Don't be fooled by myths about taxman (From The Wiltshire Gazette and Herald)

Don't be fooled by myths about taxman

ACCOUNTANTS are warning people to beware the myths that are circulating about calculating tax, as the September 30 deadline draws near for returning self-assessment forms.

The Southern Society of Chartered Accountants, which represents accountants in south Wiltshire, Hampshire, Dorset and the Isle of Wight, says that calculating tax can be a minefield at the best of times and these myths do nothing to help.

SOSCA president Martin Pearson says that among the most common are:

Money kept overseas is not taxable.

For most people living in the UK it is taxable.

It doesn't matter if you leave the money in Jersey and never touch it, you must still pay income tax on any interest.

If you are living in the UK, but it is not your permanent home, the position may be different.

Children are not taxable.

They are.

However, for most children, there won't be any tax to pay since the personal allowance of £4,895 for 2005/06 allows each person this much income before they start paying tax.

Students are not taxable in their first year at university.

Students who earn more than the personal allowance will have to pay tax.

Employers will usually ask student employees to sign a form P38S so they can pay their wages gross.

The Inland Revenue always gets your tax code right.

Even if the information you have given is correct it can be easily lost among the millions of other PAYE codes.

If you have overpaid tax, you can always rely on the Inland Revenue to pay it back.

This won't happen by magic.

However, if you have overpaid tax under the PAYE system and have no other income, it should happen automatically.

If you let a room to a lodger, income is not taxable.

All income from letting is taxable, but income of up to £4,250 is exempt.

State pension is not taxable.

The state pension is taxable, but is always paid gross.

If you have no other income, then since the state pension for a single person is below the level of the personal allowance, no tax is due.

If you only ever work for cash, you don't need to pay tax.

HM Revenue & Customs devotes significant resources to tracking money in the black economy.

It is your responsibility to keep records of your financial affairs and to declare your income.