Britain’s road users have been given a reprieve from a taxation of filling the car at the petrol station.

Chancellor of the Exchequer Alistair Darling announced in his first budget, a six-month delay in implementing the two pence a litre fuel duty.

The fuel duty was scheduled to begin in April, but with crude oil prices near record highs the HM Treasury is trying to alleviate more upward pressure on pump prices.

The delay isn’t the slow death of the duty. In fact the treasury used the budget announcement yesterday to reaffirm its commitment to the proposed duty.

“The planned fuel duty increase of 2 pence per litre in April 2008 will be delayed until 1 October 2008. Main road fuel duty rates will rise by 1.84 pence per litre on 1 April 2009, and will increase by 0.5 pence per litre above inflation on 1 April 2010,” the statement said.

So, how does this affect the consumer?

Fuel and energy costs are a major chunk of a personal budget and it is also the most volatile expense.

The daily price changes can have an adverse impact on a personal budget and can be the difference in how much we save each week.

Increases in fuel prices also have a negative impact on inflation, not only does it increasing the price at the pump but it also raising the cost of food, clothing and other essentials.

Rising inflation also has a negative impact on the money that people can save.

A inflation calculator shows how our day-to-day budgets are affected by inflation and how rising costs can erodes our wealth.

Taxation reform is always a complicated issue for anyone trying to calculate the impact on their personal finances.

It is made even more difficult when the chancellor of HM Treasury decides to make a flood of changes in one day with the chance of more changes to follow.

Already there are 30 or so changes to Britain’s taxation system to be introduced next month, and this year’s Treasury budget is still to be delivered which could give taxpayers more surprises.

The chancellor has already come under fire from the financial sector about the changes to Capital Gains Tax (CGT).

So to minimize the impact the chancellor has decided to a “amend” the CGT reform to reduce the tax burden on entrepreneurs.

Now people have an allowance of £1 million, which is taxed at 10 per cent rather than the proposed flat tax rate of 18 per cent.

Isn’t the goal of most tax reform to simplify tax? I expect the chancellor will have a hard time selling any further reforms that may be dilivered in tomorrow’s budget.

I received a question today regarding capital gains on a property sale.

My correspondent said, ‘A married couple can both claim the full capital gains allowance each against profit from sale, as indeed can so-called civil partners. Does the same apply to couples in joint ownership of a property?’

In a nutshell, yes.

Capital gains tax is due on the sale of properties other than your main home, and each individual has an annual tax-free allowance. This is currently £9,200.

Say you made a £100,000 profit (after deducting allowable purchase, renovation and sale costs) on an investment property which you owned equally, you would each have made £50,000.

Assuming you haven’t used your annual allowance for anything else, you can set this against your share of the gain, leaving you each with a taxable profit of £40,800.

The rate you pay on this will depend on your individual tax bands.

For example, if once your gain has been added to your income for the year, the total is within your personal allowance, you will be taxed at 10 per cent on the gain, costing you £4,080.

If the total is within the lower or basic rate bands, the tax rate will be 20 per cent – making it £8,160.

If the gain takes you into the higher rate band, you’ll pay at 40 per cent on this part of it.

And if you are already a 40 per cent taxpayer, you will pay this rate on the whole gain, giving a bill of £16,320.

However, depending on how long you’ve owned the property, you may be eligible for taper relief, which will reduce your capital gain and, therefore, your liability.

Revenue & Customs has a helpful leaflet on taper relief, which also explains what is and isn’t an allowable cost.

My previous post about tax on children�s savings led to another question - about avoiding it!

The mum in question asks: ‘What would be the position if a parent invested money for a child and kept it in an offshore account’ If the interest was in excess of £100, would this only be taxed when it was brought back onshore? (This could be some years later).�

This is a bit of a complicated one, but in a nutshell�

Most offshore accounts pay out yearly and this is taxed as if it is part of the holder’s income. (So it’s taxed at your income tax rate, not the 20 per cent savings rate.)

However, if you choose a deferred interest or ‘roll-up’ fund, it isn’t taxable until the year you cash it in.

Either way, the holder has to pay the tax eventually.

And that is likely to be you. Offshore accounts are almost exclusively open only to adults. A rare exception is Bradford & Bingley International’s YoungSave.

Click here to learn more about saving offshore.

I received the following email today and thought it might be worth sharing the answer with a wider audience�

‘I know that children are allowed to earn �100 interest on saving per annum, but amounts in excess of this contribute to the parents taxable income. What is the position if the savings were gifted by a grandparent, please’�

You’re getting a couple of things slightly confused: children’s tax allowances and the amount of interest they can earn on gifts from parents.

The under-16s have the same tax allowances as adults, which means they can earn up to £5,225 this tax year (April 6 to April 5 next year) before they’re liable for income or savings tax.

To ensure they don’t have 20 per cent savings tax deducted from the interest (below this threshold) that they make on their cash, you need to fill in an R85 form for each account they hold. You can download it here.

As a parent, you can also claim back, on their behalf, any tax they’ve been wrongly charged on earnings, using an R40 form (download here).

Also as a parent (or step-parent), you can give them - or invest on their behalf - as much money as you like.

But if the cash from each parent earns more than £100 interest a year, it will be taxed as if it was yours, not theirs.

If the Revenue didn’t do this, parents could off-load their cash onto their kids as a way of avoiding tax.

Grandparents and other adults (who are obviously considered to be above such dirty tricks) can give them any amount of money without tax liability. But if it earns enough interest to breach the tax threshold, the child will have to pay 20 per cent savings tax on it.

There are all sorts of accounts aimed at children, or adults saving on their behalf, so make sure you shop around to find the best possible interest rate.