Hey folks – it’s that great time of year again when we all panic about getting our tax returns in to HMRC (those of us who complete a tax return that is).

Paper Returns

If you want to send a paper return to HMRC and have them calculate the tax then the deadline is 31st October 2009 (if you received a notice to submit a return before or on 31st July this year – if you received your notice after 31st July then you have 3 months from that date – confusing, I know!)

Online Returns

If you’re looking to have tax collected through your PAYE code (i.e. you’re an employee) then you have to submit online by 31st December 2009.

If you’re self-employed and you wish to calculate your own tax liability then you have until 31st January 2010 (this is the one I go for – note to self – get books to Accountant)


It’s important not to miss a deadline as HMRC may issue you with a fine of at least £100.

More information on tax deadlines from HMRC website.

Alistair Darling, Chancellor of the Exchequer presented his Budget for 2009 last week and below are the main points and changes contained in the Budget:

The Economy

Whilst the economy is expected to shrink by 2.5% during 2009, the Chancellor indicated that there was the expectation that the economy would grow next year, 2010, by 1.25%. I our opinion this is an optimistic forecast and we believe that growth in the economy is unlikely. He then said that the economy would grow by 3.5% annually from 2011. Whilst we would expect the economy to be heading out of recession by 2011, again we would comment that growth at these levels is again unlikely.

Borrowing by the Government is estimated to amount to £703 billion over the next 5 years which, in our opinion, is a large burden for the UK economy to endure.

Income Tax

In order to boost funds to meet this borrowing expectation, the Chancellor announced that income tax for those people earning more than £150,000 would rise to 50% from April 2010. The one comment we would make on this is that this would be fairly ineffective as people falling into this tax bracket will no doubt come up with methods and techniques to get around this additional tax burden.

In addition to this, he also reduced tax relief on pension contributions for people falling into this tax bracket, again from April 2010.  The level of tax relief for people earning over £150,000 will fall from 40% to 20% following introduction of a taper. To this end, many high-earners will consider making pension contributions following a “salary sacrifice” exercise – by effectively reducing their income levels, it is then possible for their employers to contribute directly to their pension plans, and this can be topped up by the employer also contributing some or all of the National Insurance saving enjoyed following the reduction in salary.

Employment, Jobs and Training

The Government announced support for the economy to protect 500,000 jobs and also indicated that redundancy payments would increase from £350 to £380 per week for those made redundant. From January, everyone under the age of 25 will be offered a job or training place, with additional funds paid on top of the benefits they are already receiving – in addition to this there will also be additional support for those people who have been out of work for more than 12 months.

It was also announced that funds would be made available to create an additional 54,000 places in sixth form education.

Housing and Accommodation

The government is concerned about housing and announced plans to provide £500 million to kickstart the housing market, with £100 million being made available to local councils to build energy-efficient homes. Many commentators have said that this is inadequate and will not provide for the true number of new homes needed each year. £80 million will be made available for a shared equity mortgage scheme to promote home ownership as well as £50 million to upgrade military housing.

The current stamp duty holiday for house purchases below £175,000 has been extended until the end of the year in an attempt to help first-time buyers.

The Environment

The government is committed to cutting carbon emissions by 34% by the year 2020. An extra £1 billion will be made available to attack climate change by supporting low-carbon industries. £525 million will be made available for offshore wind farms as an alternative energy source over the next 2 years with £435 million to help with energy efficiency schemes for homes, companies and public buildings.


Help was announced for loss-making businesses – they will be able to reclaim more taxes paid for the last 3 years until November 2010 with the main capital allowance rate doubled to 40% in an attempt to help companies bring forwards capital investment decisions. Also announced was a £750 million strategic investment fund to help emerging industries and those industries which has an important regional position.

Savings and Investments

The annual ISA allowance was raised from £7,200 per annum to £10,200 per annum. This will be introduced from 6th October 2009 for over 50’s and from 6th April 2010 for the rest of the population.


Those grandparents of working age who care for their grandchildren will see their basic state pension increased to take account of this. The winter fuel allowance will be maintained at the higher level of £250 for those over the age of 60 and £400 for those aged over 80 for another tax year.

The Chancellor also announced that there would be a minimum increase of 2.5% on the basic state pension, regardless of what RPI, the index to which inflation is linked, does.

Child Benefits

The child tax credit will rise by £20 by 2010 and child trust funds for disabled children will rise by £100 per year with those for severely disabled children rising by £200.

Cars – Scrappage Scheme

A new scheme will be introduced in an attempt to remove older, more polluting cars from our roads. From March 2010, £2,000 discount will apply for those people who trade in their existing cards over 20 years old in exchange for a new car. In order to qualify they will have to be shown as the registered keeper of the vehicle for the 12 months prior to the purchase and it is expected that the Government will provide £1,000 towards this scheme with the motor industry providing the remainder.

And finally (!) – Cigarettes, Alcohol and Fuel

Tax and duties on alcohol and cigarettes is to rise by 2% – putting a penny on a pint and 7 pence on a packet of 20 cigarettes on average.

Fuel duty is to rise by 2 pence per litre and then by 1 pence above inflation each April for the next four years.


So there you have it – how as the Budget affected you? Who do you feel are the winners and losers of this Budget? Please make your comments below.

The start of the new tax year yesterday signalled changes in some of the main tax rates, reliefs and allowances and summarised below are the main rates, reliefs and allowances based on our own research: –













Capital Gains Tax

No change to personal allowance for Capital Gains Tax – remains at £9,600 for the 2009/2010 tax year


Tax allowances, rates and reliefs are subject to change. These figures are for guidance only and are correct to the best of our knowledge at the date of publication. Please check the HMRC website for current rates before making tax planning decisions.

Many people have heard of income protection – yet many remain unsure exactly what it is and how it can be used to protect their family and themselves.

What is Income Protection?

As the name suggests, Income Protection Insurance, previously known as Permanent Health Insurance (PHI), is a type of insurance which is designed to replace lost income in the event of long term illness or accident.

Unlike Mortgage Protection Insurance and ASU cover, which usually pay an income limited to 12 months, Income Protection Insurance is designed to pay replacement income right up until retirement in the event of the claimant being unable to return to work.

How much Cover can I get?

Life companies will normally cover you for between 50% and 60% of your pre-disability income. In the event of a claim they will normally deduct any continuing income or state single person long term disability benefit.

A claim once in payment under an Income Protection plan is normally paid free of UK income tax.

Under what Circumstances will a Claim be paid?

This is dependent on the basis on which the plan was originally set up: –

Own occupation – pays out if unable to perform your own occupation as disclosed on the application form

Any occupation – pays out if you’re unable to work at any occupation, normally based on work in line with your education and training

Activities of Daily Living – this type of plan pays out if you are unable to perform a number of task – such as eating, dressing, using the toilet etc – you need to be unable to perform a number of tasks from a range of tasks stated by the insurance company – e.g. any 2 from a range of 6 tasks.

Own Occupation cover generally carries the highest premium rates – and may not be available for riskier occupations e.g. working at heights, with explosives, dangerous occupations etc.

How Soon Can I Claim?

You normally submit your claim as soon as you stop working. The payout on the plan will not start until the end of the “deferred period” – you choose this at application – e.g. one month, three months, six months, twelve months.

Warning – the deferred period can in some instances commence from the date of notification to the life office, NOT the first day of sickness – make sure you don’t wait too long to tell them of a claim.

Naturally the longer the deferred period, the lower the premium, since you are less likely to make a claim on the policy.

What About Inflation?

You can set up your plan to allow for annual rises in the cost of living and most people opt for this benefit – your level of cover generally rises each year with a corresponding rise in the monthly premium to offset the general increase in the cost of living over time.

What About if I am Well Enough to Return to Work?

Normally your claim stops but you carry on paying premiums and your policy continues – the insurance doesn’t end.

There are various options under these plans which may be available: –

Proportionate benefit – if you returned to work in a lower-paid position as a result of your illness then a proportion of the benefit may continue to be paid

Rehabilitation benefit – if you returned to work after a period of illness and your income falls, then this benefit may pay a proportion of your cover to cover the loss of income and this benefit normally pays for up to 12 months.

Linked Claims – if you return to work following illness, and subsequently have to stop working due to the same condition then this benefit means you don’t have to go through the same deferred period again and the claim payout can recommence without delay.

Choosing a Policy

We believe that income protection insurance is vitally important for all individuals – especially those who do not have any cover through their employment and, in particular, the self-employed.

Most people are dependent on their incomes – simply ask yourself this question – “how long can we survive with no income?”

Naturally every policy is different so it is therefore important to take advice from an Independent Financial Adviser.

In our next article we will consider this type of cover in more detail and the practical uses to which is can be put

Please share with us your experiences and thoughts on income protection insurance below.