Greig Gemmell, tax consultant of Henderson Loggie, answers some taxing questions.
Q When I lodged my 2014 tax return in January, I calculated that I had a tax liability for 2013/14 and I paid my tax online. I have now received a 2013/14 tax calculation from the Revenue showing a reduced tax liability for the year.
The reason for the reduction is that part of the underpaid tax is being collected via my 2014/15 tax code.
Does this mean the Revenue will send me a cheque for the tax which I have overpaid?
A If HM Revenue & Customs’ (HMRC) tax calculation is correct, you should automatically receive a cheque for the overpaid tax under separate cover from the calculation.
This may come as a surprise to some people, but there has been a number of incorrect calculations issued by HMRC over the last month.
The error has occurred because the calculation makes a deduction for tax being collected via the tax code when, in fact, no adjustment has been made to the tax code in order to collect the tax.
I would suggest you check your 2014/15 tax code and, if no adjustment has been made, you should contact HMRC to advise them of this error as soon as possible.
Otherwise, the underpayment will remain unpaid and will require to be included in your 2014/15 tax calculation.
You should make sure that you check the correct tax code because the Revenue has recently been issuing the new tax codes for 2015/16.
Q I recently got married, and understand I can claim a marriage allowance which will save me tax. Is this correct, and how can I apply for it?
A The marriage allowance is a new scheme which comes into effect on April 6 this year.
Married couples and civil partners will benefit in circumstances where one partner has an annual income of less than £10,600 and the other partner has an annual income between £10,602 and £42,385.
The scheme allows for a maximum of £1,060 to be transferred from the lower earner to the higher earner, thereby saving a maximum of £212 (being £1,060 at 20%).
For example, if the lower earner has an annual income of £10,000, then £600 of the unused allowance could be transferred to the higher earner, with a potential tax saving of £120 for the higher earner.
If you think you may qualify for the marriage allowance it is possible to register at www.gov.uk/marriage-allowance, whereupon HMRC will contact you after April and advise you of the change to your PAYE tax code, if applicable.
If you have PAYE income, it is possible to register at any point in the tax year and still receive the full benefit of the allowance.
Q I am a pensioner and although I have been receiving rental income for a number of years, I have never completed a tax return.
A couple of years ago, I phoned HMRC to tell them I was receiving rental income and, at that time, I was advised to write to them providing details of the income.
However, I was too busy and never managed to provide them with details.
I am now getting quite anxious about the situation and wonder what I should do to bring my tax affairs up to date.
A First, I would suggest you complete a form SA1 to indicate you are in receipt of rental income and request that you are issued with a self-assessment tax return.
This should ensure you are issued with a 2015 tax return in due course and prevent your tax affairs from falling any further in arrears.
The form SA1 can be completed and submitted online, or you can print the form from the HMRC website www.hmrc.gov.uk and send the completed form by post.
Once this has been done you should contact HMRC and advise them of your taxable rental income for each of the previous tax years.
For example, the income and expenditure for 2011/12 should be calculated from April 6 2011 to April 5 2012.
Don’t forget that if your rental income is from a furnished property you can claim a 10% wear-and-tear allowance each year, based on the gross rental income.
It may be that HMRC will issue you with a tax return for each of the appropriate years, in which case there will be penalties and interest applied.
If required to complete a tax return for each year, please be aware you must include details of all your income and not just the rental income.
Q I understand that from April 6 this year it is possible for a surviving spouse or partner to inherit all funds from their partner’s ISA and retain the tax advantages of the ‘tax-free’ wrapper.
In addition, the surviving spouse can use their own annual ISA allowance which, for 2015/16, is £15,240.
Does a similar arrangement apply to any premium bonds which a spouse or partner held prior to death ie, can the Premium Bonds be transferred into the surviving spouse’s name?
A The short answer is “no”.
As things stand, there is no arrangement in place for Premium Bonds to be transferred from one spouse to another.
From June 1 last year the maximum individual holding of Premium Bonds was increased from £30,000 to £40,000.
A further increase to £50,000 has also been promised sometime during 2015 or next year.
The extension of the existing individual limits would seem to indicate that there are no plans to allow any special arrangements for Premium Bonds on the death of a spouse or partner.