Top 10 tax mistakes

1. Missing out on allowances

The amount of income you can have tax-free goes up once you reach 65 – to £9,940 (from £7,475), or £10,090 at 75; this is called your personal allowance. You get the higher allowance from the start of the tax year in which you turn 65 (or 75), so make sure your tax office knows your date of birth.

2. Not claiming blind person’s allowance

You get an extra allowance of £1,980 if you are registered blind, or if you live in Scotland or Northern Ireland and your sight is too poor for you to do any work for which eyesight is essential. You can claim for the year before you were registered, providing that you have evidence of blindness for that year.

3. Not working as a team

Couples can save tax by giving investments to the partner who pays the lower rate of tax – but it has to be a real gift, not a gift in name only. If you are married or a civil partner and one of you was born before 6 April 1935, you also get an extra married couple’s allowance worth £729.

4. Not transferring unused allowances

If your income is too low to use up all your married couple’s allowance or blind person’s allowance, you can transfer the unused part to your husband, wife or civil partner. Contact your tax office for more information.

5. Paying tax when you don’t need to

Income tax at 20% is taken off your bank or building society interest before you get it. If your total income – including pension, earnings and interest – is less than your allowances, fill in form R85 to get your interest paid with no tax taken off. Your bank or building society can provide this form.

6. Not claiming back overpaid tax

If you’ve paid too much tax because you’ve failed to claim an allowance or tax relief, or because too much tax has been deducted from your income, you can usually claim tax back within four years of the end of tax year in question. Ask your tax office for form R40.

7. Not checking your tax code

Your tax code tells your pension company or employer how much pay you can be paid free of tax – tax is taken off the rest. Your tax office will write to you from time to time explaining how the code was worked out. Check they have given you the right allowances, that the amount of pension or other income shown is correct, and query anything that you don’t understand.

8. Still working?

If you change your hours, tell HMRC. They may need to adjust your tax code. Be particularly careful if you have a job as well as a pension - you get a code for each source of income, but it’s common for the wrong amount to be deducted.

9. Retirement coming up?

Make sure your tax office knows in good time if you expect to start receiving a pension in the next few months so that they can sort out your tax code.

10. Putting off your tax return

If you are sent a tax return for the 2010-11 tax year, you must fill it in by 31 October 2011, or by 31 January 2012 if you do it online. New, tougher, penalties make missing the deadline expensive – there’s an automatic £100 penalty, plus higher penalties after a further three months.

All figures are for 2011-12 tax year, which started on 6 April 2011.

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