Year End Tax Review 2009/2010 Contents Lead articles The year ahead... This year, next year Pension hit Employees Too much NIC NIC and pensions Company cars Tax-free benefits Business - General Time to incorporate? His and hers Family bonus Profit and loss Show me the money Can't pay, won't pay? Turning back the clock Business - VAT Standard VAT or flat VAT? VAT goes down - must come up? European revolution A good start for VAT Happy returns? Investments Top-up savings Rainy day money Capital Gains Gains favoured Splitting gains A place in the country Holiday lets end Families Family fortunes Where there's a Will Credits and debits Piggy banks Still trustworthy? Administration Penalty shoot-out Paperwork, paperwork Pay tax later Opportunity knocks again Charity Give and save Non-Domiciled People Home and away Interest Interesting times

Credits and debits Child Tax Credits (CTC) and Working Tax Credits (WTC) have now been around for several years. The system for rebating tax to people who need it has been criticised as over-complicated, and there have been examples of people being paid too much and then finding the Revenue pursuing them to get the money back. But in spite of all the bad press, it's still worth thinking about making a claim, particularly if you are couple where both of you work and you therefore pay childcare costs. The basic CTC (about £10 a week) is payable to a couple with a qualifying child and combined income of up to £50,000. Above that, it reduces to nothing by the time total income is about £58,000. The form may be longer and more complicated than seems reasonable (when a lot of the information is already provided to the HM Revenue & Customs on the tax return), but £545 a year probably pays for the effort. WTC will pay up to 80% of £300 a week in childcare costs, so it can be quite generous even on combined incomes above £30,000. It's worth looking into, particularly if your income goes up and down, and is not predictable at the beginning of the year. To start with, a claim is based on last year's income - 2009/10 for the 2010/11 payment year - and it's then revised at the end of the year based on actual income. If you make a claim at the beginning of 2010/11 based on 2009/10 income of £100,000, your claim will be noted but you will receive nothing. If by the end of the year your income has fallen to £30,000 for some reason, you would get the higher level of payment - maybe £3,000 - backdated to the beginning of the year. If you only bother to claim at the end of the year when you know your income is low enough, you only qualify for payment from three months before you claim. This "protective claim" idea is particularly important in an economic downturn - it benefits people to claim when they won't qualify immediately, in case they do so later. Until the taxman changes the rules, it makes sense to think about a claim even if your past income is above the limit. Action Point! Should you claim CTC/WTC?