THIS TRANSCRIPT IS ISSUED ON THE UNDERSTANDING THAT IT IS TAKEN FROM A LIVE PROGRAMME AS IT WAS BROADCAST. THE NATURE OF LIVE BROADCASTING MEANS THAT NEITHER THE BBC NOR THE PARTICIPANTS IN THE PROGRAMME CAN GUARANTEE THE ACCURACY OF THE INFORMATION HERE. MONEY BOX LIVE Presenter: VINCENT DUGGLEBY TRANSMISSION 24th JANUARY 2005 3.00-3.30pm RADIO 4 DUGGLEBY: With just one week left for sending in your tax return, there’s another chance to discuss any particular problems you have with the Money Box Live team. It beats me why every year nearly a million people incur a £100 fine for missing the deadline. Is it lack of information, forgetfulness, or a belief you have a good cause? There are very few excuses the Inland Revenue will accept. Even if you’ve filed your return and got the assessment back, remember you have to pay the tax, including the first instalment of this year’s estimated bill, which you can challenge if your income’s gone down. We’re already more than three quarters of the way through the 2004-05 tax year, so it’s also worth thinking how you might save tax before 6th April while there is still time, rather than leaving it all to the last minute: capital gains, inheritance tax, ISA’s, pension contributions, charitable donations, buying a new computer for the business, and if both husband and wife are involved in a small firm, check you won’t get caught by the so-called ‘settlements’ rule. Maybe you’re due for a tax refund in which case the sooner you claim it, the better. And then there’s the vexed question of tax credits where the Government’s under pressure to help those who’ve been overpaid through no fault of their own and are being pursued by the Revenue. We can talk about that in more detail if you wish, but, as always, the questions are yours. And with me to answer them, Anita Monteith from the tax faculty of the Institute of Chartered Accountants for England and Wales and Mike Warburton, tax partner with Grant Thornton. 08700 100 444 is the number to call. And June in London, you’ve got the first one. JUNE: Yes. It’s the £100 fine that’s worrying me because when this system first came in, I filled in a form, but since then I don’t think I’ve ever had a tax form sent. I’ve been retired since then and I don’t think I’ve ever had to fill in a form. DUGGLEBY: Have you any reason to believe you’ve got income that isn’t taxed? JUNE: No. DUGGLEBY: Alright, Mike, set her mind at rest. WARBURTON: Yes, a lot of people are concerned when they see all the publicity on this that they should be sending in a tax return. I think, June, it’s very unlikely you need to send in a tax return. If all the income you’ve got is being taxed at source, in those circumstances it’s very unlikely you’ve got additional tax to pay. I don’t believe you’ll need to send in a return. They probably sent you one right at the outset just to check on your circumstances to satisfy themselves that that was the case. If you haven’t been sent one since, I shouldn’t worry about it and stop worrying about a £100 fine. DUGGLEBY: Now I reckon this is the hottest topic of the whole programme. We’ve got umpteen e-mails about these wretched tax forms. I’m going to try and run through them very quickly. I don’t want to take up too much time. But here’s Tony. He’s on PAYE, he’s an employee, no interest earning accounts, no other income. ‘Why do I get a tax form every year when the Inland Revenue already know my entire story?’ WARBURTON: Well I think the answer there is he shouldn’t be having one if he’s no extra tax to pay. Unfortunately if you’ve had a return, you’re going to have to send it in, but fill in the white space on box Q23 and say ‘I don’t think I need this return in future’. DUGGLEBY: Okay. Here’s Nelson - state pension, he’s got a teacher’s pension. He’s got some interest, which is taxed at source; he’s got a couple of dividends tax deducted. ‘Why must I fill in a form?’ Anita? MONTEITH: I think it’s very unlikely that he will need to fill in a form … DUGGLEBY: Well he’s been sent one. MONTEITH: … and I think in future he may find that he falls out of the self-assessment system. The Revenue are actually trying this year to remove people, if they can - particularly if your savings income is less than £10,000. DUGGLEBY: Okay. Then here’s Andrew. He’s just got his assessment. He shouldn’t have filled in the form, he didn’t have any liabilities, so guess what? He’s got an assessment, zero tax to pay. ‘Do these people never learn and they still want me to fill in the form’, he says. WARBURTON: Yeah, once you’re in the system, it’s actually quite difficult to get out of it again because the Inland Revenue will have a habit of sending you returns just to be sure. So that’s why I say ask them specifically. Best to fill in the white space on the return because, hopefully, you’ll stop it for next year. But if you’ve had a return, you have to complete it. MONTEITH: As Mike says, you must send it back because otherwise you’ll get an instant penalty notice generated and you really want to keep away from all that. WARBURTON: I think it’s worth saying, Vincent … DUGGLEBY: I mean get these people off our backs. That’s what he’s saying. WARBURTON: … they don’t actually charge you a penalty if you’ve got a late return unless you’ve got tax due. It’s limited to the tax due. So it’s probably less than half of those 900,000 that will actually attract a penalty. DUGGLEBY: Okay. Just one more. As I say, we’ve had an awful lot. Age 71. He’s got a company pension, a state pension, interest taxed at source. You know the story. He sent his form in. Lost in the post. Then he’s filled another one in, even though he knew he didn’t have to pay any tax. They put the wrong figures down on the return, assessed him to tax he doesn’t owe. He’s now had to pay the tax he doesn’t owe because if he doesn’t pay the tax that he doesn’t owe on the form that they lost, which he had to fill in twice … Pick the bones out of that one. MONTEITH: It’s an unfortunate fact that we live in a society where we have tax returns and things get lost. I mean to be honest, I would recommend – particularly at this stage of the year – taking it into the tax office yourself and actually getting a receipt for it. DUGGLEBY: And sitting down and sorting it. Okay. MONTEITH: And once you’ve got that receipt, you can prove that they’ve had it. DUGGLEBY: But is it going to get any better? WARBURTON: It will get better. The Inland Revenue do try very hard to get this right, but, like anybody else, mistakes get made. If he’s been messed around like that, he can make a complaint and the Inland Revenue will treat complaints very seriously. MONTEITH: And you can actually get financial redress from the Revenue for problems that have been caused by their errors. DUGGLEBY: I think he’s right to pay the tax actually if he’s got the demand because otherwise he could get into even more difficulties. But the forms are going to be simpler next year, the ones that are going to be sent out to people with very simple tax affairs. MONTEITH: That’s right. The short tax return was piloted last year – and it’s actually been very successful – so we’re hoping that it’s going to be nationwide and lots of people will get a much easier form in future. DUGGLEBY: Because there is no doubt that it really gets up their wick when they get this enormous form. At least a four page is easier. I’ve seen it. It’s not too bad. Take my word for it. Right, we’ve kept you a long time, Peter, but we wanted to just clear that out of the way before we take your call. PETER: Oh hi. I’m your perfect £100 example or victim. I’m about 2 years back now and they keep on chasing me. It’s something which I know I’ve got to do, but I always leave it to the last minute and they keep on chasing me up and it keeps on increasing. It’s getting there, getting to that form. I filled in a form 3 years ago and it was a headache. So now I’m trying to find out how easy it is on the Internet basically. DUGGLEBY: Internet filling. WARBURTON: Well the answer is it is surprisingly easy to do it online and you want to visit the Inland Revenue website: www.inlandrevenue.gov.uk. Take the tab that talks about self-assessment and it’ll effectively feed you through it, asking you the questions as you go along. You could probably do a self-assessment return on line in about half an hour if you’ve got all the information available at your fingertips. DUGGLEBY: But you can’t do it this year though. MONTEITH: He’s too late to do it this year because it actually takes four or five days to get the necessary code, which will be posted through to you by the Revenue once you register online. And unfortunately I think he’s too late for last year as well because they will have removed last year’s form from their system. WARBURTON: Yeah, he’d certainly be cutting it fine. I suppose, Peter, you could give it a try, but I think you’d be cutting it fine. I think in your circumstances what you could do is if you think or you know you’ve got any tax due, pay the tax that you believe is outstanding. You can try and file. Your return may well be late, but you should avoid the penalty. MONTEITH: And you can go into your local Inland Revenue enquiry centre. They’re usually very helpful. If you go in this week rather than leaving it till Monday, there won’t be quite such a queue. DUGGLEBY: Okay, thanks for that, Peter. And now Amanda in Brighton. AMANDA: Oh hello. My question is not to do with the tax return. It’s with regard to a claim for child tax credit. I made an application in January 2003 and I mean to date have really had no response to that claim. And my question was you know is the system working badly generally or is it just with regard to my particular application for this tax credit? DUGGLEBY: You filled in the application form … AMANDA: Filled in the application form. DUGGLEBY: Nothing at all? AMANDA: No. I had a small amount of money paid into a bank account in April with no notification. To be honest, I didn’t even acknowledge that it was child tax credit. About a year on, I sort of realised that we’d never heard anything, so approximately every four to six weeks I would phone. The initial response was they didn’t seem to have acknowledged the fact that I had two children, but I put them right on that. I wrote a letter of official complaint in October, followed that up with another letter in I think it was November, and I think I’m just at the end of my six to eight weeks wait for a response to that. DUGGLEBY: I should think you’re at the end of your tether as well. AMANDA: I am really, yes. DUGGLEBY: Anita … MONTEITH: Yes Amanda, I’m a bit puzzled. You said you had some money back in April, but you didn’t get anything else. AMANDA: No, I had a bizarre amount paid into my bank account, but with no accompanying letter and nothing further. MONTEITH: Right, well what you would have expected would have been an award notice at that time. AMANDA: Right. MONTEITH: Presumably you’ve got details of when you rang, have you? AMANDA: I haven’t got details of the phone call. I’ve certainly got copies of my two letters in October and November of last year. I did actually have a phone call in October of last year to say that they were going to put it right, I would receive some money and that I needed to be aware that I may be overpaid, which seemed quite amusing. MONTEITH: Amanda, what I suggest you do is give them another call. This time keep a record of when you ring them. And then if you don’t hear anything following that call to the help line, you can write giving details and make an official complaint. DUGGLEBY: We’ve got again a number of e-mails on the same subject, but the one that is pretty general is ‘We’ve been asked to repay tax credits. Just please tell us what to do’. MONTEITH: If you’ve been asked to repay tax credits, the first thing that I would say is if that is going to leave you in a position of financial hardship you can ask for hardship payments. They’re not particularly well advertised at the moment, but you can get them. Secondly, do ring up and ask for a breakdown of your award notice. You must have been sent something that will explain what this overpayment is. There are rules that will prevent the Revenue deducting vast sums from your ongoing tax credit payments. And it is very complicated, so go into your local citizen’s advice bureau and get some help. DUGGLEBY: Okay - moving onto the calls again, John in Leicestershire. JOHN: Oh hello. Mine is really about capital gains. Currently my wife and I own a bungalow that we rent out. We’re thinking of selling our own house and then, when the current tenancy agreement expires, moving in and using the bungalow ourselves as our primary residence. How long would we have to stay there to substantially reduce any capital gains tax? And because we’ve actually owned the bungalow for 10 years, would there be any advantage of actually moving in rather than just selling the bungalow as it is? WARBURTON: The answer is yes, John, you can save quite a lot. The key issue is that the bungalow has got to become your residence. It’s no good just camping out there for a few weeks. You’ve got to live in it, you’ve got to pay council tax, you’ve got to have your furniture there. You’ve got to live in it as your residence. Once it then becomes your principal residence because you’ve sold the other place and you’re only living in one property, not only do you qualify for the capital gains exemption as a principal private residence for the period you’re living in it; you automatically qualify for the whole of the last 3 years of ownership and you may well in addition to that qualify for what’s called rental relief, which is gains of up to £40,000 on top of that. JOHN: Oh. WARBURTON: I’ve done this calculation many times for people and it does make an enormous difference to the amount of capital gains tax they pay. If you do it jointly with your wife, you both can qualify for the £40,000 letting relief as long as you satisfy the circumstances. And the key issue, as I say, is you’ve really got to live in it and make sure it’s your home. Even if you kept both homes, but they were both residences, as long as you’ve lived in the bungalow you can elect with the Revenue which one is treated as your principal residence, so you can elect the bungalow. So there’s a lot of tax potentially you could save by doing that. DUGGLEBY: I think that’s a pretty comprehensive answer, John, so we’ll move on. We’ve got a couple of e-mails again for you, Mike. This is again rental properties, as we’re on the subject. ‘Going abroad, expecting to stay there for 3 or 4 years. Owner-occupier house is going to be let out through agents. What do I need to know in terms of getting the rental sent to me and all this sort of thing?’ WARBURTON: Well as far as the rental’s concerned, normally what you do if you’re going abroad is appoint an agent. DUGGLEBY: Which he’s done. WARBURTON: And appointing an agent - then the agent, his duty is to actually complete returns for the Revenue and collect tax at source. DUGGLEBY: That’s one of the key questions: does he have to fill in a return when he’s gone abroad? Does he personally have to fill it in? WARBURTON: Well you will have to fill in a return if it’s sent to you, but on the face of it what it looks is happening is if your agent is actually completing the assessment for you, then you may not be sent a tax return. DUGGLEBY: He’s abroad. He’s gone; he’s abroad. The agent’s acting on his behalf. WARBURTON: If you get sent a tax return, you should complete it. DUGGLEBY: But he’s not here. WARBURTON: Well if there’s any reason to suppose that you haven’t paid tax on a UK source, you may still have to do a return. But in practice what happens in cases like this is your agent that you’ve produced in the UK will submit the information. DUGGLEBY: This is the key thing? WARBURTON: And that’s how it’s actually handled. DUGGLEBY: So the agent essentially will sort of take on the role of you as the taxpayer? WARBURTON: Yeah. The rules changed a few years ago. You used to have to deduct the whole of the rental income paid abroad. You had to take a basic rate at source. That’s no longer the case. The agent actually does a calculation, which works out what expenses you can set against it and just pay the tax that’s due. And that should be the end of the matter. DUGGLEBY: And then the money’s just remitted to you? WARBURTON: Yeah. But don’t forget that sometimes if people have been abroad, you can often - particularly in the year you go and the year you come back - you can actually have an overpayment of tax. You can get a reclaim. So tax returns aren’t necessarily a bad thing. DUGGLEBY: You don’t jeopardise your owner-occupation and your capital gains tax decision? WARBURTON: No because if you live in the property when you return, the whole of your period overseas will count as your principal private residence because that’s one of the exemptions available in the legislation. DUGGLEBY: Right. Two very quick ones on buy to lets. Can you carry forward losses on a buy to let against other earned income? WARBURTON: You can carry it forward against other rental incomes … DUGGLEBY: Earned income. WARBURTON: Not earned income. Only letting income from whatever properties you’ve got. DUGGLEBY: Okay. That’s Graham. And then Dermot’s running buy to let as a business. Can he deduct stamp duty from the costs? WARBURTON: What you do is with stamp duty, that’s not a running expense. It’s treated as a cost of the property. So when you sell it, it will feature in your capital gains calculation as a deduction from that. DUGGLEBY: Okay, right. That’s the property bit out of the way. Now then, Anne in Pembroke - your call. ANNE: Hello. I work for a company and my tax is paid through them, but last Autumn I did some extra work for a small consultancy, which my company, the company I work for knew about. What do I do about paying the tax for the money I earned when I was doing the extra work? MONTEITH: Anne, I assume that you didn’t pay any tax at all for the extra bit of work you were doing? ANNE: No, no. MONTEITH: No. Okay then. Well obviously you’re right, you do have to pay tax on that, and I would suggest the easiest way to do it is just to ask for a tax return and put it through that for the current year. ANNE: … the financial year. Is that April or end of March rather or … ? MONTEITH: Well we’re now in the tax year 2004-2005, so you will need to ask before 5th October 2005 for a tax return to be sent to you. ANNE: Yeah. That’s okay, so I’m not going to get a £100 fine or anything. MONTEITH: No, no, you’ve got plenty of time. ANNE: Okay, brilliant. Excellent. Thank you. DUGGLEBY: Alright. And while you’re on it, Anita, let’s have this one. ‘I’m owed’ – this is an e-mail – ‘I’m owed a refund for last year’s tax bill. I’m told that if the refund doesn’t arrive by the time the next payment is due, which it hasn’t, I can take off the amount of the refund and pay the difference between the refund and the tax I owe’. MONTEITH: Oh, you’re getting into a real minefield here. There are practically a lot of difficulties with just knocking sums off, not least because of the complex interest rules. Can I just make a general point on refunds? If you’re putting in a tax return and you want to reclaim tax, it’s well worth writing on the tax return, on the front of it, ‘repayment claim’ because that pushes you up the pile. It stands out and you’re more likely to get your money back more quickly. DUGGLEBY: So we don’t recommend writing on your thing: ‘you owe me money; I’m not paying what you say I owe’? WARBURTON: I wouldn’t recommend it. DUGGLEBY: Okay. Right, well we’ll take another call now. This one is from Edwin calling us from Edinburgh. EDWIN: In common with other MM02 shareholders, I have the chance to realise my shares without any charge to me. The form has to be in by March 9th and I know that capital gains tax is payable on this. But if I don’t get paid until the next financial year – i.e. after April 1st – will I have to pay capital gains tax in this year? This is important because I have other capital gains which I’ve realised earlier. DUGGLEBY: Yes, in other words you’ve used up your allowance for this year and you’ve suddenly got this possibility of a gain coming up in the latter part? EDWIN: Yes. DUGGLEBY: Mike, is this the question … It’s the date of the transaction, isn’t it? WARBURTON: Yes, it’s the date of the transaction. As it happens Edwin, I got a call from my father-in-law with a similar question on Friday night and he sent me all the forms and I had a look through. They’re quite daunting, aren’t they? EDWIN: Yes. WARBURTON: But in fact, what happens is either you don’t send the forms in or you complete the part saying that you want to take the cash. Then you’ll be treated as making a capital gains disposal, and my view is it’s at the time you’ve made that effectively the contract to sell the shares … DUGGLEBY: It is in March. WARBURTON: And it’s in March, so it’s in the current tax year. Your only choice there is simply to say I don’t want the cash, I’ll take the shares, in which case you can then sell the shares in the market. But they are offering a special deal at the moment where they’ll sell without dealing costs in the market, plus another 5 pence a share. So it’s worth (if you can) selling in the current year to save the dealing costs and that might actually be a bigger saving than the capital gains tax, depending on what your base cost of your shares is. DUGGLEBY: Yes. On the question of these shares, quite a lot of these deals that are offered by companies, it doesn’t seem very clear what the tax position is. I mean, for example, there’s an e-mail from somebody with the Abbey Santander thing where they got this special payment at the end of the time and they don’t know what it is. WARBURTON: Oh the Santander thing was very complicated because of course we’re dealing with Spanish tax as well as UK tax. DUGGLEBY: But I mean this is the extra payment they got, a special dividend or something that they had, which they got if they didn’t want to sell them. If they obviously wanted new shares, they got this special extra payment. MONTEITH: Most of those extra payments are taken as capital because the whole point is you’re getting the money because of your ownership of a capital asset and so any money you get out of it is also going to be treated as a capital gain. DUGGLEBY: And what about the question of when there’s a re- capitalisation? You sometimes get extra bits of income, which is sort of deemed to be odd bits that aren’t covered by the new shares you get. MONTEITH: There’s still going to be capital disposals though, so you’ll still have a capital gains tax. DUGGLEBY: I mean they’re so tiny, it probably doesn’t matter very much. WARBURTON: They send you great, big, thick documents and sort of page 92 or something they have a little paragraph about taxation, and it might tell you in that but it is very confusing when these things are done. DUGGLEBY: Indeed. Well let’s move on now to Kate. You’re ringing us from Cornwall, Kate. KATE: Yes, hello. My question is my father in October at the advice of the Bank of Scotland took out a lifetime, nil rate band trust for £310,000. He has unfortunately passed away and I’ve been informed by my solicitor that £47,000 will be part of his estate; whereas at the time that my father took out the trust, he took out – there was two, one in my mum’s name, one in his, both at £310,000 – I understood that neither would come under inheritance laws. WARBURTON: Yes, it is confusing and regrettably it’s caused by the death. The way these trusts normally work is you set up the trust, you make the gift within a nil rate band, and the hope and expectation is that the person who’s made the gift, your parents, would survive 7 years. If you don’t survive 7 years, then unfortunately the amount of the gift has to be taken into account in the inheritance tax calculated on death, so what effectively is happening is you’ll look at the total amount of assets in the estate at death and add back the value of those gifts, or in this case your father’s gift. So, unfortunately, your solicitor’s right: there will be additional inheritance tax paid at that stage by virtue of the death. DUGGLEBY: Back to an e-mail for you, Anita. This is ‘How do I claim tax back? I haven’t made a claim since 2001. Possibly some of what I want to claim may be unclaimable, but how do I go about it?’ MONTEITH: You download a form called an R40 from the Revenue’s website and fill in the forms. If you just go to the www.inlandrevenue.gov.uk site DUGGLEBY: Or ring up somebody, presumably? MONTEITH: … or ring somebody up, you can actually just put in R40 into the search engine and it’ll produce the form for you. DUGGLEBY: Is there any limit on the number of years you can go back, Mike? WARBURTON: Six years is the maximum. DUGGLEBY: Okay, so 2001 is actually okay. You could do three or four years all in one go? WARBURTON: Yuh. DUGGLEBY: And you might be pleasantly surprised. And this is a question about gifting a house. This is a question of a mother who had a house bought for her by her daughter. This was a council house. The daughter paid for it all – i.e. she paid for the mortgage – but the mother was the owner. Now the mother’s transferred the house into the ownership of the daughter and she wants to know what the tax position is on this. The mother’s still living there. WARBURTON: Well on a transfer from mother to daughter, there would be no capital gains at that stage to pay, no capital gains tax because it’s the principle residence of the mother. But from that time onwards it would be regarded effectively as an investment property, so even though it’s her mother still living there … DUGGLEBY: And even though she paid for it. WARBURTON: Even though she paid - well her mother bought it. She might have provided the funds, but her mother bought it. In those circumstances, what’s actually better – it’s too late now perhaps – but it’s better if you transfer it into a trust; and under the terms of the trust the mother has the right of occupancy because then the trustees continue to get the private residence exemption. DUGGLEBY: Will that work with a right to buy on a council house? WARBURTON: Well I mean once it was able to be transferred to the daughter - rather than transfer to the daughter, transfer into the trust. I mean you could still do it now; it’s just that it might have gone up a little bit in value. And it’s a relief most people fail to spot, I think. DUGGLEBY: Okay. Now we’ll go onto Helen, I think, in Norwich. Helen HELEN: Hello. I’ve been self-employed for 30 years. Every year I come to do my accounts and I find one or two little items that I’m not sure whether I can claim. This year, for instance, I need glasses to run my sewing machine. I don’t need them for any other purpose. I can’t get an opinion. Is there a substantial list of what you can and can’t claim as a self-employed person? DUGGLEBY: I think you must be also called Jonathan because he sent us an e-mail almost identical to yours. He’s not a kite maker. HELEN: Not me. DUGGLEBY: No. And I’ll also couple it with John who’s also e-mailed us, saying he works primarily from home and he’s dedicated one room as his office. Can he claim tax relief?’ etcetera, etcetera, etcetera. So Mike, give us a dissertation on tax relief. WARBURTON: Well it’s got to be wholly and exclusively for the purpose of your business. In fact with something like this, with special glasses and things like that, it just depends how specific it is. Even cosmetic surgery for you know actors and what have you can count. Alison Mitchell’s dental work, I seem to remember, was a leading case on this topic. So it really depends just how specific it is and does it have a dual purpose. Do you need those glasses for other things as well? Is it purely for the business? If it’s purely for the business, then I think it’s probably worth claiming. DUGGLEBY: Yuh, I mean it’s the old thing - what are the three tests for expenses? MONTEITH: Ah, well you’ve got wholly and exclusively … DUGGLEBY: Wholly and exclusively, that’s it yes. MONTEITH: That’s if you’re a business. DUGGLEBY: And necessarily if you’re employed. MONTEITH: And necessarily if you’re employed, yeah. And it’s much trickier if you’re employed actually to get a deduction. DUGGLEBY: Is there a list for any particular business that you can consult? This is the point of the e-mail really. MONTEITH: Some unions do provide help to their people and they will produce a list that might help. But really you just have to say, as Mike said, do you use it to help you do your work. DUGGLEBY: And this dedication of one room for an office at home? WARBURTON: If you’ve got one room at home dedicated to the purpose of your business, that’s actually quite dangerous from a capital gains point of view. I would never recommend someone have it dedicated. Even if it’s not dedicated, some of your home expenses will still be allowed in the normal way, a proportion. You know if it’s 10% of your house, you may well be able to claim … DUGGLEBY: Heating, electricity – a proportion? WARBURTON: Yeah, claim 10% of your heating, electricity and all the running costs of the house. MONTEITH: What a lot of people do is agree a fixed rate per week, so you could say £5 per week is roughly what it costs me to work from my office at home. DUGGLEBY: Okay. Ian in South Yorkshire, your call. IAN: Hello. If my wife and I open a joint savings account at a building society, can the interest be split so that my wife pays the tax? I’m in a higher tax bracket. WARBURTON: Well the answer is with a husband and wife, with a joint account with a husband and wife, the automatic presumption is that you own it equally, so if you don’t do anything else it would be presumed to be owned equally. You can make a declaration of trust to the effect that your wife, for example, owns 90% of it and you own 10%, but frankly in those circumstances I think I’d just open an account entirely in your wife’s name because it keeps it a lot simpler and most people would do it that way. IAN: This was all brought about because we want to open an Internet account, but my wife doesn’t want to run it because she doesn’t like going on the Internet, so we need to have it in a joint account. DUGGLEBY: Well you can run it if it’s in her name. I mean nobody’s going to know who’s running it if you’re on a computer really. IAN: No, but there’s clauses in the contracts for the Internet account saving, you can’t divulge your information to anyone else. WARBURTON: I think I’d get your wife’s log-in number with her permission. MONTEITH: You could sit there and help her. DUGGLEBY: It’s up to you, yes. You just sit beside her and help her do it. You know that’s the thing. But you know obviously if you have qualms about that, then clearly the Internet is not going to work for you. Moving on quickly now. Stephen in Luton. Just about the last call we’re going to be able to take, I think. Stephen … STEPHEN: Yes, I received a redundancy payment in the previous tax year of £60,000; tax relief of £30,000, and tax was deducted at the basic rate when I received the payment. Now I’ve filled in my self-assessment form, I find out I’ve got to pay an additional 18% after the 40% tax level. Is there any possibility of avoiding that additional? WARBURTON: I think the answer is probably not. You’re quite right to have the £30,000 deducted. Your employer on paying it to you should, I believe, have applied the higher rate liability if it was paid at the time just at the end of your employment. I’m afraid it sounds as if you’ve got the extra 18% to pay and I can’t think of any way that would avoid that. DUGGLEBY: And I want to finish with an e-mail, which is a cri de coeur from a 19 year old casual worker. He’s just started work. It’s not regular work, Anita – two days one week, one day the next week. He gets his payslips, he thinks he’s paying far more tax than he should. He hasn’t a clue what to do, as 19 year olds often don’t. “Help, help”, he says. MONTEITH: Well assuming he hasn’t got a parent who’s a chartered accountant to help him, go into your local Inland Revenue enquiry centre and they’ll sort it out for you. DUGGLEBY: They’ll be that kind, will they? MONTEITH: They will, yes. DUGGLEBY: Okay, fine. And just one final question for you, Mike. Accountants’ charges. ‘I was charged £560 by my accountant; £35,000 profits. When I earned £50,000, he charged me £800. What’s the basis for that?’ WARBURTON: Accountants don’t charge on the money you earn. They charge on the work they have to do and the hours they spend and it all depends on what sort of information you gave them in the first place. DUGGLEBY: Alright Mike, thanks very much indeed. Mike from Grant Thornton and Anita Monteith from the Institute of Chartered Accountants for England and Wales. Two numbers for you: 0800 044 044 is the telephone line; our website is bbc.co.uk/moneybox. Paul Lewis will be here with Money Box at noon on Saturday. I’ll be back at the same time next Monday afternoon with Money Box Live when the subject will be banking.