Anne Redston, John Whiting and Chas Roy-Chowdhury
BBC News website's Money Talk column is a forum for topical issues affecting your finances.
This week's column coincides with the start of the new tax year. To celebrate, BBC News website has got together resolutions from some of the UK's top accountants.
They offer simple steps and choices, which could help you get your finances into shape - and save you from paying too much tax.
John Whiting, tax partner at Pricewaterhouse Coopers
Check your tax coding:
The best and potentially most profitable tax resolution for any new tax year is "I will monitor my tax code". All employees, and many pensioners, should have a tax code.
It's the signal from the Inland Revenue to the employer of the tax allowances due to the employee; the Revenue send taxpayers their codes at least once a year and people really should check that it's correct.
TAX CODES: GET HELP
Refer to leaflet P3: Understanding your Tax Code (available on the Revenue website)
Contact your local Revenue office (details on Revenue website)
All you need to do is review what's on your coding notice and query anything you don't understand.
Incorrect codes - and they often happen - means that the wrong amount of tax is being deducted.
A continued charge for a benefit you no longer have is a regular occurrence; those aged over 65 should always check that they have been given their higher age allowances.
The Revenue don't always spot 65th birthdays and being 65 at any time during the tax year qualifies you for the higher allowance.
Another good tip is "Must aim for lower tax rates on my savings income".
If you're a non-taxpayer, or your income doesn't get up to the taxable level of £4,895 (the personal allowance for those aged under 65), register to get your bank or building society interest gross.
You should receive your interest gross if your annual income does not exceed £4,895 this tax year
Fill in form R85 to qualify
Fill in form R85, which the bank will have. Bear in mind that children also get a personal allowance and that means an odd bit of interest that they receive shouldn't be taxed.
If your income just tips over the personal allowance level, remember that the 10% tax rate applies to the first £2,090 of taxable income.
Whilst you can't receive interest gross any more, it will have had 20% tax deducted and you can claim back 10%. The Revenue has a simple claim form for this.
Anne Redston, tax partner at Ernst & Young:
Withdrawing profits from small companies:
Until this tax year, tax-efficient profit withdrawal from small companies used to be easy.
Imagine a company with £15,000 of profits. The tax planning worked like this:
- A small salary, say £4,500, would be enough to qualify you for means-tested National Insurance benefits and also provided a "qualifying year" for pensions purposes.
- But £4,500 is below the threshold of both tax and National Insurance payments (NICs), so there is no income tax or NICs on the salary.
- The balance, £10,500 would be subject to corporation tax - at just over £100, as the first £10,000 of profits were charged at 0% tax.
- The balance would then be paid out as a dividend, on which no NICs would be due - and no tax either if you were a basic rate taxpayer.
- Thus on an income of £15,000, the small business owner paid just over £100 of tax.
These days are now past. From 1 April 2004 profits paid out as a dividend have become subject to a minimum corporation tax charge of 19%.
This will make a serious dent in the take-home pay of businesses with profits up to £50,000.
Businesses with profits over this level are unaffected, because they pay 19% corporation tax in any event.
Owners of small companies should thus consider whether, when and how they should withdraw funds from their companies, in conjunction with their tax advisers.
It may, for example, make sense to defer dividends until profitability has increased.
But the simple route of borrowing money from the company instead of taking a dividend is unlikely to work, as the chancellor has announced that he is changing these rules too.
Chas Roy-Chowdhury, head of taxation, Association of Chartered Certified Accountants:
Anyone who is about to choose a new company car and who does not wish to pay above the flat tax rate of 15%, should select carefully.
Generally speaking, it is advisable to buy a car which has a smaller engine and is more fuel efficient, as this will help to keep the tax charge to a minimum.
It is widely expected that the ongoing reduction of the emissions band which attracts the minimum 15% charge will extend beyond next year and that there will continue to be a 5g/km plus drop in the bands on a year-on-year basis, perhaps until cars are required to produce no CO2 at all.
Company car taxation is currently worked out on the basis of the car's CO2 emissions and its list price when new.
As mentioned above, the tax rate starts at 15% of the car's price, for a small car emitting 145 grams per kilometre (g/km) CO2, then rises in one per cent steps for every additional 5g/km over 145g/km - up to a maximum of 35 per cent of the car's price.
Diesel cars are subject to a further 3% surcharge, up to the 35% maximum unless they meet the strict Euro IV emissions standard.
Next year, the 145 g/km minimum will be reduced by 5 g/km a year, to 140 g/km in 2005/06, which will further increase tax bills for those with less environmentally-friendly company cars.
You can find out CO2 emissions by car model on the Society of Motor Manufacturers' website (see link on right).
If you are a homeowner with a spare room, you may be able to benefit from the Government's 'rent a room' scheme, whereby homeowners can charge rent of up to £4,250 tax free (2004/05 tax year), within a given tax year.
The rent charges have to remain below the £4,250 threshold if the payments received are to be completely non-taxable. Any amounts above this are taxed.
The scheme only applies to a property where it is the main or only residence and the person renting the room shares meals and facilities with the rest of the household.
The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.