Tax advice of the week: sometimes honesty is best
Aug 07, 2009
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HM Revenue & Customs has announced a second amnesty for those with undeclared gains from bank accounts and assets such as property held offshore, says The Sunday Times. HMRC raised £400m from a similar amnesty in 2007.
Penalties for savers who declare unpaid tax will be capped at 10% of the amount of unpaid tax (normally this can rise to 100%), unless they failed to own up after getting a letter from HMRC in 2007, in which case the penalty is 20%. If you owe less than £1,000, penalties will be waived, but interest of 2.5% is payable.
For key dates for making a disclosure, visit Hmrc.gov.uk and follow the “key dates” links for New Disclosure Opportunity. Making an “intention to disclose” does not commit you to making a subsequent full disclosure, should you find that you don’t actually owe any tax.
Investors with offshore bonds need not worry; withdrawals of up to 5% a year do not attract immediate tax and do not have to be declared. Tax is due when you cash in the bond, at which point you may have shifted from a higher-rate to a lower-rate band.