Year End Tax Review 2008 Contents New Year's resolutions Investment limits Borrowings and tax Family tax planning Mr and Mrs Give generously and save tax Jam today, or jam tomorrow? Tax payback - tax credits Bringing it back home Children's pensions? A matter of trust Children's savings? All change for gains Second homes Portfolio gains Capital ideas Tax-free perks Employee pensions and NIC Pension policies Employee cars and fuel Business tax Pay rise for the other half? Company or trade Two jobs = too much NIC Should VAT be flat? VAT and cash Inheritance tax One careful owner

Tax payback - tax credits Child Tax Credits (CTC) and Working Tax Credits (WTC) have now been around for four years. The system for rebating tax to people who need it has been criticised as over-complicated, and there have been examples of people being paid too much and then finding the Revenue pursuing them to get the money back. In spite of all the bad press, it's still worth thinking about making a claim, particularly if you are a couple where both of you work and you therefore pay childcare costs. The basic CTC (about £10 a week) is payable to a couple with a qualifying child and combined income of up to £50,000. Above that, it reduces to nothing by the time total income is about £58,000. The form may be longer and more complicated than seems reasonable (when a lot of the information is already provided to the Revenue on the tax return), but £545 a year probably pays for the effort. WTC will pay up to 80% of £300 a week in childcare costs, so it can be quite generous even on combined incomes above £30,000. It's worth looking into, particularly if your income goes up and down, and is not predictable at the beginning of the year. To start with, a claim is based on last year's income - 2007/08 for the 2008/09 payment year - and it's then revised at the end of the year based on actual income. If you make a claim at the beginning of 2008/09 based on 2007/08 income of £100,000, your claim will be noted but you will receive nothing. If by the end of the year your income has fallen to £30,000 for some reason, you would get the higher level of payment - maybe £3,000 - backdated to the beginning of the year. If you only bother to claim at the end of the year when you know your income is low enough, you only qualify for payment from three months before you claim. This "protective claim" idea has added to the Revenue's burden - they have actually encouraged people to claim when they won't qualify immediately, in case they do so later. Until they change the rules, it makes sense to think about a claim even if your past income is above the limit. Action Point! Should you claim CTC/WTC?