Warning: what follows may be of little interest unless you’re involved in the workings of the excellent U.K. tax credit system. 

Both my partner and myself received fantastic letters from Her Majesty’s Revenue & Customs this morning, to notify us that they were stopping paying us the zero tax credits that they’ve been paying us for the last couple of years. Yes, that’s right, two letters to let us know we weren’t going to receive anything when we already hadn’t been receiving anything for the last few years.

This is just one in a series of mess ups we’ve seen from the HMRC in our saga, which has been going on for the best part of 3 years, since our daughter (our second child) was born.

When she arrived, we notified the HMRC of the situation, and eventually they came back saying that we owed them a couple of hundred quid for some reason, which we disputed. And this dispute went on and on, largely because communicating with them was such a pain – call centers couldn’t answer straight questions, you’d ask for a call back from a supervisor and never get the call. This went on for weeks, eventually we resorted to writing letters, but this still failed to resolve the problem.

At this point, we decided (in hindsight, a bad decision), to give up on it, as we thought back then that it wasn’t worth the hassle for a few extra quid.

A couple of weeks ago, we started to wonder whether we were missing out by not claiming any Child Tax Credits that we could still be entitled to – we both work and pay our taxes, and whilst a couple of years ago we thought we could do without it, given the hassle we were getting claiming it, right now every penny counts to us, so why shouldn’t we claim what we are entitled to? 

So once again we approached the HMRC to see if the situation had changed and if we could get it sorted out. We submitted some more information, and awaited a reply. I thought they may come back and say we owed them money, which, although we still dispute that we owe them anything, I was now willing to pay, if I knew it would mean we’d make it back over the months we were receiving the tax credits. 

Which brings us to today’s letters, telling us that we no longer qualify for the credits that they weren’t paying to us anyway.

I still feel in the dark about the whole situation – are we simply not entitled to anything? I’d admit that I need to do some more  research to find this out, as it has been my partner who has really been looking after this problem, but I suspect that even if we are entitled to them, it will still be a pain to sort out.

It’s also frustrating not knowing where to turn to next, if we are indeed still entitled to the tax credits. We’ve tried phoning , writing etc., so what’s the next step? This is really what stopped us pursuing the claim in the past, but times have changed and now we’re more eager to get all we’re entitled to. I’m not too concerned if we can’t reclaim anything we may have been entitled to in the last 3 years, as it was our decision to give up chasing it, but going forward, it would be good to get the money we should have, given our contributions to the tax man.

In some ways I think we were stupid to drop the claim when we did, but 3 years down the line, we are entitled to change our minds, aren’t we? And with the government seemingly promising tax payer’s money to bail out people left right and center, I’m eager to get more for my family.

I’d be interested to hear if anyone else has had similar experiences with the tax credit system, and what the outcome was? Leave your thoughts in the comments below.

photo credit: Larsz

Our Child Tax Credit Nightmare was originally published at Money Watch a UK personal finance blog. Sign up to our RSS feed and follow us on Twitter.

Using the average weekly tax spend, together with the tax chart recently featured on the Guardian they’ve worked out that each week the average family pays £36 of tax to the NHS, £21 for schools and £12 for the Army, Navy and RAF, amongst other things.

For the full breakdown, read the full post.

Where Does Your Tax Get Spent? was originally published at Money Watch a UK personal finance blog. Sign up to our RSS feed and follow us on Twitter.

The guy has fallen foul of his own penny-pinching ethos and been fined for failing to file his company accounts on time: he missed the deadline for filing his annual accounts for Moneysavingexpert.com on August 31 and was fined £100 by Companies House as a result.

Money Saving Expert Fined was originally published at Money Watch a UK personal finance blog. Sign up to our RSS feed and follow us on Twitter.

It certainly won’t break the bank, but it’s always nice to get something back from the taxman.

The question is, what will you be spending you rebate on? Personally, I’ll be using mine to snowball on my credit card debt.

Don’t forget, if you’re lucky enough to get the £60 rebate, you’ll also receive a whopping £10 a month for the next 6 months – thanks Darling!

How Will You Spend Your £60 Tax Rebate? was originally published at Money Watch a UK personal finance blog. Sign up to our RSS feed and follow us on Twitter.

Here in the U.K. we’re hearing more and more complaints about the high and rising price of petrol, and with the recent rise in oil prices, it’s something that likely to get worse.

There’s an interesting page on Wikipedia which shows the relative price of petrol (or gasoline) in countries around the world, and highlights where we stand in the petrol price league table. Unsurprisingly, like most of Western Europe, we’re quite near the top, which is largely due to the tax levied by our Governments.

Our friends across the pond in the U.S. probably think they have it bad, but the cost of petrol there is less than half it is here in the U.K., and it will come as no surprise that the countries towards the bottom of the list tend to be the large oil producing nations. At the very bottom of the list is Venezuela (petroleum is their main export). Here’s the relative prices in a few select countries, all in US$ per gallon:

• #1 – Siera Leone: $18.42
• #7 – Germany: $8.91
• #10 – U.K.: $8.53
• #14 – France: $8.07
• #36 – U.S.: $3.87
• #40 – China: $2.44
• #45 – Saudi Arabia: $0.45
• #49 – Venezuela: $0.17

Can you imagine paying $0.17 for a gallon of petrol? Yes, that’s just 8p. You could probably fill your car up for about £3. Of course, the tax on petrol over here is seen as a way of limiting its use, and helping the environment, and whilst I think this is largely a good idea, it is interesting to see how much others are paying overseas. I personally would like the government to cut petrol us by giving incentives for greener cars or promoting other methods of transport, rather than keep piling tax onto petrol.

Hat tip to Chris Garrett for the Wikipedia link.

photo credit: adpowers

Fed Up With High Petrol Prices? Go Live In Venezuela was originally published at Money Watch a UK personal finance blog. Sign up to our RSS feed and follow us on Twitter.

Despite the feel good announcements made by the Prime Minister today, focusing on schools, hospitals and law & order, as well as first-time buyers (a diversionary tactic to take some heat off following the tax chaos?), the tax problems are likely to rumble on.

An interesting point was made by Jonathan Rawle on his blog:

Ominously, the BBC report that people will gain £120 this year. We should be under no illusions that this will be a permanent tax cut. Next year, the personal allowance won’t increase nearly as much as it would have done, and over time, further reduced increases in the allowance will mean that the £2.7 billion is eventually clawed back. But as no-one can know what the increases would have been without today’s announcement, they won’t be able to complain about losing out. The amount of tax collected will be the same in the end, but I suppose at least low earners won’t be hit with a big increase in tax all at once.

So that helps to explain where the money will be coming from. It just shows how easy it is for these huge figures to be manipulated, massaged and moved around to make it look good for the majority of the population who probably won’t question it – they’ll just see the extra money in their pay packets and think it’s great.

Tax Changes: The Aftermath was originally published at Money Watch a UK personal finance blog. Sign up to our RSS feed and follow us on Twitter.

Following the government’s terrible decision to scrap the 10p tax band, they’ve decided to bribe compensate those of us who pay 22% tax by altering the tax allowance rate. The money will be paid as a £60 payment in your pay packet in September, followed by £10 for the next 6 months.

Whilst it is a welcome change to get something back from the tax man, you can’t help feeling it was completely unnecessary waste of both time and money, had the 10p rate not been scrapped in the first place. It’s also an embarrassing turn of events for the government.

Look out for the extra £60 in your pay packet in September.

Basic Rate Taxpayers Get £120 Back From Tax Man was originally published at Money Watch a UK personal finance blog. Sign up to our RSS feed and follow us on Twitter.

UPDATE 24th November 2008: If you’re looking for information on the latest changes to tax rates announced today, please see our post on the pre-Budget report key points.

Last year, in How Much Tax Will I Pay?, I wrote about SimplePound’s useful Excel spreadsheet which helped calculate how much Income Tax and National Insurance you’ll pay given your monthly salary. When the tax rules changed recently, Kirsten updated the spreadsheet to reflect the abolition of the 10% basic rate of tax, amongst other changes.

Since then, I’ve been thinking about putting together an online tax calculator to do a similar thing, but halfway into the development, I found I didn’t need to bother: there’s already a really useful website which will do just that, and with a calculator which will do it in much more detail than I would be able to develop.

The ListenToTaxman calculator will show you how much of your salary is disappearing in tax, with both Income Tax and National Insurance contributions taken into account, along with student loan repayments and pension contributions. You can also compare the tax rates from the last 8 years, and it also gives a useful rundown of the various tax rates, so you can tell how you have been affected by the recent changes in tax rates.

Photo by ansik

New Tax Rules: How Much Tax Will You Pay? was originally published at Money Watch a UK personal finance blog. Sign up to our RSS feed and follow us on Twitter.

I hope you’ve had a great New Tax Year’s Day!

What makes today so special? Well, you now have a brand new ISA allowance to play with – and this year the government has generously increased the maximum amount you can pay into your ISA to a whopping £7,200, yes, that’s a massive £200 more than you could have invested yesterday.

Sadly, today we have to say goodbye to Mr Maxi and Mrs Mini ISA. Just to remind you of the new rules, you can invest up to £7,200 in an ISA, of which up to £3,600 can be in a cash ISA, and the rest (or of course, the whole £7,200) can be invested in stocks & shares.

Anything else good about today? Well, the basic rate of income tax has reduced from 22% to 20%, which even by itself, must be cause for celebration.

Oh, I was forgetting that the 10% starting rate of tax has disappeared today, which according to the Institute of Fiscal Studies, means that 5.3 million families will now be worse off than they were yesterday.

So, some reasons to be cheerful, and some to be not so cheerful in this New Tax Year.

photo credit: Edward Deluxe

Happy New Tax Year! was originally published at Money Watch a UK personal finance blog. Sign up to our RSS feed and follow us on Twitter.

From my experience, there will be people reading this who have no idea what an ISA is, there will be those who know what they are, but do not have the money to invest or save in them, and there will be those people who have forgotten to use this year’s allowance so far and risk losing it if they don’t invest soon enough. (There will of course be those smug, organised people who always make sure they use their full ISA allowance each year – this post is probably not the most useful for you).

If you’re in the first group (not sure what an ISA is), then it’s worth knowing that ISAs are a way of either saving or investing in a tax efficient manner, and should really be one of the first things you look at when starting to save or invest. They are simply atax-efficient “wrapper” in which you can invest money in either cash or stocks and shares (most commonly investment funds). If you’re looking to save regularly then I’d seriously recommend looking at cash ISAs in the first instance – there are some good rates available, you can often start investing from as little as £20 per month and of course there are the tax benefits.

From 6th April 2008, you’ll be able to invest up to £7,200 in an ISA, of which up to £3,600 can be in a cash ISA, and the rest (or of course, the whole £7,200) can be invested in stocks & shares. Plonkee has written a 7-part guide to stocks & shares ISAs which you really should read for more information about these investments, but if a cash ISA is more your thing, especially given the volatility of the markets recently, then take a look at the regularly updated best cash ISAs page on MoneySavingExpert.

Although time is running out to take advantage of this year’s allowance, there is still plenty of time to make a choice and invest – many providers will let you open your ISA up until midnight on 5th April. And of course, a whole new allowance is just around the corner.

ISA Deadline Approaching: Have You Used Your Allowance? was originally published at Money Watch a UK personal finance blog. Sign up to our RSS feed and follow us on Twitter.