existing domicile remains unless it is proved to have changed.


Dual residence

Tax Guide

Tax Tips

Other country in which you are resident

Relief claimed under double taxation agreement

Amount of income for which relief is claimed

You need to complete this screen if, for tax purposes, you are resident in the UK under UK tax law at the same time as being resident in another country under that country's tax law and you want to claim tax relief under a double taxation agreement.

Other country in which you are resident

Enter the name of the other country under whose tax rules you are regarded as resident. The terms of the double taxation agreement under which you may be able to claim relief vary depending on the country.

Relief claimed under double taxation agreement

The tax rules may mean that you are taxed twice, both by the UK and by any other country in which you are resident. To avoid this, the UK has double taxation agreements with many countries. To work out how much double taxation relief you can claim, see Inland Revenue Help Sheet IR304: Non-residents - relief under Double Taxation Agreements (from the Inland Revenue Orderline, Tel: 0645 000404). This Help Sheet also includes a claim form which you must fill in and send it in with your tax return.

Amount of income for which relief is claimed

Enter the amount of income for which you are claiming double taxation relief. TaxCalc will print this in the Additional Information box on page 2 of the Non-Residence supplementary sheets, as requested by the Inland Revenue. You can type in any other explanatory material by clicking on the Additional Information button at the bottom of the screen.


Benefits & pensions contents

Tax Guide

Benefits

Pensions


Other income contents

Tax Guide

Trusts & estates

Maintenance

All other income


Pension contributions contents

Tax Guide

Personal pension

Other pension contributions


Other pension contributions

Tax Guide

Tax Tips

Retirement annuity contracts

Life insurance

Payments made in 1998-99

1998-99 payments to be carried back

1998-99 payments used in an earlier year

Payments brought back from 1999-2000

Contributions to employers' pension schemes

Free Standing Additional Voluntary Contributions (FSAVCs)

Retirement annuity contracts

These are a type of personal pension - sometimes called a section 620 plan - which were available before 1 July 1988 (contributions to personal pension plans, a similar type of plan first available after 1 July 1988, should be entered on the Personal pensions screen, not here). You get tax relief on these contributions, within limits (set out in the Tax Guide), but you can boost your payments by claiming to carry back contributions to an earlier tax year, or by carrying forward unused relief from earlier years.

You make contributions to these plans gross: you get the tax relief either through your tax return or by an alteration to your PAYE code (for most employees). Enter the amount you paid in total to plans of this type in the appropriate box.

Life insurance

If you are eligible for a retirement annuity scheme you can use up to five per cent of your net relevant earnings to buy life insurance linked to your scheme or plan. The premiums qualify for tax relief at your highest rate and they count towards your overall limit for pension contributions. If you pay premiums for this sort of insurance, you should include them in the amounts you enter.

Payments made in 1998-99

Enter the amount you paid to each type of plan between 6 April 1998 and 5 April 1999. If you want to use TaxCalc to record and add up all your contributions of this type for you, leave this box empty and click on the button to the right of the box for a calculator: TaxCalc will enter the total in the box on this screen.

1998-99 payments to be carried back

Enter the amount paid during 1998-99 that you wish to carry back to an earlier year. TaxCalc will deduct any amount entered here from your qualifying pension payments for 1998-99 and will not take them into account when calculating your 1998-99 tax liability.

1998-99 payments used in an earlier year

Enter here any amount paid during 1998-99 for which you have already claimed relief in an earlier year (i.e. you used your 1997-98 tax return to claim to have them 'carried back' to 1997-98). TaxCalc will deduct any amount entered from your qualifying pension payments for 1998-99 and will not take them into account when calculating your 1998-99 tax liability.

Payments brought back from 1999-2000

If you have made pension contributions after 5 April 1999, but before the date you send in your tax return, you can claim tax relief for them in the 1998-99 tax year if you wish. 'Carry back', as this is called, allows you to defer your contribution until you know what your net relevant earnings are for the year, and hence the maximum you can contribute. Enter any relevant amounts here.

The tax relief on contributions carried back from 1999-2000 to 1998-99 is calculated as if you had actually paid the contributions in the earlier year. Note that you cannot reduce your overall tax liability for the year by using these contributions, as it would have the effect of reducing your 'payments on account' (if you pay them), for the following tax year. But you can still offset these contributions against your actual tax bill - they are treated as a 'tax credit', to be set against future payments of tax.

If you enter an amount here, TaxCalc will calculate the amount of tax relief due on it, deduct the relief from your tax payments, and enter the tax relief in the appropriate place (box 18.9 of the tax return). You will also see the amount of tax relief you are due under a '1999-2000 repayment' on the penultimate page of the tax summary on the 'View' menu of TaxCalc.

Example

Contributions to employers' pension schemes

You do not need to include here any payments on which your employer has already given you full relief by deducting them from your pay before working out your PAYE. This has already been taken into account in working out your taxable income. In the rare event that this has not been the case, enter the amount of the contributions here.

If you are a medical or dental practitioner whose income from the NHS is taxable as self-employed profits, and you want to claim relief for contributions to the NHS Superannuation Scheme, also enter the amount of your 1998-99 contributions here.

T

Free standing additional voluntary contributions (FSAVCs)

You make contributions to these plans after deducting tax relief at the basic rate. You get this relief even if you are a non-taxpayer or lower-rate taxpayer. Enter the amount you actually paid during the tax year. TaxCalc will gross up any amounts entered here.

You are not permitted to have more than one FSAVC in a tax year. However, some insurance companies or pension providers automatically issue a second policy (and policy number) if, for example, you increase your premium during the year. Providing any schemes you contribute to are with the same insurance company or pension provider, the Revenue consider this to be one FSAVC and you should enter the total of all policies or schemes to which you are currently contributing.


Travel & subsistence minicalc
Travel & subsistence expenses

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your 1998-99 travel and subsistence expenses which qualify for tax relief. Enter details of each expense and, in the right-column, the amount. Once you have entered all the expenses, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Share dividends minicalc
Share dividends

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your individual share dividends. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the company - or any other reference you want to use for each dividend - in the left hand column and the amount of the dividend actually received in the right-hand column. Once you have entered all your dividends, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Unit trust dividend minicalc
Dividend distributions from unit trusts/OEICs

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your individual distributions of this type. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the unit trust or OEIC - or any other reference you want to use for each distribution - in the left hand column and the amount actually received in the right-hand column. Once you have entered all your dividends, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Share FIDS minicalc
Foreign income distributions from UK companies

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your individual share dividends of this type. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the company or any other reference you want to use for each dividend, the amount of the dividend actually received, and the notional tax. Once you have entered all your dividends, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Unit trust FIDS minicalc
Foreign income dividends from UK unit trusts/OEICs

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your individual dividends of this type. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the unit trust/OEIC or any other reference you want to use for each dividend, the amount of the dividend actually received, and the notional tax. Once you have entered all your dividends, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Gross interest minicalc
Interest paid before tax

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your interest paid out before tax. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of each building society or bank with which you have an account, the account number (or any other reference you want to use) and, in the right-column, the amount of interest credited to your account during the 1998-99 tax year. Once you have entered all your interest, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Net interest minicalc
Interest paid out after tax

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your interest paid out after deduction of tax. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of each building society or bank with which you have an account, the account number (or any other reference you want to use) and, in the right-column, the amount of after-tax interest credited to your account during the 1998-99 tax year. Once you have entered all your interest, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Other investments minicalc
Other investment income

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your investment income which you have not already entered. TaxCalc will enter the totals of figures you enter here in the boxes on the main screen. Enter the name of each source of income (or any other reference you want to use) and, in the right-column, the amount of before-tax income received during the 1998-99 tax year. If the income was paid out after deduction of tax, also enter the after-tax amount. Once you have entered all your income of this type, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Other pensions minicalc

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your pension income received in the 1998-99 tax year. TaxCalc will enter the total of figures you enter here in the boxes on the main screen. Enter the name of whoever pays each pension (or any other reference you want to use) and the before-tax amount of pension, any tax deducted, and any exemption/deduction. Once you have entered all your interest, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Trusts basic rate minicalc
Income from trusts taxable at the basic rate

More Help

The tax return asks only for totals, but you can use this calculator to record and add up all the income you have received of this kind. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the trust (or any other reference you want to use) and the amount of income (after tax) to which you were entitled during the 1998-99 tax year. Once you have entered all your income of this type, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Trusts rate applicable to trusts minicalc
Income from trusts taxable at the rate applicable to trusts

More Help

The tax return asks only for totals, but you can use this calculator to record and add up all the income you have received of this kind. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the trust (or any other reference you want to use) and the amount of income (after tax) to which you were entitled during the 1998-99 tax year. Once you have entered all your income of this type, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Trusts lower rate minicalc
Income from trusts taxable at the lower rate

More Help

The tax return asks only for totals, but you can use this calculator to record and add up all the income you have received of this kind. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the trust (or any other reference you want to use) and the amount of income (after tax) to which you were entitled during the 1998-99 tax year. Once you have entered all your income of this type, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Estates basic rate minicalc
Income from estates taxable at the basic rate

More Help

The tax return asks only for totals, but you can use this calculator to record and add up all the income you have received of this kind. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the deceased person (or any other reference you want to use) and the amount of income (after tax) to which you were entitled during the 1998-99 tax year. Once you have entered all your income of this type, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Estates lower rate minicalc
Income from estates taxable at the lower rate

More Help

The tax return asks only for totals, but you can use this calculator to record and add up all the income you have received of this kind. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the deceased person (or any other reference you want to use) and the amount of income (after tax) to which you were entitled during the 1998-99 tax year. Once you have entered all your income of this type, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Estates non-repayable basic rate minicalc
Income from estates bearing non-repayable tax at the basic rate

More Help

The tax return asks only for totals, but you can use this calculator to record and add up all the income you have received of this kind. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the deceased person (or any other reference you want to use) and the amount of income (after tax) to which you were entitled during the 1998-99 tax year. Once you have entered all your income of this type, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Estates non-repayable lower rate minicalc
Income from estates bearing non-repayable tax at the lower rate

More Help

The tax return asks only for totals, but you can use this calculator to record and add up all the income you have received of this kind. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the deceased person (or any other reference you want to use) and the amount of income (after tax) to which you were entitled during the 1998-99 tax year. Once you have entered all your income of this type, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Mortgages minicalc
Mortgages

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your mortgage interest paid which is not within the MIRAS scheme. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of each building society or bank with which you have a mortgage (or any other reference you want to use) and, in the right-column, the amount of interest qualifying during the 1998-99 tax year (i.e. interest on the first £30,000 or other qualifying amount of the loan). Once you have entered all your interest, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Other loans minicalc
Other loans

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your loan interest of this type. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of each lender (or any other reference you want to use) and, in the right-hand column, the amount of interest qualifying for relief which you paid during the 1998-99 tax year. Once you have entered all your interest, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Self PPP minicalc
Self-employed contributions to personal pension plans

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your personal pension contributions of this type. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of each pension provider, a reference for each policy (you can leave this blank if you want) and, in the right-column, the amount of contributions paid during the 1998-99 tax year. Once you have entered all your payments, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Employer PPP minicalc
Employee contributions to personal pension plans

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your personal pension contributions of this type. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of each pension provider, a reference for each policy (you can leave this blank if you want) and, in the right-column, the amount of contributions. Enter the amount actually paid during the 1998-99 tax year (after tax relief) and TaxCalc will work out the gross equivalent for you. Once you have entered all your payments, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Covenants minicalc
Covenants

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your covenant payments. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the charity (or any other reference you want to use) and, in the right-column, the amount paid during the 1998-99 tax year. Once you have entered all your payments, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Gift Aid minicalc
Gift Aid and Millennium Gift Aid

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your payments of this type. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the charity (or any other reference you want to use) and, in the right-column, the amount paid during the 1998-99 tax year. Once you have entered all your payments, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Partnership interest minicalc

More help

The tax return asks only for totals, but you can use this calculator to record and add up all the payments of interest received by the partnership. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the account or any other reference you want to use for each amount and the amount actually received. Once you have entered all the payments, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Partnership subcontractors minicalc
Partnership sub-contractors deductions

More help

The tax return asks only for totals, but you can use this calculator to record and add up all the deductions made by contractors before payment. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of each contractor (or any other reference you want to use) and, in the right-column, the amount of each deduction made during the 1998-99 tax year. Once you have entered all the deductions, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Partnership Return - trade & profession details
Partnership Return trade & profession

Tax Guide

Tax Tips

Description of trade/profession

Accounting period

Date commenced

Date ceased

Not required to give full details

Accounts do not run from last accounting date

Accounting date has changed

Change of accounting date

Second or further change of accounting date

Figures are provisional

Additional information

The documents and papers you will need to complete these sections are:

your partnership accounts for the accounting period ending in the 1998-99 tax year

your books and records, if you do not have accounts.

You do not have to send your accounts with your tax return - but you must have records of all your business transactions. You must keep these until at least 31 January 2005 in case your Tax Office asks to see them.

Description of trade/profession

If the partnership was involved in a trade or profession during 1998-99, enter a brief description of the trade/profession. If the partnership had more than more trade or profession, enter details for each separately, using the 'Add' button. Also use the 'Add' button if there is more than one period of account ending in 1998-99 and you need to complete a separate set of Partnership trading pages for each.

Accounting period

You may not need to have accounts prepared for your business each year. If you do not, and you do not have an accountant, Inland Revenue Help Sheet IR222 How to calculate your taxable profits (available on the Help menu of TaxCalc) will help you to work out your taxable profits. However, you do need to understand what is meant by 'accounting period'. This is simply the period for which you provide details of your business income and expenses: your 'accounting date' is the date on which this period ended. Enter this as the end date on this screen. Your start date is usually the day after the previous accounting date. For example, if accounts are drawn up each year to 31 December, the accounting period for the 1998-99 tax year is the 12 month period 1st January 1998 to 31st December 1998 and the accounting date is 31st December 1999.

You should provide details of the partnership's figures for the accounting period ending between 6 April 1998-99. If the partnership had more than one account ending in this period, you may need to complete a separate set of partnership pages (using the 'Add' button at the top of this screen) for each period of account. You must always do so if this is due to a change of accounting date, otherwise you can, if you wish simply add together the figures for the two accounting periods to make one 12-month period.

If there was no accounting period ending in 1998-99, you should tick the Not required to give full details box; you need only complete this screen, the last three boxes on the Allowances/deductions screen, and the Statement screen. The partners will have to use estimated figures to complete their own tax returns.

Date commenced

You only need to put this date in if the partnership started up after 5 April 1996.

Date ceased

You only need to put this date in if the partnership ceased before 6 April 1999.

Not required to give full details

Click this box if you are not required to complete information about the partnership's turnover, expenses, capital allowances, profit and balance sheet. You may not be required to complete this information if any of the following applies:

no accounts end in 1998-99 or

the partnership has succeeded to a business previously carried on by a sole trader and the accounts information has been included in that person's tax return or

the partnership's annual turnover exceeds £15 million.

Accounts do not run from last accounting date

Click this box if there is a gap between the end of the  previous accounting period and the beginning of this one. You will need to explain why in the 'Additional information' box.

Accounting date has changed

Click here if the partnership has changed its accounting date, and you want it to be a permanent change for tax purposes. This may affect the individual partners' basis periods. See Inland Revenue Help Sheet IR222 How to calculate your taxable profits and 'Change of accounting date', below.

Change of accounting date

A change of accounting date may be desirable for good commercial reasons but the tax rules are complicated.

A change may result in some profits being assessed twice creating overlap relief for which relief may not be obtained until the business ceases or you cease to be a partner. Alternatively, profits for a period longer than 12 months can become assessable but be reduced by the setting off of existing overlap relief - which might or might not be advantageous. See Inland Revenue Help Sheet IR222 How to calculate your taxable profits (available on the Help menu of TaxCalc).

Unless you are sure you understand all the implications involved it may be worthwhile seeking advice from a professional tax adviser.

Second or further change of accounting date

Click this box if it applies to the partnership. You should explain why it has changed, in the 'Additional information' section.

Figures are provisional

Final accounts may not be available for your partnership. If so, you should enter provisional figures where necessary and click on the 'additional information' box to enter the reason why. Also give a date by which you expect to provide final figures. If the provisional figures mean that you find, when the full information is available, that you have paid too little tax, you will have to pay interest on the outstanding amount. However, you will have avoided the penalties and surcharges arising from not having sent your return in on time - and if it turns out that you have paid too much tax, you will receive interest on the amount overpaid.

Additional information

Any information entered here will print out on page 4 of the tax return, or, if the partnership has more than one trade or profession, on page 3 of the Partnership Trading and Professional Income extra pages.


Income from a job (guide)
Tax Guide - Income from a job

Tax Tips

Introduction

Profit-related pay

Profit-sharing schemes

Share schemes

Fringe benefits

Tax-free fringe benefits

Expenses

Introduction

Broadly speaking, the Inland Revenue seeks to tax you on all your income from employment, after making certain deductions. Your income from employment includes:

your salary or wages, bonuses, commission and tips

maternity pay and (in most cases) sick pay

directors' fees, or money from other offices you have held

any taxable fringe benefits, such as a company car or free or cheap shares from a share incentive scheme

any expenses you receive, minus any tax-allowable expenses you claim

income from a profit-sharing scheme, and profit-related pay (although you can get tax relief on some such income)

a lump sum payment, either when you start work (a 'golden hello') or when you leave your job - again, some such payments are tax-free

income from working abroad, unless you are non-resident and not 'ordinarily resident' in the UK.

If you count as an employee, your employer is (in most cases) required to deduct tax and National Insurance under the Pay As You Earn system (PAYE) before paying you.

There are two types of payments you might make which are deducted from your income before PAYE is worked out: this effectively gives you tax relief at your highest rate of tax on the amount deducted. These payments are:

up to £1,200 a year that you give to charity directly from your pay via a payroll giving scheme (sometimes known as 'Give As You Earn')

contributions to an employer’s pension scheme, providing that the scheme is ‘approved’ by the Inland Revenue (nearly all are) or is statutory (eg for local authority and NHS schemes). The Inland Revenue limit on an employee's annual contributions is 15 per cent of before-tax earnings. If your scheme was set up after 13 March 1989, or you joined your present scheme after 31 May 1989, there's also a cash limit on contributions - £13,140 in the 1998-99 tax year. An employer's contributions count as a tax-free fringe benefit, so needn't be entered at all.

Profit-related pay

If part of your pay is linked to the profits made by the company you work for, you can get tax relief on your profit-related pay if the scheme meets certain Inland Revenue conditions. It must:

be set up by a profit-making private sector employer

run for at least one year and be open to at least 80 per cent of the workforce (a PRP scheme may be set up for a department, say)

be registered with the Inland Revenue before it starts.

If these conditions are met, you can get tax relief on any profit-related pay you get up to the point where your PRP is 20 per cent of your total pay, with a ceiling of £2,000 for profit periods beginning on or after 1 January 1998, and £1,000 for profit periods beginning on or after 1 January 1999. Note that this tax relief will be abolished for profit periods beginning after 1 January 2000. You get the tax relief through the PAYE system. National Insurance contributions have to be paid on profit-related pay.

Profit-sharing schemes

Under an approved profit-sharing scheme you can get shares in your employer's firm free of tax. The yearly limit is £3,000 worth of shares or ten per cent of your earnings, whichever is higher, with an overall limit of £8,000 worth of shares a year. To get approval, the scheme must meet various conditions. If you withdraw your shares from the trust in which they are held, within three years of getting them, there will be some tax to pay. Your employer works out the taxable amount for you and deducts the tax before passing on the proceeds. Both the taxable amount and the tax deducted should be entered in the employment section of TaxCalc.

Share schemes

If you receive free or cheap shares in your employer’s company, or the option to buy them at a set price at some point in the future, this counts as a taxable benefit. However, there are a number of ‘approved’ schemes that allow you to receive share incentives tax-free, providing certain conditions are met. Your employer should be able to tell you whether the scheme is approved.

If the scheme is not approved, or you breach the conditions, you may be taxed when what the Revenue calls a ‘taxable event’ occurs. Depending on how the scheme is set up and whether it is approved, these taxable events may be:

the point at which you are granted an option to buy shares in the future

the point at which at which you exercise your option to buy shares

receiving some other benefit from your option, for example payment for agreeing not to exercise your option, transferring it to someone else, cancelling it or releasing the company from the agreement

acquiring the shares themselves, either free or cheaply

receiving further benefits from shares previously acquired free or cheaply because of your job.

You should enter in the share schemes section of TaxCalc any share incentives which are taxable in the 1998-99 tax year, or incentives from tax-free schemes which become taxable because you have not met the conditions. You do not need to enter:

tax-free incentives (see Tax-free fringe benefits)

the dividends from shares you received under an incentive scheme - these are taxed just like other dividends and should be entered in the savings and investments section of TaxCalc

any capital gains when you eventually sell shares you received through a share incentive scheme. Enter these in the capital gains section of TaxCalc.

Fringe benefits

If your employer gives you any perks or benefits in kind, such as a company car, the general principle is that they count as part of your earnings for tax purposes. However there are some tax-free fringe benefits, and the taxable value of others may depend on whether you earn ‘at a rate of £8,500 a year or more'.

If you don’t earn at a rate of at least £8,500 a year, you’ll usually be taxed on the second-hand value of the benefit. But fringe benefits like medical insurance or a car have no second-hand value, so are tax-free unless you go over the £8,500 limit. If you are not sure whether you are over the limit, you should check with your employer.

If you earn at a rate of £8,500 or more, you'll usually be taxed on the cost to your employer of providing the benefit. But if your employer gives you something to keep, you will generally pay tax on the item's market value. There are special rules for some perks, including loans of money and property, and free or cheap accommodation.

Expenses

The broad principle is that all expenses payments received from your employer count as earnings from your job. However, certain expenses can be deducted before you arrive at your 'taxable income'. These expenses are called 'allowable expenses'. The rules say an expense is allowable only if it is incurred 'wholly, exclusively and necessarily for the purposes of your work'. If it is made partly for non-work purposes none is allowable. However, in practice, some expenses (for example road tax, insurance, repairs for a car you use for work) may be apportioned between private and business use - the business proportion is then allowable.


Working for yourself (guide)
Tax Guide - Working for yourself

Tax Tips

What you are taxed on

Overlap profits

Your taxable profits

Working out capital allowances

Losses and how to use them

VAT

Class 4 National Insurance contributions

Partners

If you work for yourself, you enjoy more favourable tax treatment than employees because you have greater scope to deduct business expenses from your income. For this reason, the Inland Revenue has strict rules about whom it will regard as self-employed - see Inland Revenue leaflet  IR56 Employed or self-employed?. However, you can ask for a decision in writing as to whether you will be classed as self-employed.

What you are taxed on

You are taxed on your profits (or losses) for a 'basis period'. After the first two or three years in period, your basis period will normally be your accounting year ending in the current tax year.

The basis period for new businesses will normally be one of the following (unless you change your accounting date during the year): .

If you started in business during the period 6 April 1996 to 5 April 1997, your basis period is the 12 months up to your accounting date in 1998-99.

If you started in business during the period 6 April 1997 to 5 April 1998, your basis period is one of the following:

- If your accounting date in 1998-99 is 12 months or more after the date on which you started in business, your basis period is the 12 months to your accounting date.

- If your accounting date in 1998-99 is less than 12 months after the date on which you started in business, your basis period is the 12 months beginning on the date you started.

- If you do not have an accounting date in 1998-99, your basis period is the 12 month period from 6 April 1998 to 5 April 1999.

If you started in business during the period 6 April 1998 and 6 April 1999, your basis period is the period from the date you started to 5 April 1999.

If your business closes down, you are taxed in that year on the profits of your accounting period from the last accounting date up to the date of closure.

Tax is payable in two instalments, through payments on account.

Overlap profits

In some circumstances, because of the way in which your basis period can overlap with your accounting period, you can end up being taxed on the same profits in two consecutive years. These profits are called 'overlap profits' and the special relief which you can claim to compensate is called 'overlap relief'. Note though, that you can claim this relief only when you close down or sell your business, or if you change your accounting date.

You may have overlap profits because:

you started in business or joined a partnership before 6 April 1994, when different rules applied. During the transition to the current rules, some profits may have formed the basis of your tax liability over two tax years. In compensation, you are entitled to what is called transitional overlap relief.

you started in business or joined a partnership after 5 April 1996, and the special rules for new businesses meant your basis periods have overlapped resulting in some of your profits being taxed twice. The amounts taxed twice are your overlap profits.

Your taxable profits

Your taxable profits are, broadly, yearly takings less:

the cost of raw materials or goods bought for resale, but only if they are actually sold during the year. Their value is generally the lower of their cost to you or their market value. If stock is unsold at the end of the year, you can carry forward the cost and deduct it when you sell the stock

allowable expenses

capital allowances. When you buy 'capital assets' - ie items not for resale and of lasting use to the business, such as computers or cars - you cannot simply deduct their cost from profits at the time you buy them. Nor, under tax rules, can you claim depreciation. Instead, for tax purposes, you claim ‘capital allowances’.

losses.

Accounts normally have to be kept on an 'accruals' basis. This means that income has to be included in your accounts according to the date an invoice is issued or the income is actually earned, regardless of whether any payment has been received. In the past, some small traders and professionals in partnership were also permitted to work on a cash basis, but most people using this method will not be allowed to do so for accounting periods beginning after 6 April 1999. Check with your tax office if you are not sure whether the change will apply to you.

You must keep accounts and hold on to them for up to five years and ten months after the final filing date for the tax year (31 January 2005 for the 1998-99 tax year).

Working out capital allowances

Capital allowances are worked out by adding the cost of each capital asset to a 'pool of expenditure'. You can then deduct a set percentage of the value of the pool at the end of each year from your tax assessment as a 'writing-down allowance'. Note that separate pools of expenditure must be kept for cars (but not lorries or vans) and for assets used for private and business purposes (you get the proportion of the writing-down allowance equal to the business use). Cars which cost £12,000 or more must be recorded in individual pools and there's a £3,000 maximum yearly allowance.

You can elect for many capital items with an expected life of less than five years - for example, computers - to be treated as 'short-life assets'. Each one is put into its own pool of expenditure, and provided it stops being used in the business within five years, you get immediate tax relief for any loss on disposal.

Normally, the writing-down allowance is 25 per cent of the value of the pool, but for small and medium-sized businesses buying machinery or plant in the 24 months to 1 July 2000, a special allowance of 40 per cent applies in the first year (it was 50 per cent in the 12 months to 1 July 1998).

You are within the ‘small and medium-sized’ category if :

your business has a turnover of not more than £11.2 million

your business assets are not more than £5.6 million and

your business does not employ more than 250 employees.

When you sell or give away something on which you were receiving capital allowances, or begin to use it for non-business purposes, there may be a balancing adjustment, known as a 'balancing charge'. If you sell an item for less than its written-down value, you cannot normally claim tax relief on the loss until the business ceases and all the assets in the capital pool are sold. You then claim relief in the form of a balancing allowance on any loss on all the assets in the pool. You can claim relief earlier than this, if you have elected to have the item treated as a short-life asset and you dispose of the asset within five years of its acquisition.

Losses and how to use them

You can use losses to reduce your overall tax liability now or in the future or even, in some cases, the tax liability of earlier years. A loss incurred in an accounting year can be:

carried forward indefinitely to set against profits from the same business in future years

set against any other type of income in the current tax year. If this does not use up the whole loss, you can set the remainder against any capital gains for the year

set against any other type of income for the previous tax year, providing the business was carried on in that year. If this does not use up the whole loss, you can set the remainder against any capital gains for the previous year

set against any other income (but not capital gains) from the previous three tax years if the loss is incurred in the first four tax years of your business

set against profits from the business over the previous three years if the loss is incurred in the last 12 months before closing down.

VAT

Since 1 April 1998 you have had to register for VAT if, at the end of any month the taxable turnover of all your business activities in the year ending on the last day of that month has exceeded £50,000 (£51,000 from 1 April 1999). However, if you can satisfy Customs and Excise that your taxable turnover due in the next 12 months will not exceed a certain limit you can deregister - the limit is £49,000 from 1 April 1999.

At £49,000 and under, it is up to you whether to register. Registration can cut your costs, but it requires more record-keeping. Contact your local VAT office (under Customs and Excise in the phone book) for more details.

If you are not VAT-registered, you cannot claim back VAT on things you buy for business, but you can use prices including VAT when working out your allowable expenses and capital allowances for income tax.

If you are not VAT-registered, you cannot claim back VAT on things you buy for the partnership, but you can use prices including VAT when working out your allowable expenses and capital allowances for income tax.

Class 4 National Insurance contributions

Self employed people and people in partnership must pay Class 4 National Insurance contributions on profits from any trade, profession or vocation unless they are exempted. The contributions are paid at a rate of 6 per cent on taxable profits between £7,310 and £25,220 for 1998-99. If your profits are less than the lower limit, no Class 4 contributions are due.

You are exempt from paying Class 4 contributions if you are under 16 or over state pension age at the beginning of the tax, or not UK-resident.

Partners

As a partner in a partnership, you are effectively treated for tax purposes in the same way as a sole trader, with your  business profits or losses consisting of your share of those made by the partnership. The Inland Revenue tends to call this your 'notional business'. Some of the tax reliefs and allowances which a sole trader can claim are claimed by the partnership, such as tax-allowable expenses and capital allowances, in calculating the partnership profits. The partnership's profits and losses are then split between the individual partners, normally in line with the partnership profit-sharing agreement, but subject to various adjustments for tax purposes in a few cases. But, as an individual partner, you may then have to make adjustments to their share of these profits and losses to reflect:

The fact that your own basis period may be different from the partnership's accounting period. For example, if you have just joined the partnership, you may be taxed on a different basis from the other partners until your basis period catches up with the partnership's accounting period. You may have make an adjustment to your share of the profits/losses to reflect this: you may also be able to claim overlap relief if the rules for basis periods mean that you have been taxed twice on the same set of profits

Other types of income/deductions which count as your individual profits, rather than as those of the partnership

What you want to do with your share of any losses made by the partnership. Once allocated to you, you have your own set of choices about whether you want to set them against your other income for the year, or carry them forward or, in certain circumstances, carry them back. Obviously, you may decide to set off your losses in a different way from other partners

Class 4 National Insurance Contributions. These are based on your own profits from all businesses and partnerships.


Income from property (guide)
Tax Guide - Income from property

Tax Tips

Furnished holiday lettings

Rent a Room scheme

Your home as a business

Other rental income

If you have income from property, you can claim various allowable expenses against the income (including mortgage interest), and if you let rooms in your own home you may qualify for Rent a Room relief which means that some or all of the income may be tax-free.

Note that you must declare rental income for the tax year in which it's due, even if your tenant is in arrears. However, you can deduct rent not received from your total rental income if you have tried but failed to collect it: this can sometimes also apply if you have not enforced your right to the rent to avoid hardship to the tenant.

Most property income is taxed under Schedule A , but some types are taxable under Schedule D. The advantage of being taxed under Schedule D is that the rules applying to businesses come into play, in particular:

 Schedule D losses can be offset against other (non-rental) income or capital gains, whereas Schedule A losses can usually be offset only against other rental income

Capital allowances on furniture, furnishings etc in the let property may be claimed in some circumstances as well as capital allowances on machinery and plant used outside the property (such as vans and tools).

Capital gains tax reliefs such as roll-over relief and retirement relief, and inheritance tax business property relief, may be available

The income counts as net relevant earnings, and therefore entitles you to make contributions to a personal pension plan.

There are four broad categories into which income from property might fall.

Furnished holiday lettings

Properties which are let as 'furnished holiday lettings' are treated differently from other properties for tax purposes. Although they fall within Schedule A, they are treated in some respects as if they were a Schedule D business.

To qualify as a furnished holiday letting, the accommodation must be available for letting for at least 140 days in a twelve-month period. It must actually be let for 70 days and there must be a seven month period during which no one tenant occupies the place for more than 31 days consecutively.

Rent a Room scheme

If you let furnished rooms in your only or main home in the UK you can get the first £4,250 tax free under the Rent a Room scheme (you do not actually have to own the home for the scheme to apply - you can be renting it yourself and sub-letting). If more than one person receives rent from one property the tax-free allowance is reduced to £2,125 per person. For full details see Inland Revenue leaflet IR87 Letting and your home (full text available in the 'Help' section of TaxCalc).

If you elect to be in the scheme, any charge you make for meals, laundry etc must be added to the rent received when calculating the gross rent. You cannot deduct expenses or capital allowances from the rent received, and if you make a loss from renting, you cannot use the loss to reduce your other taxable income.

Some people may lose out by being within the Rent a Room scheme, if, for example, expenses exceed the rent received and they want to claim relief for a loss. Because of this, you can elect to come out of the Rent a Room scheme. The time limit for the claim is twelve months after 31 January following the end of the relevant tax year - i.e. 31 January 2001 for the 1998-99 tax year.

If your rents which qualify for Rent a Room relief exceed £4,250 (or £2,125), you can choose between either paying tax on only the amount above the limit, but ignoring any expenses, or staying out of the scheme altogether (in which case the income will be taxed in the same way as other rental income).

Your home as a business

If you let out rooms in your home as a business - e.g. you run a small hotel, guest house or bed and breakfast establishment - the Revenue may treat this as a Schedule D business. They will only do this if you provide services such as meals, laundry etc. which are beyond those normally offered by a landlord.

Other rental income

All other income from property or land apart from those categories above is taxed under Schedule A. The same rules apply whether the property is furnished or unfurnished, domestic or commercial: however many sources of property income you have, all the income and expenses are pooled and treated as one single property business. The following sources of income also count as property income:

premiums received on the grant of a lease

ground rent and (in Scotland) feu duties

income from letting other people use your land, e.g. for sport, for waste tipping, or filming

local authority grants towards property repair

income from land and property from any Enterprise Zone Trusts.


Tax for older people
Tax Guide - Tax for older people

Tax Tips

Tax on pensions

Age-related allowances

Losing your age-related allowance

As you grow older, your finances will change; pensions will replace earnings and you may find yourself depending to a larger extent on income from your savings and investments. An advantage of growing older is that you may qualify for higher, age-related allowances. See Inland Revenue leaflet IR121 Income tax and pensioners (available on the 'Help' menu of TaxCalc).

Tax on pensions

Pensions are taxed as 'earned' income, but how the tax is collected depends on the type of pension.

State pensions are taxable, but paid without tax deducted. A pension from a former employer, on the other hand, is usually paid after deduction of tax under PAYE. This means that when you first receive your employer's pension, it might appear that it is being taxed at a higher rate than your earnings where before you retired. This is because the tax deducted will probably include tax on your state pension.

Pensions from a personal pension plan are also usually paid after deduction of tax under PAYE. Pensions from a retirement annuity contract (a precursor to personal pension plans) are usually paid with basic-rate tax deducted: non-taxpayers or lower-rate taxpayers can reclaim back tax overpaid, but higher-rate taxpayers must pay extra.

Age-related allowances

If you or your spouse will be 65 or over at any time during the 1998-99 tax year, you may qualify for higher, age-related personal allowance and married couple's allowance.

The maximum age-related personal allowance for 1998-99 is up to £5,410 if aged 65 to 74 at any point in the tax year, or £5,600 if aged 75 or over.

The amount of the married couple's allowance depends on the age of the oldest partner (if you are a married man married successively to two wives in the year, it is the age of the oldest of all of you which counts). The maximum allowance for 1998-99 is up to £3,305 if 65 or over, up to £3,345 if either spouse is 75 or over. The allowance is worth 15 per cent of these figures in 1998-99.

Losing your age-related allowance

Your age-related personal and married couple's allowances may be reduced, depending on your 'total income'. This is, broadly, your gross income minus some outgoings which qualify for tax relief. If your total income is more than £16,200 (in 1998-99) your age-related allowance is reduced by £1 for every £2 above the limit. However, the allowance can never be reduced below the ordinary allowances for people aged under 65.

Whoever receives the allowance (husband, wife or split between you), whether or not it is reduced depends on whether the husband's total income is over the £16,200 limit - even if the allowance is claimed wholly by the wife. Above that limit, it is the married man's personal allowance that is reduced first. Once that has been reduced to the level of the basic personal allowance, he starts to lose the age-related married couple's allowance, until that too is reduced to the level of the allowance for those aged under 65. TaxCalc automatically works out the amount of allowance to which you are entitled.


Savings and investments (guide)
Tax Guide - Savings and investments

Tax Tips

Tax-free investment income

Taxable but paid gross

Taxed investment income

If you are married

Life insurance

Trusts

There are two types of tax which you might have to pay on any income you receive from savings and investments: capital gains tax on any gain in value over the time you have held the investment, and income tax. Investment income may be either tax-free: taxable but paid out before tax; or paid out after deduction of tax. Note that different rules apply if you are not a UK resident. The rules described below are those for the 1998-99 tax year - see the Budget summary for future changes.

Tax-free investment income

The range of tax-free investments is changing radically from 6 April 1999 with the introduction of Individual Savings Accounts (ISAs) but for 1998-99 tax-free investments included:

TESSAs (Tax Exempt Special Savings Accounts) - an account with a bank or building society which pays interest tax-free as long as you hold the account for five years. You can only have one TESSA at a time: no new TESSAs can be opened after 5 April 1999 but existing TESSAs can run until maturity.

PEPs (Personal Equity Plans) - a special wrapper for shares, unit trusts, investment trusts and certain other investments. Both income and gains are tax-free (although the income tax benefits continue only until 5 April 2004): you can sell your investments at any time. No new PEPs can be bought after 5 April 1999, but you can continue to hold your existing PEPs

various types of National Savings investments, including National Savings Certificates

SAYE (Save As You Earn accounts) - these have not been generally available to new savers since 1994, unless linked to a share scheme in your employer's company. Interest is added as a tax-free bonus at the end of five years

friendly society tax-free insurance plans, including special 'baby bonds'. Unlike other insurance policies, the society pays no tax on the underlying investments, but there is a limit on the amount you can save. Friendly societies may also offer standard insurance plans.

You do not need to enter income from any of these types of investment in your tax return (or in TaxCalc), providing you comply with various conditions (e.g. you do not withdraw more than a certain amount of interest from a TESSA).

Money you invest in an Enterprise Investment Scheme or Venture Capital Trust qualifies for limited tax relief on the amount you invest, but income you receive from such schemes (e.g. as dividends) is taxable in the same way as other income of the same type.

Taxable but paid gross

Income from these investments is paid with no tax deducted. However, unless you're a non-taxpayer, you have to pay tax. The standard rate of tax on this income is 20 per cent unless you are a higher-rate taxpayer, when it is 40 per cent. The tax is collected through your self-assessment tax return, although if you have income taxed under PAYE (e.g. you are an employee) you may find that the Revenue collects tax on it through your PAYE code.

The main kinds of investment which are taxable in this way include:

some National Savings investments (although the first £70 of interest from the National Savings Ordinary Account is tax-free

British Government stocks (gilts) - unless they were acquired before 6 April 1998, not through the National Savings Stock Register, and you have not opted to have interest paid gross

offshore accounts (e.g. in the Channel Islands) from banks and building societies, and offshore managed investment funds. Depending on your whether you are not resident in the UK, you may pay tax on this income only when you transfer it back it the UK. Enter any such income which is taxable in the Foreign section of TaxCalc.

Taxed investment income

Whoever pays you income of this kind deducts tax, usually at 20 per cent, and pays it to the Inland Revenue. Higher-rate taxpayers have an extra 20 per cent to pay. If you're a non-taxpayer, you can usually claim back the tax. And if you're a lower-rate or basic-rate taxpayer (even after including the gross equivalent of income received after-tax) there's no more tax to pay.

The most common type of investment income taxed in this way is interest from a bank, building society or other deposit-taker. Interest of this kind is paid out after deduction of tax at 20 per cent except in a few circumstances, the most common of which is that you are a non-taxpayer and have registered to receive interest gross. If you want to do this, see Inland Revenue leaflet IR110 A guide for people with savings, available on the 'Help' menu of TaxCalc (registration forms are available from banks and building societies). You can also get interest paid out before tax if the account is at the non-UK branch of a UK bank or building society, or you are not ordinarily resident in the UK.

The Inland Revenue also treats dividends that you receive from UK shares, and distributions from UK unit trusts and OEICs (Open Ended Investment Companies) as being paid net of 20 per cent tax. The taxable amount is the dividend/distribution, plus the 20 per cent 'tax credit' (which should be shown on the tax voucher which accompanies the dividend or distribution). Lower-rate and basic-rate taxpayers have no further tax to pay: higher-rate taxpayers have a further 20 per cent. If you are a non-taxpayer, even taking into account the taxable amount received, you can (in the 1998-99 tax year) reclaim the tax credit unless the income is classed as a scrip dividend or foreign income dividend

Note that this will change from 6 April 1999. The tax credit will fall to 10 per cent (adjusted for higher-rate taxpayers) - this will not affect taxpayers, but non-taxpayers will not be able to reclaim the tax credit.

Other types of investment received after tax include:

purchased life annuities

some British Government Stocks and Permanent Interest Bearing Shares (PIBs)

National Savings First Option Bonds.

With all of these, you can reclaim tax deducted if you are a non-taxpayer.

If you are married

If you own investments jointly with your husband or wife, you are normally each taxed on half the income (and should therefore enter half the overall amount received in your individual TaxCalc files). However, you can opt to be taxed in different shares, providing this reflects the underlying shares in which you own the investment (if, for example, the investment is in joint names, but only one of you actually put up the funds to buy it). You can also transfer an investment into your husband or wife's name, without incurring a tax bill (providing it is a real gift without strings), but you must do this before the start of the tax year when you want the change to come into effect. If you want to alter the shares in which you own an investment, ask your tax office for Form 17 or inform the Revenue using the 'Additional Information' box on the Tax already paid screen in the Other information section of TaxCalc.

Life insurance

Any gain you make from most ten-year (or more) regular premium life insurance policies does not count as taxable providing the policy is 'qualifying' and you have kept the policy going for at least ten years (or three-quarters of the term if less).

Qualifying policies must meet certain rules regarding the frequency of premiums and size and nature of benefits. Most regular premium policies, such as whole life insurance and most endowment policies are qualifying. The life company pays tax on the underlying investments (which is regarded as being equivalent to basic-rate tax): this is called notional tax.

Non-qualifying policies are usually either regular-premium policies which you have cashed in early or single-premium bonds. You get a tax-free allowance for each complete year that the policy has run (five per cent of the premium is the current allowance). If you do not use this allowance one year you can roll it over to the next, so a policy which had run for three complete years would have accumulated a 15 per cent tax-free allowance. If you do draw more than your tax-free allowance this part will be taxable, ie a 'chargeable event gain' (the insurance company will tell you how much of the gain is taxable). If you are a lower- or basic-rate taxpayer there will be no further tax to pay on your gains. However, you cannot claim back the tax, even if it is more than you would be liable to pay. If you are a higher-rate taxpayer there will be further tax to pay of 17 per cent (40% - 23%) of the gain.

If you do receive a taxable lump sum from an insurance policy pushing you into the higher-rate tax band you can claim top-slicing relief. TaxCalc will automatically calculate and apply this relief for you.

Trusts

For the 1998-99 tax year, trustees of discretionary and accumulation trusts pay tax at 34 per cent (the 'rate applicable to trusts') on all income, whether it is retained by the trust or paid to beneficiaries. Most other trusts pay tax at 20 or 23 per cent depending on the type of trust and the type of income received.

If you receive money from a discretionary trust, you may be able to claim some tax back unless you are a higher-rate taxpayer, when you might have to pay extra tax. The tax will be automatically claimed through your tax return.


Capital gains tax (guide)
Tax Guide - Capital gains tax

Tax Tips

Tax-free gains

Calculating the gain

Deducting indexation allowance

Allowing for losses

Time limit for claiming losses

Taper relief

How much tax?

Assets owned on 31 March 1982

If you are married

Special treatment for some assets

Over recent years, capital gains tax and income tax have become increasingly interlinked - for example, the rate of capital gains tax you pay depends on your income. TaxCalc takes both your income and capital gains into account.

The simplest example of making a capital gain is selling something you own at a profit. For example, you buy a Victorian etching for £10,000 and sell it a couple of years later for £12,000. Your capital gain (ignoring any allowance for inflation) is £2,000 or a bit less if you can claim some expenses of buying and selling. But you can make a capital gain even though no buying or selling is involved, eg if you give something away.

So here are the basic rules.

You can make a capital gain (or loss) whenever you dispose of an asset, however you came to own it.

Broadly, anything you own counts as an asset, eg houses, jewellery, shares and antiques. But gains made on some assets are tax-free.

You dispose of an asset not only if you sell it, but also if you give it away, exchange it or lose it. You also dispose of an asset if: you sell rights to it, for example, grant a lease; it is destroyed or becomes worthless; you get compensation for damage to it, for example insurance money,and do not spend all the money on restoring it.

Not every gain you make will be taxable, nor will every loss be allowed by the Revenue. However, in general, allowable losses can be used to reduce taxable gains: the first £6,800 of taxable capital gains made in 1998-99 is tax-free.

Gains made purely because of inflation between 6 April 1982 and 5 April 1998 are not taxable - this is allowed for by giving you an indexation allowance to deduct from your gain. Gains after 5 April 1998 qualify for taper relief instead.

There is no capital gains tax to pay when you die.

Gifts between a husband and wife are not taxable at the time - instead any tax is deferred until the recipient disposes of it, when tax is worked out on the gain over the period both husband and wife owned it.

Some assets qualify for special treatment.

If you are 'domiciled' in the UK, capital gains tax applies to gains you make anywhere in the world - eg the profit when you sell your holiday cottage in France. If the gains cannot be remitted to the UK (eg because of exchange or currency controls) you can ask the Inland Revenue to defer bringing them into the tax net until they can be remitted. If you are not domiciled in the UK you are taxed only on gains you bring into the UK.

Fuller information is given in the Inland Revenue's notes on Capital Gains Tax which accompany the capital gains tax pages of the tax return - these are available on TaxCalc's Help menu.

Calculating the gain

This is how to work out your taxable gain or loss (or what the Revenue calls your chargeable gain or allowable loss) for each asset you dispose of. TaxCalc will carry out the whole of the calculation, for straightforward disposals, and will then work out the amount of tax you owe.

In general, only gains or losses since 31 March 1982 are taken into account, and some gains are tax-free altogether. If the gain is not tax-free, the taxable amount is based on the increase in the value of the asset during the time you owned it. This is worked out by taking the disposal proceeds of the asset and then deducting the initial value of the asset, together with any allowable expenses of acquiring, improving or disposing of an asset (but not just maintaining it).

The figures for the disposal proceeds and initial value are generally based on the price paid for the asset, or its market value if it was given or inherited, but there are special rules for assets owned on 31 March 1982.

Deducting indexation allowance

For assets owned before 6 April 1998, you can also deduct indexation allowance. This is an allowance which prevents you from paying tax on gains made purely because of inflation. It applies to disposals on or after 6 April 1982 but does not apply to gains made after April 1998 (for assets disposed of after that date you can still claim it for the period up to and including April 1998).

To work out your allowance for assets disposed of after April 1998, take the initial value or allowable expense and multiply by the indexation factor published by the Inland Revenue (TaxCalc can work out indexation allowance for you). Note that the indexation allowance can only reduce or eliminate a gain - it cannot be used to create or increase a loss. For example, if your final value is £10,000, your initial value is £8,000, and your indexation allowance is £3,000, your gain will be reduced to nil - but you cannot claim a loss of £1,000.

The figure you end up is your chargeable gain (or allowable loss).

Allowing for losses

Total allowable losses for 1998-99 are deducted from the total chargeable gains for the year. If the allowable losses are greater than the chargeable gains, this loss is carried forward to be set against gains you make in future years. If the allowable losses are less than your chargeable gains, other losses can be set against the remaining gains in a strict order laid down by the Revenue:

first, you can set against your gains various types of trading losses made in 1998-99, which you have not been able to set against income. However, this is not worth doing if it would reduce your gains to below the level of the £6,800 amount of gains which you can have tax-free in any case

next, you can set off allowable losses made on disposals of assets between 6 April 1996 and 5 April 1998

finally, you can set off allowable losses made on disposals of assets before 6 April 1996.

Note that when deducting allowable losses brought forward from earlier years, you use only enough losses to reduce the gains you have made to the level of the 'tax-free' exemption (£6,800 for 1998-99). When working out your tax, TaxCalc takes just enough losses from previous years to reduce your chargeable gains to zero after deducting the tax-free exemption: any losses left-over can be carried forward to future years.

Time limit for claiming losses

Any losses made in 1996-97 or later years have to be claimed. These losses are not allowable losses until you have given notice of the amount of the loss to your Tax Inspector. The tax return (and consequently TaxCalc) gives you the ability to send a summary of your allowable losses to the Revenue.

Allowable losses for 1996-97 and later years must be claimed within five years and ten months of the end of the tax year in which they were made. This applies whether the losses are actually used during that time period or not - under current rules, as long as the Revenue are notified of the losses by the time limit, they can be carried forward indefinitely. The latest date for claiming losses made in the 1998-99 tax year is therefore 31 January 2005.

Taper relief

Taper relief reduces the chargeable gain depending on the length of time you've owned an asset since 5 April 1998. The relief is more generous for business assets (if the asset is used both for business and privately, you can claim the higher rate of relief on the part used for business).

For 1998-99 it has not yet been possible to accumulate more than one whole year. However, for assets held before 17 March 1998, an extra year is allowed. This means that for 1998-99 taper relief will only reduce your tax bill if you are disposing of business assets which you acquired before 17 March 1998.

One unwelcome consequence of the introduction of taper relief is that, because it is deducted after any losses, you can end up deducting more losses than necessary to reduce the tapered gains (after relief) to the level of the tax-free slice. However, you can allocate your losses to those gains that will qualify for the least taper relief: TaxCalc will do this automatically.

No. of whole years after 5 April 1998 that asset has been held	Percentage of gain chargeable - business assets	Percentage of gain chargeable - business assets
1	92.5	100
2	85	100
3	77.5	95
4	70	90
5	62.5	85
6	55	80
7	47.5	75
8	40	70
9	32.5	65
10+	25	60
How much tax?

Your gains after losses and after taper relief are added together. The first slice of taxable capital gains (£6,800 in 1998-99) is free of tax. The gains above that are taxed as if they were the top slice of your income. Income here means your taxable income, less any deductions and allowances for full tax relief, but there are special rules if your total taxable income excluding savings income is within the lower-rate band (20 per cent in 1998-99). To save wasting your lower-rate band on savings income (which is taxable at 20 per cent anyway), the unused lower-rate band is set against your savings income in priority to your capital gains.

TaxCalc takes these special rules into account.

Assets owned on 31 March 1982

For these assets, you normally use the market value on 31 March 1982 as the initial value. If you do this, you cannot deduct allowable expenses incurred before that date. However, you can use the market value of the asset when you got it as the initial value and deduct expenses, including those incurred before 31 March 1982, if this would result in a lower gain (eg if the asset dropped in value between the date you acquired it and March 1982). Whichever method is used, indexation allowance runs from March 1982 to April 1998 only. And note that you cannot use the market value when you got the asset if you have already elected to have all your assets treated as if you had acquired them on 31 March 1982.

If you are married

Husband and wife are taxed separately for CGT and each get their own tax-free slice. However, on gifts between husband and wife there is no tax to pay at the time of the gift. When the recipient finally disposes of the asset, the tax is worked out over the whole period during which both partners owned it. In this case, remember to use the date the first partner acquired the asset as the date of acquisition, and its value at that date as the initial value. The taper relief on the subsequent disposal is based on the combined period of ownership.

Special treatment for some assets

Some assets get special treatment.

Owner-occupied property

Gains on your only or main home are usually tax-free, but may not be if you do not live there all the time you own it or if you let part or all of it. See Inland Revenue Help Sheet IR283 Private Residence Relief (available on the 'Help' menu of TaxCalc).

If you own more than one home, you can usually choose which home is treated as your main tax-free one. Preferably choose the one on which you think you'll make the largest gain. You must tell your tax office of the choice within two years of buying the second home. You can change your choice, but it takes effect only from two years before the date you notify your tax office.

Business assets

You may be able to defer the tax, or get tax relief if you are disposing of a business on retirement. See Inland Revenue Help Sheets IR 289 Retirement relief and Capital Gains Tax  and IR290 Business asset roll-over relief.

Shares

If you bought shares of the same type in the same company at different times, and dispose of only part of them, there are special rules for deciding which ones you have sold. See Inland Revenue Help Sheet IR284, Shares and Capital Gains Tax and IR285, Share reorganisations, company takeovers and Capital Gains Tax (both of which are available in the Help Sheets section of TaxCalc's Help files).

Note that recent tax changes have largely put a stop to 'bed and breakfasting' where shares are sold at the end of one tax year and bought back the same day, in order to use up unused tax-free slices and create a new, higher price from which to work out any future gain. The new rules say that if you buy back shares within 30 days of selling them, the sale and purchase are ignored for capital gains tax purposes.

Building society mergers, conversions and takeovers

If you have

received cash as a result of a merger of two or more societies, or

received cash, or been issued with shares, or received both cash and shares, as a result of either:

- a conversion of a building society to a company or

- a takeover of a building society by a company

there may be a liability to either income tax or capital gains tax.

The building society concerned should be able to tell you whether there is any tax liability, but if not, contact your tax office or tax adviser for guidance.


Being a non-resident (guide)
Tax Guide - Being a non-resident

Tax tips

Residence

Ordinary residence

Domicile

Special classes of employee

Letting out a UK property

Getting further help

In general, the UK aims to tax you on:

all income arising in the UK, whatever your nationality or where you actually live

all income arising outside the UK, if you are resident in the UK

all capital gains when you dispose of an asset anywhere in the world, if you are resident or ordinarily resident in the UK.

It can therefore make quite a difference to your tax bill - and what you need to declare on your tax return - if you are classed as non-resident or not 'ordinarily' resident: your 'domicile' also makes a difference. These terms have not been defined in tax law, so their interpretation is up to the courts. However, the Inland Revenue does follow various guidelines which have been established over the years: the 'Non-residence' section of TaxCalc will help you apply these guidelines to your own case. Also see the Inland Revenue Notes on Non-Residence which accompany the Non-Residence Supplementary Sheet to your tax return: you can find these in the Notes file on the Help menu of TaxCalc.

Strictly speaking, you are either resident or non-resident in the UK for the whole tax year. But a tax concession allows you to claim split-year treatment in certain circumstances. In this case, you can be treated as UK-resident only for the part of the year you actually spend here.

Alternatively, you could be resident (or ordinarily resident) in the UK under UK tax law at the same time as being resident in another country under that country's tax law. In this case, if the UK has a double taxation agreement with the other country, the agreement may allow you to be treated as resident in only one country.

Residence

You are likely to count as resident if:

you are in the UK for at least six months (183 days) of the tax year - including visits or a succession of visits, or

over a four year period, you come to the UK for an average of three months (91 days) or more a year

However, you cannot assume that you are non-resident just because you do not fall within these time limits. The Revenue takes other conditions into account, such as your intentions (and owning or leasing a property may be taken to imply an intention to stay). So, if you leave the UK and want to claim non-residence, you will need some evidence to show that you have left the UK either permanently or for at least three years, for example, by buying a permanent home overseas. If you do not have such evidence, but you can show that you went abroad for a 'settled purpose' (e.g. a lengthy project overseas), you can claim non-residence if you have been away for at least one whole tax year, and you have not breached the 183-day and 91-day rules above.

There is one situation in which you are clearly non-resident. This is if you work full-time abroad as an employee (or you accompany your husband or wife overseas for their full-time work) and your visits home do not exceed the limits described above. You can be treated as non-resident in this case even if you have accommodation in the UK.

Ordinary residence

'Ordinary residence' implies a greater degree of permanence than simply being resident in the UK in one particular tax year. You may be resident but not ordinarily resident in the UK for a tax year if, for example, you normally live outside the UK but are in this country for 183 days or more in the year. Or you may be ordinarily resident but not resident for a tax year if, for example, you usually live in the UK but have gone abroad for a long holiday and do not set foot in the UK during that year. Exactly when ordinary residence starts (or stops) depends on which of the following categories you fall within:

short-term visitors - you will be treated as ordinarily resident if you come to the UK regularly and your visits average 91 days or more a tax year (excluding days spent in the UK for exceptional circumstances beyond your control, e.g. you are struck down by a bus). The date from which your ordinary residence starts depends on your intentions and whether you actually carry them out

longer-term visitors - you are ordinarily resident from the date you arrive, whether to work here or not, if it is clear that you intend to stay for at least three years. The date from which your ordinary residence starts depends on your intentions and whether you actually carry them out

students - even if you breach the rules above, you will not be treated as ordinarily resident if you come to the UK for a period of study or education and you will be here for less than four years. But you must not own or buy accommodation. here, or lease it for three years or more, and when you leave the UK you must not plan to return regularly for visits which average 91 days or more in a tax year

spouse accompanying your husband or wife working overseas - if your husband or wife qualifies for non-residence because of full-time employment overseas, you will be treated as not ordinarily resident if you are away for three years or more and UK visits average less than 91 days per tax year.

Domicile

If you're considered to be domiciled in the UK, the main implications are for your liability to capital gains tax and inheritance tax, although there are implications for income tax, even if you're currently living abroad. For information on Inheritance tax, see Inland Revenue booklet IHT18 Inheritance tax: foreign aspects.

You start off life with a domicile of origin inherited from your father (or in some cases, your mother) and until you are old enough to change it to your own domicile of choice, you have a domicile of dependency, which is the domicile of the person on whom you are legally dependent. You can change your domicile at the age of 16, but only by settling in a new country and providing strong evidence that you intend to remain there permanently or indefinitely. You'll generally be considered to be domiciled in the UK if this is where you have your permanent home and where you're likely to end your days: registering and voting as an overseas elector is not normally taken into account.

Note that if you are a woman who married before 1974 you will usually have your husband's domicile unless you have established your own separate domicile.

Note
The day of your arrival and the day of your departure do not normally count as days spent in the UK. The 'United Kingdom', in tax terms, includes England, Wales, Scotland and Northern Ireland, but not the Channel Islands and the Isle of Man.

Special classes of employee

Crown employees (e.g. UK diplomats and members of the armed forces) working abroad are, for most income tax purposes, taxed as if they worked in the UK. But any extra allowance paid for additional living costs when working abroad may not be taxable. Special rules also apply to seafarers, European Community (EC) employees, non-resident entertainers and sports persons, and employees of non-resident employers in the gas and oil exploration and extraction industries.

If in doubt about how the tax rules affect you, contact one of the specialist Inland Revenue offices listed on page 7 of the Inland Revenue notes on non-residence.

Letting out a UK property

If you are treated as a non-resident but have UK property which you let out, your tenant (or letting agent, if there is one) is required to act as a tax collector for the Revenue by deducting basic-rate tax on the rent, before they pay it to you, and passing the tax on to the Revenue. The income should be declared on the Land and Property supplementary sheets of your UK tax return. You can set the tax deducted against any other UK tax bill you have.

However, if your tenants pay less than £100 a week they do not have to operate the scheme unless asked to do so by the Revenue. And, if your tax affairs are up to date, and you either have had no UK tax obligations in the past, or do not expect to be liable to UK tax in the future, you can claim to have your UK property income paid without deduction of tax. See Inland Revenue leaflet IR140 Non-resident landlords, their agents and tenants.

Getting further help

The taxation of people who are not UK residents can be complex. If you are not sure where you stand, a useful leaflet is IR20, Residents and non-residents: Liability to tax in the United Kingdom. If large sums of money are at stake, it may be worth getting help from a professional tax adviser - but check that they are experienced in dealing with overseas matters.


Income from abroad (guide)
Tax Guide - Income from abroad

Tax Tips

How foreign income is taxed

Double taxation agreements

Allowing for tax already paid

For tax purposes, ‘the United Kingdom’ is made up of England, Wales, Scotland and Northern Ireland. So income from (and capital gains made in) any other country counts as ‘foreign’, including that from the Channel Islands and the Isle of Man.

How foreign income is taxed

Any income from abroad is treated in broadly the same way as UK income of the same type: the same rates of tax apply and the calculation is broadly similar. However, special rules are needed to cope with the following:

deciding which income is taxable in the UK. The general rule is that all income arising from a foreign country is taxable in the UK, whether or not you actually bring it into the country. An exception is made for 'unremittable' income - that is, income you cannot get out of the country of origin because, for example, foreign exchange restrictions. This is taxable only when it is eventually brought back to the UK

people who are not resident, not ordinarily resident or not domiciled in the UK. Very broadly speaking, the UK tax system charges tax on any income arising outside the UK that belongs to individuals resident in the UK. Depending on the type of income, if you are resident but  not ordinarily resident or not domiciled you may only be taxed on income you actually bring into the UK - i.e. on the 'remittance basis'.

allowing for any foreign tax you may already have paid on the income. To avoid being taxed twice, once abroad and once in the UK, you can either deduct the foreign tax from the income received or claim tax credit relief. Tax credit relief usually saves you most tax.

Double taxation agreements

A double taxation agreement is an arrangement between two countries. It consists of detailed rules designed to eliminate or relieve the taxation of income or gains in more than one country. It may state, for example, that a UK resident is exempt from tax in the other country, or that a UK resident is liable to a reduced rate of withholding tax. Double taxation agreements vary considerably from country to country and are re-negotiated periodically.

Allowing for tax already paid

Income from abroad may be taxable both in the country of origin and in the UK. To avoid paying two lots of tax on your foreign income, both overseas and in the UK, the UK system allow you to deduct the foreign tax from the before-tax amount and then work out your UK tax on the amount you are left with. However, this can still leave you worse off if the foreign income has pushed you into a higher tax bracket. For this reason, the UK tax system usually allows you to claim tax credit relief.

Roughly speaking, to work out your tax credit relief, you work out:

the UK tax on your income including the item of foreign income

the UK tax on your income excluding the item of foreign income.

The relief is the difference between the two or, if less, the amount of foreign tax. In practice, the calculations can get very complicated if you have more than one item of foreign income because the relief has to be worked out separately for each, according to a strict order of priority. TaxCalc does this for you automatically. However, it cannot currently deal with special rules if as well as foreign income you have taxable lump sums from an employer or from a life insurance policy, or if you have taxable capital gains. Special working sheets are available for the Inland Revenue if this affects you.

There may also be limits on tax credit relief, depending on which country the income comes from. In particular, you cannot claim relief in the UK for any foreign tax paid in excess of the rate set out for that particular type of income in any double taxation agreement with the overseas country (listed in the Revenue's Notes to the Foreign supplementary pages). In such a case, you will have to approach the tax authorities of the overseas country for a refund of the excess. Tax credit relief is also prohibited by a few double taxation agreements. And you cannot claim the relief if you are not a UK resident (though special rules apply for some residents of the Isle of Man or the Channel Islands).


You and your family
Tax Guide - You and your family

Tax Tips

Tax and marriage

Transitional allowance

Living together

Additional personal allowance

If your husband dies

If your wife dies

Splitting up

Receiving maintenance

Paying maintenance

A choice to make - new or old rules?

Your home

If you are married, living with a partner, widowed, separated or divorced, there are special tax rules that may affect you.

Tax and marriage

Everyone receives a basic personal allowance of £4,195 for the 1998-99 tax year (possibly more if you are 65 or over).

Married couples can also claim an extra married couple's allowance. This is worth 15 per cent of £1,900 in 1998-99, ie £285, deducted from your tax bill (reducing to 10 per cent of £1,970 in 1999-2000, and due for abolition altogether from 6 April 2000 unless you are 65 or over before that date). A higher allowance is paid if either you or your wife were aged 65 or more at any time in the 1998-99 tax year. If one of you cannot look after him or herself during the tax year because of illness or disability, and you have a dependent child, you can also claim the additional personal allowance.

If a couple marries during the tax year, the husband is entitled to the married couple's allowance, reduced by one-twelfth for each complete tax month prior to the date of marriage.

The married couple's allowance is given in the first place to the husband. However, after the year of marriage, couples can jointly elect for the whole allowance to go to the wife. And whoever has the allowance, the other spouse may unilaterally elect to receive half of it. You must do this before the start of the tax year, so it is now too late to make the choice before the allowance is abolished altogether.

However, if the partner who has the allowance cannot make full use of it because his or her income is too low, the unused part of the basic married couple's allowance (but not the age-related amount) can be transferred to the other partner after the end of the tax year. The blind person's allowance can also be transferred in this way.

Transitional allowance

Husbands and wives can't normally transfer any unused portion of their personal allowance to their spouse. But this rule could have meant that the total allowances given to a married couple dropped as a result of the change to independent taxation in 1990-1991. To avoid this, special rules can be applied where a husband's income was lower than his personal allowance in 1990-1991. These rules allow a husband to transfer some of his unused personal allowance to his wife for 1998-99 - the amount transferred is known as transitional allowance.

Living together

If you are living together without being married, you cannot claim the married couple's allowance. However, you may be able to claim the additional personal allowance if you have a child. This is worth the same as the married couple's allowance - 15 per cent of £1,900 in 1998-99 (reducing to 10 per cent of £1,970 in 1999-2000, and due for abolition altogether from 6 April 2000). You get the same allowance however many qualifying children you have: claim for the youngest child, unless someone else is already claiming for him/her.

Two single parents living as a couple can have only one additional personal allowance between them.

Additional personal allowance

If you have a dependent child you may be able to claim the additional personal allowance if you are:

a single or widowed person

a married woman separated from your husband

a woman who married in 1998-99 and had a child living with you before your marriage

a married man who does not get the married couple's allowance, because you are separated from your wife

married, but living with a husband or wife who could not look after him/herself at all because of illness or disability, throughout the tax year.

He or she must be either your own child (including a stepchild or child you have legally adopted), or any other child who was aged under 18 whom you maintain at your own expense (eg a younger sibling). The child must be under 16 on 6 April 1998, or in full-time education, or undergoing full-time training lasting at least two years for a trade, profession or vocation.

If your husband dies

In the tax year of your husband's death, you can claim:

widow's bereavement allowance. This is worth exactly the same as the married couple's allowance - 15 per cent of £1,900 in 1998-99 (reducing to 10 per cent of £1,970 in 1999-2000, and due for abolition altogether from 6 April 2000)

any part of the married couple's allowance not used, after it has first been set against your husband's tax liability for the year (regardless of any application you had previously made to share the allowance)

additional personal allowance if you have a child living in with you.

After the year of death (providing you haven't remarried before the start of the tax year) you can claim:

widow's bereavement allowance for the tax year following your husband's death (but not for subsequent years)

additional personal allowance for any year you have a dependent child living with you.

If your wife dies

You get the whole amount of the married couple's allowance in the year of your wife's death. If the couple had previously applied to allocate part or all to the wife, he can have any part unused by his wife transferred to him.

In later years, you may be able to claim additional personal allowance, if you have a child living with you and you haven't remarried before the start of the tax year.

Splitting up

Most of the special tax rules that deal with the break-up of a marriage apply whether you're divorced or separated. You are considered separated for tax purposes if there's a decree of judicial separation, a separation deed, or if the separation is likely to be permanent. If you get back together in the same year as you split up, you are taxed as if there had been no separation. If you get back together in the later year, you will get the full married couple's allowance in the year of reconciliation as long as a decree absolute has not been issued.

In the tax year in which they part, a married couple can each get the proportion of married couple's allowance they were receiving when they separated. If one spouse receives no married couple's allowance, and has a child living with them, they can claim a full additional personal allowance.

If a couple has only one child who lives with each of them for part of the year, the additional personal allowance can be shared between them in any way they agree (if they cannot agree, the allowance is split in line with the time the child spends with each of them). If one child lives with one partner, and another with the other partner, then each partner can claim the allowance.

Maintenance payments

For tax purposes, there are two types of maintenance: voluntary and enforceable. To get tax relief, maintenance payments must be enforceable under a court order, a legally-binding agreement, or an assessment from the Child Support Agency. Payments made under any other arrangements are 'voluntary' and won't qualify for tax relief.

Taxation of maintenance payments is also affected by whether they are paid under arrangements set up before or after 15 March 1988 - i.e. under 'old rules' or 'new rules'. 'Old rules' payments are those paid under:

a court order first made before 15 March 1988 (or applied for before 16 March and in place by 30 June 1988)

a legally enforceable agreement first made before 15 March 1988 and in place by 30 June 1988

a court order, legal agreement or Child Support Agency assessment which replaces or varies one of the orders or agreements above.

For more information, see Inland Revenue leaflet IR93, Separation, divorce & maintenance payments (from tax offices).

Receiving maintenance

Maintenance payments you receive under the 'new rules' are tax-free and can be ignored altogether for tax purposes.

If the agreement was made under the 'old rules', the maintenance is taxable. But you probably will not have to pay tax on the whole lot because:

The amount of taxable maintenance is pegged forever to the amount on which you were charged tax in 1988-89 - any increases above that amount are tax-free.

If you are an ex-spouse who has not remarried, the first £1,900 of your maintenance is tax-free anyway. So you will only pay any tax if the amount you received in 1988-89 was more than £1,900

Even if made under the 'old rules', payments made to a child who reached 21 after 5 April 1994 are tax-free.

Note that the person who pays you the maintenance can opt to move the payments to the 'new rules' applying for post-March 1988 payments. If so, all the payments are tax-free.

Paying maintenance

The new rules for paying maintenance also apply to court orders or legally-binding written agreements from other countries in the European Union and, since 1 January 1994, payments under court orders or agreements in the European Economic Area (EEA). But payments under court orders or agreements made outside the EEA rarely qualify for tax relief.

If you make enforceable payments under the 'new rules', you will receive the maintenance deduction. This gives tax relief of 15 per cent on payments of up to £1,900 in the 1998-99 tax year, i.e. up to £285 (reducing to 10 per cent of £1,970 in 1999-2000).

You will receive the extra relief only if the payments are made directly to an ex-spouse who has not remarried, whether it is for their maintenance, or for the maintenance of a child of the family who is aged under 21. The maintenance deduction is not available if the order says that payments are to be made to your children, so make sure the court order directs payments to your ex-spouse.

You cannot claim the maintenance deduction for lump sums paid as part of the divorce settlement (even if they are paid in instalments), or for payments for which you already receive tax relief - for example, mortgage payments.

If you make enforceable payments under the 'old rules', you will receive tax relief of 15 per cent on the first £1,900 (reducing to 10 per cent of £1,970 in 1999-2000), and at your highest rate of tax on any amount of maintenance paid over this limit. However, the amount of relief you get will be limited to the amount of maintenance which had relief during the 1988-1989 tax year. So, if you paid £2,000 to your ex-spouse during 1988-89 you will get tax relief only up to a maximum of £2,000 in future tax years, even if you increase your payment later.

If tax relief is claimed under the old rules, the maintenance payments direct to the child will be counted as the child's own income, against which the child's own personal allowance may be used.

A choice to make - new or old rules?

You can elect to switch to the new rules at any time during the tax year for which your election is to apply, or by 31 January 2001 if you want it to apply for the 1998-99 tax year. Get form 142 from your tax office. You also have to inform the recipient in writing. Once you have switched to the new rules you cannot change back.

If you pay maintenance only to an ex-spouse and have increased the amount since April 1989, your tax relief will not have been increased to take this extra into account. So, if you are still paying less than the maximum maintenance deduction (currently £1,900) you would get more relief by asking your tax office to move you on to the system applying for agreements made on or after 15 March 1988. But if you are also getting tax relief on payments made direct to a child, you will lose all the tax relief on these payments.

Your home

If you are married, you get tax relief on the interest on the first £30,000 of the loan. An unmarried couple owning a home together also has the same tax relief limit on mortgage interest as a married couple. However an unmarried couple who took out their mortgage before August 1988 can each claim tax relief on balances of up to £30,000 each. You lose this double relief if you marry or switch to another lender (and even, in some cases, if you remortgage with the same lender).

If you split up, you each qualify for tax relief on interest you pay on the first £30,000 of any new mortgage. If one of you stays in the old home and buys out the other, that person carries on getting relief of up to £30,000. If you pay your ex-spouse's mortgage and the loan was taken out after 5 April 1988, there is no tax relief on the interest. It's usually better to pay extra maintenance, so your ex-spouse can pay their mortgage direct.


Building up a pension
Tax Guide - Building up a pension

Tax Tips

Employers' schemes

Additional voluntary contributions (AVCs)

Personal Pension Plans

Maximum contributions

Carry back

Carry forward of unused relief

Life insurance

If you have a retirement annuity contract and a personal pension plan

A state pension will provide only a modest income when you retire. An employer's pension or personal pension scheme will boost your retirement income. You get tax relief at your contributions (up to certain limits) and you can take part of the savings as a tax-free lump sum. But you can't usually get back what you paid in until you retire.

If you have the option of joining an employer's scheme, this will nearly always be the best way to save for retirement. If your employer doesn't run a scheme, you've chosen not to join it or you're self-employed, you could consider a personal pension plan, but many have high charges so consult the latest Which? pensions report first. Some employers arrange group personal pensions instead of running an employer's scheme. the Government has also proposed a new type of pensions scheme for the future.

You can't usually belong to an employer's schemes and contribute at the same time, unless you have earnings from two difference sources. However if you are in an employer's scheme that isn't contracted out of the State Earnings Related Pension Scheme (SERPS) you can use a PPP to contract out yourself (and the Government pays a rebate into your scheme as an incentive).

Employers' schemes

Contributions to an employer's scheme of up to 15 per cent of your annual earnings qualify for tax relief (assuming the scheme is tax-approved, as most are). Your 'earnings' for this purpose include the taxable value of most benefits such as companies cars, but if you joined the scheme on or after 1 June 1989 there is an earnings cap on the cash value you can pay in. Your employer's contributions don't count towards this limit and don't count as a taxable fringe benefit. Your employer deducts your contributions from your pay before your tax under PAYE is worked out (which is why you do not usually need to claim them on your tax return).

'Final salary' schemes pay a pension based on a proportion of your earnings at or near to your retirement, and how long you have been in the scheme. In a money-purchase scheme, your and your employer's contributions are invested in the pension fund, and used to buy an annuity after your retirement.

Although you receive tax relief on your contributions, you have to pay tax on your eventual pension: the pension counts as 'earned' income. However, you can take part of the pension fund as a tax-free lump sum on retirement.

If you leave the scheme after two years or more, your employer must preserve your pension rights until you reach the normal pension age for the scheme. You can transfer your pension rights to another employer's scheme, or to a personal pension plan (including special 'buy-out' plans designed for this purpose).

Additional voluntary contributions (AVCs)

If you want to boost your employer's pension, you can either pay into an in-house AVC scheme or arrange a free-standing AVC scheme with a pension company. However FSAVCs usually have higher costs than in-house AVCs. Contributions to both types are included within the 15 per cent contributions limit applying to employer's scheme.

Tax relief on AVCs is given by deducting the contributions from your pay in the same way as the main contributions. FSAVCs work rather like personal pension plans and you make your contributions after deducting basic-rate tax (you should claim the higher-rate tax relief on the Other pensions screen in the Reliefs section of TaxCalc).

If, when you retire, you find that your AVCs or FSAVCs have taken you over the Inland Revenue's limits on pension benefits, you get back the excess funds after tax (33 per cent in 1998-99). You should enter the refund on the Pensions screen in the Income section of TaxCalc.)

Personal Pension Plans

These were first available on or after 1 July 1988: before that date similar schemes were available, called Retirement Annuity Contracts. Your contributions are invested on a money-purchase basis - i.e. your money is pooled with that of other investors in a pension fund and your eventual pension depends on investment performance.

You can contribute up to 17.5 per cent of your net relevant earnings each year (more if you are aged 36 or over) up to the maximum shown below. If you're contracted out of SERPS through a personal pension plan, the rebate paid into your scheme doesn't count against your contribution limits. You can contribute to more than one scheme at a time, providing you stay within these maximum contributions.

You can get your tax relief either through your PAYE code (if you are an employee) or by putting in a claim on your tax return. But if you are an employee with a personal pension plan, you make your contributions after deducting basic-rate tax relief. You keep this relief even if you are a non-taxpayer, and if you are a higher-rate taxpayer you will get higher-rate tax relief through your PAYE code. Enter your payments in the Pension contributions screens in the Reliefs section of TaxCalc.

Maximum contributions

The maximum depends on your age at the start of the tax year, and the type of pension scheme. The limits for personal pensions are higher but the amount of earnings which count for personal pension is restricted by the earnings cap. You can use up unused relief by using the carry back and carry forward of unused relief rules.

Age at 6 April	Personal pensions limit	Retirement annuity limit
35 or less	17.5%	17.5%
36 - 45	20.0%	17.5%
46 - 50	25.0%	17.5%
51 - 55	30.0%	20.0%
56 - 60	35.0%	22.5%
61 - 74	40.0%	27.5%

Carry back

You can, if you wish, elect to have all or part of a payment made during one year to a personal pension plan or retirement annuity contract allocated to an earlier tax year (provided you have not already paid the maximum permitted for that year). Payments made during 1998-99 may be allocated to:

the 1997-98 tax year, or

the 1996-97 tax year, but only if you had no net relevant earnings in 1997-98.

The contributions are treated as if you actually paid them in the earlier year, so you get relief at the rate which applied for that year. See Inland Revenue Help Sheet IR330 Pension payments for more details on carry back.

If you wish to claim unused relief you can do so on your tax return. If you are claiming outside your tax return, and are an employee, you will need to complete Form PP43 (available from your pension provider) and send it to your tax office.

Carry forward of unused relief

If the tax relief you claim for pension contributions in a given tax year is less than the maximum you are permitted to claim for that year, the balance is 'unused relief'. You can carry this unused relief forward for up to six years.

For example, if during 1998-99 you have contributed the maximum amount permitted to either a retirement annuity contract or a personal pension plan, you may be able to pay more into your pension if you have unused relief from any previous year back to tax year 1992-1993. (You can actually go back to the tax year 1991-1992 if you are electing to have all your 1998-99 contributions carried back to 1997-98 - so you are effectively starting six years before the last tax year.) See Inland Revenue Help Sheet IR330 Pension payments (from the Inland Revenue Orderline, 0645 000404) for full details.

If you wish to claim unused relief you can do so on your tax return. If you are claiming outside your tax return, and are an employee, you will need to complete Form PP42 (available from your pension provider) and send it to your tax office.

Life insurance

If you are eligible for a retirement annuity scheme or personal pension plan you can use up to five per cent of your net relevant earnings to buy life insurance linked to your scheme or plan. The premiums qualify for tax relief at your highest rate and they count towards your overall limit for pension contributions. If you pay premiums for this sort of insurance, you should include them in the amounts for the relevant plan.

If you have a retirement annuity contract and a personal pension plan

If you contribute to both a retirement annuity contract and a personal pension plan during the same tax year relief for payments to retirement annuity contracts is always given before relief for payments to personal pension plans. So relief to retirement annuity contracts may reduce the personal pension plan premium allowable in the year. Check your position before deciding how much you wish to contribute to each plan - see Inland Revenue Help Sheet IR330 Pension payments which provides more details of how the interaction between the two contracts work. Also, talk to your financial adviser or accountant if you use one.


At a rate of £8,500 or more a year

The £8,500 limit includes the value of your fringe benefits (worked out as if you earn over the limit) and any expenses paid to you (unless your employer has a dispensation in which case you can ignore them). The limit is reduced proportionately if you work for only part of the year.  If you are a director you are automatically treated as earning £8,500 or more unless all of the following three conditions apply:

you are either a full-time working director or a director of a charity or non-profit making concern

you do not own or control more than 5 per cent of the share capital

you earn under £8,500.


Dispensations

A dispensation is an arrangement your employer may have with your Tax Office to save you the trouble of including a benefit or expense you get with your tax return, and then making a matching claim for the tax relief of that benefit or expense.


More than one set of accounts

Tax Guide

Using TaxCalc if you have more than one set of accounts

Before self-assessment was introduced, the Revenue required you to send in a set of accounts for each accounting period. Under self-assessment, this effectively continues - but rather than allowing you to send in the accounts themselves, you are required to transfer the information to the self-employment supplementary pages, where it is presented in a standardised format in boxes 3.11 to 3.70 and 3.93 to 3.109. The other boxes (3.71 to 3.92 and 3.120) make the necessary adjustments to work out your total taxable profits from the business for the accounting period.

If the ‘basis period’ for tax purposes is the same as your last accounting period, then obviously only one set of self-employment supplementary pages is needed. If your business profits for the basis period appear in more than one set of accounts, the Revenue still wants one set of standardised accounts information for each accounting period, but, of course, the adjustments needed to work out your total taxable profits only need to be done once.

Using TaxCalc if you have more than one set of accounts

You can still use TaxCalc if you have more than one set of accounts to send in for the business. But it does not currently calculate the necessary adjustments. We advise you to get help from your tax adviser in order to work out the adjustments correctly. Also see Inland Revenue Help Sheet IR222: How to calculate your taxable profits (available on the Help menu of TaxCalc).

To use TaxCalc if you have more than one set of accounts, you need to set up the following separate TaxCalc files:

File 1:

In your main TaxCalc file (the one in which you have entered all your income, reliefs and allowances for the tax year)  complete the Turnover Business expenses, Capital allowances and Balance Sheet screens using the data from the most recent set of accounts. Complete all the other self-employment screens using information for the 1998-99 tax year. Make the adjustments necessary to convert the profits for the accounting period to those for the basis period on the Adjustments screen. This information will be taken into the calculation to work out your overall tax bill for the year.

File 2:

Start a new TaxCalc file for each of the earlier accounting periods within your basis period. Complete only the Annual turnover, Business expenses, Capital allowances and Balance Sheet screens. Note that if you have already provided this information in the 1997-98 tax return, you do not need to do so again.

File 3:

Print out a blank page 3 of the self-employment supplementary pages from another new TaxCalc file. Complete the ‘Capital allowances summary’ (boxes 3.61 to 3.70) by hand. Leave boxes 3.71 to 3.88 empty.

Send in with your tax return:

all 4 supplementary pages from your main TaxCalc file (File 1), showing information for the latest set of accounts and including the completed boxes 3.71 to 3.92

pages 1, 2 & 4 only of the supplementary pages for the earlier accounting period(s) from the separate TaxCalc file (File 2)

the hand-completed page 3 (File 3).


Nominated partner

All the partners are responsible for the accuracy of the partnership return, but only one partner needs to complete and sign it. This will be:

the partner named on the front of the form, or

the partner nominated by the partners (or by the tax office for the partnership), or

if the return is for a European Economic Interest Grouping (EEIG) registered in Great Britain or Northern Ireland then the return should be completed by the manager, or

for other EEIGs, the person to whom the tax return is addressed.


Turnover under 15k

Turnover under £15,000

If your annual turnover is less than £15,000, the Inland Revenue allows you to give only 'three-line' accounts - i.e. your turnover, expenses and profits. Note that 'annual turnover' is the amount assuming your accounting period ran for a full 12 months - if it did not, the £15,000 limit is reduced (if it was shorter), or increased (if it was longer). TaxCalc automatically works out the 'annual turnover' limit, depending on the length of your accounting period, and will enter your information in the correct place in the self-employment/partnership supplementary sheet.


Grossing up

A gross payment is the full amount before tax. A net payment is the amount after taking tax into account. If you know the net amount, you can gross up from it to find the gross amount, by dividing the net amount by 100 minus the appropriate rate of tax. For example, to gross up a payment received net of lower-rate tax, divide by 100-20, i.e. by 80 per cent.


Adjustment example
Example - adjustment to arrive at profit or loss

Chris started his business on 6 October 1997 and his first accounts showed a profit of £9,000 for the 9 months' accounting period ended 5 July 1998. His basis period for the 1997-98 tax year is the 6 months from 6 October 1997 to 5 April 1998. So, for his first tax year in business (1997-98) Chris is taxed on 6 month's worth of profits out of the 9 month period to 5 July 1998: - 6/9 x £9,000 = £6,000.

In the second tax year Chris is in business, ie 1998-99, the accounting period ending in the year is for only 9 months. His basis period is therefore the first 12 months to 5 October 1998. His profit for the accounting period to 5 July 1999 is £18,000: his taxable profit for the 1998-99 tax year is made up of nine months profit from the first accounting period and three months from the second accounting period :

9/9 x £9,000 = £9,000

3/12 x £18,000 = £4,500

Total = £13,500

In the Income and Expenses screens for this business, Chris must enter the profits for the accounting period ending in the 1998-99 tax year, ie £9,000. But to bring this up to the £13,500 on which he is actually taxed, Chris must enter £13,500 - £9,000 = £4,500 as an adjustment. Because the accounting period ends on 5 July, Chris has the information needed to work out the adjustment in plenty of time to send in the tax return: had this information not been available, he would have had to estimate the adjustment.


Part_adjustment_example
Example - adjustment to arrive at profit or loss

Jill and Phil began in partnership on 6 October 1997 and their first accounts showed a joint profit of £18,000 shared equally for the 9 months' accounting period ended 5 July 1998. As they both started together their basis periods are identical: the 6 months from 6 October 1997 to 5 April 1998 for year 1.

They are both taxable in tax year 1 (1997-98) on 6 month's worth of profits out of the 9 month period to 5 July 1998: - 6/9 x £9,000 = £6,000 each.

In the second tax year Phil and Jill are in partnership, ie 1998-99, the accounting period ending in the year is for only 9 months. The basis period for both partners is therefore the first 12 months to 5 October 1998. The joint profit for the partnership accounting period to 5 July 1999 is £36,000, again shared equally. Their taxable profit for the 1998-99 tax year is made up of nine months profit from the first accounting period and three months from the second accounting period.

9/9 x £9,000 = £9,000

3/12 x £18,000 = £4,500

Total = £13,500

The partnership tax return and statement show the profits for the accounting period ending in the 1998-99 tax year, ie £18,000 in total, £9,000 of which is allocated to each partner and entered in 'Your share of profits'. But to bring this up to the £13,500 on which they are actually taxed, Phil and Jill must each enter £13,500 - £9,000 = £4,500 in the 'Adjustment' box. Because their accounting period ends on 5 July, they have the information they need to work out their adjustment in plenty of time to send in their tax return: had this information not been available, they would have had to estimate the adjustment.


Partnership tax return

This collects the information needed to calculate the profits or losses made by the partnership as a whole, together with details of any interest the partnership receives after tax: there are supplementary pages to be completed if the partnership receives any other type of capital gain or income. The Partnership tax return is available only in the Partnership tax document section in TaxCalc Plus: the supplementary pages to the Partnership return are not currently covered by either version.


Partnership tax statement
The partnership statement

The partnership statement forms part of the partnership tax return and tells the Revenue how the partnership's profits or losses are shared out between the partners. The partnership statement is dealt with on the Statements screen in the Partnership tax document of TaxCalc Plus: it is not available in the standard TaxCalc package. Note, though, that TaxCalc Plus currently deals with only the short version of the partnership statement, included in the partnership tax return. It does not cover the separate version for partnerships which have to complete supplementary pages.


Partnership supplementary pages

The partnership income supplementary pages

These must be filled in by each individual partner, as supplementary pages to his or her own individual tax return. To complete these, go to the Partnership income screens in the Personal tax document section of TaxCalc. The Partnership income screens collect the information needed to work out an individual's own taxable profits or losses from the partnership which will be taxable in the 1998-99 tax year, after taking into account various reliefs and adjustments. Note, though, that TaxCalc covers only the short version of the supplementary pages, not the full version for partnerships which had income other than trading income and taxed interest.


UK

United Kingdom

For tax purposes, ‘the United Kingdom’ is made up of England, Wales, Scotland and Northern Ireland. So income from (and capital gains made in) any other country counts as ‘foreign’, including that from the Channel Islands and the Isle of Man.


Sterling equivalent

For tax purposes, the general rule is that foreign income or gain is converted to sterling at the rate of exchange applying at the time when the income arose (for example, the date when savings interest is credited to your account).

There is an exception if you are entering sums which were previously treated as unremittable income. In this case, convert the amount into sterling using the rate of exchange applying on the date it was received in the UK.


Withholding tax

Witholding tax is tax deducted by the payer when the income is paid to you.


FICO

Foreign Intermediaries and Claims Office (FICO)

An Inland Revenue office dealing with matters as various as  the MIRAS scheme, Double Taxation Agreements and technical matters on TESSA. There are offices in Nottingham, but unless otherwise stated you should contact FICO at:

Financial Intermediaries and Claims Office

St John's House

Merton Road

Bootle

Merseyside L69 9BB.

Tel: 0151- 472 6000


Earnings_cap

Earnings cap

The earnings cap sets a limit on the level of earnings which can be taken into account for the purpose of making pension contributions. It also limits the benefits that can be paid out by tax-approved schemes. However, it does not apply to employer's schemes you joined before 1 June 1989 (if the scheme was set up before 14 March 1989). For 1998-99, the earnings cap is £87,000 (£90,600 for 1999-2000).


Carry_back_eg

Example of carrying back pension contributions

If you are a higher rate taxpayer and paid £5,000 in gross pension contributions after 5 April 1999 but before you sent in your tax return, the tax credit against your 1998-99 tax bill would be 40 per cent of £5,000 ie £2,000 (or £850 if you are an employee with a personal pension plan and so have already had basic-rate relief by paying lower contributions). However, your actual tax liability worked out before these contributions were taken into account would remain unchanged - and the payments on account (if you make them) you are due to make for the 1999-2000 tax year would be based on the 1998-99 liability. The tax relief you are due would normally be set off against your payment of account due on 31 January 2000 (or repaid if no tax is due).


Payments_on_account_popup

Example - claiming to reduce your payments on account

Income tax liability 1998-99	£5,000
Payments on account would be:	£2,500 31 January 2000
	£2,500 31 July 2000
Expected tax liability 1999-2000	£3,000
difference	£2,000
You may reduce your payments on account to:	£1,500 for 31 January 2000
	£1,500 for 31 July 2000


Income and deductions

Your total income less deductions forms the basis for the tax calculation.

Your income

This shows all the taxable income you have entered (minus any allowable expenses from employment or self-employment). Tax-free income is ignored. Note that the figure for employment includes the taxable value of any taxable fringe benefits or expenses from your employer, such as a company car. If you want to see a breakdown of the taxable income from savings and investments you have entered, go to the last page of the Summary. For most other types of income, you can see the underlying calculations by going to the appropriate supplementary sheet under 'Tax Return forms' on the 'View' menu of TaxCalc.

Your deductions

Here you will see only the outgoings on which you get full tax relief. You will not see outgoings on which you get only restricted tax relief, such as mortgage interest, or most types of maintenance - these appear on later pages under 'Allowances & reliefs given in terms of tax'. However, you will see an entry at 'Maintenance' if you pay maintenance of more than £1,900 under the old rules - in this case, you still get full tax relief on the excess above £1,900, which you will see here.


Pension/training payments

Pension/training payments paid net

If you're an employee and pay net contributions to a personal pension or free-standing AVC scheme, or vocational training fees, you normally deduct basic-rate tax before making the payment. Yet the before-tax (gross) amount has already been deducted from your total income on page one. So, to stop you getting two lots of tax relief, any relevant payments are sub-totalled here and added back in to the lower- and basic-rate calculations.


Allowances given as deduction from income

Shown here are those allowances on which you get tax relief at your top rate of tax. They are valuable because they also reduce your taxable income for the purposes of deciding what top rate of tax you pay. This section sub-totals the allowances to which you are entitled: they are then deducted from your income.

If you have told TaxCalc that your spouse has blind person's allowance which they cannot use, and which they wish to transfer to you, this will also be shown here.

Transitional allowance will only apply if you are a married woman and your husband's low income meant that you lost out when independent taxation for married couples was introduced in the 1990-91 tax year.


Savings income

Savings income taxed at the lower (20%) rate

Most income from savings and investments is taxed at only 20 per cent for both lower-rate and basic-rate taxpayers. Higher-rate taxpayers pay the full 40 per cent tax on it. The amount of such income is sub-totalled here. It is then deducted from the basic-rate calculation (because 20 per cent tax has already been charged on it in the lower-rate calculation). For higher-rate taxpayers, the income is added back in and, in addition to the normal 17 per cent higher-rate tax, an extra 3 per cent is charged to bring the total of tax on it to 20+17+3=40 per cent.


Allowances and reliefs given in terms of tax

These are allowances and outgoings on which you get restricted tax relief. Instead of deducting the full value of the allowance or payment from your total income, as with other allowances, the set percentage of the allowance or outgoing is deducted from your income tax due. This means that you do not benefit fully unless your tax so far is at least as high as the relief due.

Married couple's allowance can be transferred from your spouse if he or she cannot make full use of it. The amount will be shown here, if you entered it in the allowances section.


Form_Notional tax

Notional tax

This covers those types of dividends and unit trusts which come with 'notional tax' deducted (including income of this kind from trusts and estates). Notional tax counts as tax paid but cannot be reclaimed, even by non-taxpayers, so the amount is sub-totalled and then deducted from the income tax due later on in the calculation. This means that you do not benefit fully unless your tax bill is at least as high as the relief due.


Extra tax on savings income

If you are a higher-rate taxpayer, you should pay 40 per cent tax on savings income. However, because it is excluded from the basic-rate tax calculation, so far only 20+17=37 per cent tax has been charged on it. This section takes your savings income (or the amount of income within the higher-rate band, if less) and charges an extra 3 per cent on it.


VCTs and EIS subscriptions

This section shows the 20 per cent tax relief you are entitled to on any qualifying contributions to venture capital trusts or Enterprise Investment Schemes. The tax relief is deducted from the amount of income tax due, so you do not benefit fully unless your tax so far is at least as high as the relief due.


Forms_Tax credit relief

Tax credit relief

There are various types of tax credit relief which may appear here. These are tax credit relief on foreign income, double taxation relief if you are taxed both overseas and in the UK (claimed on the Non-residence pages of the tax return), and, if you received taxable share incentives, tax credit relief for any tax deducted by your employer under the PAYE system.


Forms_Class 4 National Insurance contributions

Class 4 National Insurance contributions

These are payable on your total profits from self-employment, either as a sole trader or as member of a partnership.


Recoverable tax on charitable covenants, annuities and gift aid payments

If you give to charity through one of these methods, you have already given yourself basic-rate tax relief by deducting 23 per cent from your payments. Adding it back here means that you do not get two lots of tax relief (and it also claws back the tax relief from non-taxpayers).


Unpaid tax for earlier years included in PAYE code for 1998-99

Your PAYE code for 1998-99 may have been used to collect tax still owing from a previous tax year. If so, the amount relating to previous years does not reduce the amount of tax you owe for 1998-99, and has to be added back in here.


Tax paid at source

This sub-totals all the tax you have entered as having been deducted at source, eg as PAYE from your job, or through tax deducted from savings income before it was paid out (but not payments on account, which are dealt with later). The total is deducted from your tax for the year.


Tax due for 1998-99 included in next year's PAYE code

Your tax office may already have decided that some of the tax you owe can be collected through PAYE in 1999-2000 (you can find this figure from the PAYE Coding Notice, usually received in about January each year). In this case, TaxCalc deducts from your tax bill the figure shown here.


Payments already made

Any payments on account you have already made (eg in January 1999) will be shown here and deducted from the amount due.


Form_Payments on account

Payments on account

Under the system of self-assessment, you may have to pay your tax in instalments if you are self-employed, have income from property, or receive any other income which is not taxed before you get it. These 'payments on account', as they are called, are equal to half of your income tax and Class 4 National Insurance contributions liability for the previous tax year (capital gains tax is payable in one go on 31 January after the end of the tax year in question).

However, you do not have to make payments on account for 1999-2000 if your tax outstanding from 1998-99 is below £500 or if most (80%) of your tax is collected at source. TaxCalc takes this into account. You may also be able to claim a reduction in your payments of account in some circumstances, for example you expect your income to fall - see the notes to the Inland Revenue's Tax Calculation Guide.


Tax of under £1,000 to be collected by PAYE

If you pay tax through PAYE, and have tax of less than £1,000 outstanding from 1998-99, you can ask the Inland Revenue to collect it through your PAYE code (so that the tax is deducted bit by bit from your weekly or monthly pay). If you want to ask the Revenue to do this, click the appropriate box on the Personal details screen. You must normally also send in your tax return by 30 September 1999.


Amount due on 31/1/00

Amount due on 31 March 2000

The 31 January tax payment each year 'sweeps' up all the tax outstanding for the previous tax year. But it is also the date for your first payment on account (if you make them) for the current tax year.  So the figure TaxCalc will show you as being due to pay on 31 January 2000, may comprise:

any tax outstanding from 1998-99 (unless this is less than £1,000 and you have clicked the box on the Personal details screen to show that you want it collected through PAYE)

your first payment on account for 1999-2000

less any tax repayments you are due because you are carrying pension contributions made after 5 April 1999 back to the 1998-99 tax year, or because you have claimed to carry back trading losses.


Top slicing relief

This is a special tax relief you may get if taxable insurance gains are pushing you into the higher-rate tax bracket. Broadly speaking, the relief works by spreading your gain over the years that the policy has run. The average gain each year is worked out by dividing the taxable amount by the number of complete years the policy has run. Higher-rate tax on the average gain is calculated, and then multiplied by the number of complete years. This higher-rate tax figure is then compared with the higher-rate tax due on the full gain before averaging, and the difference (broadly speaking) is your top-slicing relief, deducted from your tax bill. The Inland Revenue working sheet included in the tax calculation guide for people with lump sums from life insurance gives more information on how the relief is calculated.


Disagreements about tax due
Disagreements about the tax due

TaxCalc and the Inland Revenue may produce different figures for your tax liability. Small differences may be due to rounding. Before you assume that one or the other is wrong, check that you have given both the same information. In particular:

Have you put the correct amount under 'Taxable income' in the Employer details screen , ie is the figure you have given net of pension contributions to your employers scheme/and or payroll giving?

Are you working on a different estimate of income from that used by the Revenue? Have your circumstances changed in a way the Revenue doesn't yet know about, for example, have you changed your company car recently? Check that the interest you have entered as qualifying for tax relief really does so.

Have you double-entered tax already paid? There are sections to enter tax already paid on income from investments, for example, but if you have some income taxed under PAYE you might find that you have already entered it as tax deducted under PAYE

Have you entered the right year's income for income from a business, ie have you worked out the basis period correctly?

If you cannot agree your assessment with the Revenue you still have the right of appeal. If you have a query about TaxCalc's figures, call 0645 830270.


Calculate chargeable gain/loss

More help

You can use this calculator to work out the chargeable gain/allowable loss on disposing of an asset. TaxCalc will work out the appropriate figure, after taking into account any indexation allowance, and enter the figure calculated here in the box on the main screen. Select the asset for which you want to make the calculation, using the drop-down list at 'Asset description'. Once you have entered all your payments, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.

Note
This calculator will only work if you have already entered all the details relating to this asset on the main screen.

Initial value

Enter the price paid for the asset, or its market value when you were given or inherited it. You may need to agree this with your tax office if there is no easily accessible valuation - eg because you are selling unquoted shares.

Note that if you acquired the asset before 31 March 1982, you have a choice of value: see Assets owned on 31 March 1982.

Allowable expenses

You can claim the cost of acquiring, improving or disposing of an asset (eg legal fees, commission, stamp duty, advertising, and the legal costs of defending your title to an asset), but not the costs of maintaining it. Enter a brief reference for the expense and, in the right-hand column, the amount of the expense.

If you incurred more than one expense in the same month (e.g. commission and legal fees when selling a second home) you can add the costs together and enter them as one expense. But expenses incurred in different months need to be entered separately. This is because expenses incurred before 6 April 1998 qualify for indexation allowance which is worked out on a monthly basis.

Note that if you acquired the asset before 31 March 1982, the figure you enter as the initial value may mean that you cannot deduct allowable expenses incurred before that date: see Assets owned on 31 March 1982.


Interest income from UK authorised unit trusts/OEICs

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your individual distributions of this type. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the unit trust/OEIC or any other reference you want to use for each distribution, the amount of the distribution actually received, and the tax deducted at source. Once you have entered all your distributions, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.


Claiming non-domiciled status

More help

You can use this calculator to work out whether you can claim to have been not domiciled in the UK during the 1998-99 tax year. Answer each question (using the 'Go back' button to go back a step if necessary) and if you can claim, TaxCalc will tick the box on the main screen. Once you have answered all the questions, press OK to return to the main screen and (if you can claim) enter the other information required.


Claiming non-residence

More help

You can use this calculator to work out whether you can claim to have been non-resident for the whole of the 1998-99 tax year. Answer each question (using the 'Go back' button to go back a step if necessary) and if you can claim, TaxCalc will tick the box on the main screen. Once you have answered all the questions, press OK to return to the main screen and (if you can claim) enter the other information required.


Claiming not ordinarily resident
Claiming to be not ordinarily resident

More help

You can use this calculator to work out whether you can claim to have been not ordinarily resident in the UK during the 1998-99 tax year. Answer each question (using the 'Go back' button to go back a step if necessary) and if you can claim, TaxCalc will tick the box on the main screen. Once you have answered all the questions, press OK to return to the main screen and (if you can claim) enter the other information required.


Claiming split-year treatment

More help

You can use this calculator to work out whether you can claim to have been non-resident for part of the 1998-99 tax year. Answer each question (using the 'Go back' button to go back a step if necessary) and if you can claim, TaxCalc will tick the box on the main screen. Once you have answered all the questions, press OK to return to the main screen and (if you can claim) enter the other information required.


Scrip dividends minicalc
Scrip dividends

More help

The tax return asks only for totals, but you can use this calculator to record and add up all your individual share dividends of this type. TaxCalc will enter the total of figures you enter here in the box on the main screen. Enter the name of the company - or any other reference you want to use for each dividend - in the left hand column, the cash value of the dividend and the notional tax. Once you have entered all your dividends, press OK to return to the main screen. You can print out a list of everything you have entered by pressing the Print button and setting the options in the standard print dialog box in the usual way.