Accountants all across the country breath a sigh of relief when February rolls around – the tax return madness is over and we can get on with making you more tax efficient, rather than trying to beat the HMRC deadline.
If you left your tax return to the last minute this year, then our top tips below may ensure you are more organised next time, take a look…
- Firstly – Do you actually need to submit a tax return?
You need to do a return if you: are self-employed; you received £2,500 or more in untaxed income, such as from renting out a property; your income (or your partner’s) was more than £50,000 and one of you claimed child benefit; your income from savings or investments was £10,000 or more before tax; you made profits from selling things such as shares or a second home and need to pay capital gains tax; you were a company director, unless it was for a non-profit organisation and you didn’t get any pay or benefits; or your taxable income was more than £100,000.
- Have you registered?
If you have never filed a tax return before, you will need to register first – which can take up to 20 working days.
- Get your paperwork in order:
Dig out all the bits of paper that you need, such as P60/P45/P11D, PAYE coding notices and tax certificates for investments. For self-employed income, you need your bank statements, sales invoices and so on.
If you are renting out a property, claim all revenue expenses associated with the letting including letting agent fees, mortgage interest, ground rent, replacement of furniture and appliances, but not capital expenditure such as improvements to the property.
If you are letting out a room in your own home, is it more tax-efficient for you to claim the annual £7,500 (£3,750 if you share the income with your partner) Rent a Room Scheme allowance?
If you use your car for business and your employer pays you less than the HMRC maximum approved mileage rate (45p for the first 10,000 miles and 25p a mile above this), you can claim the excess.
If you are a member of a professional body required for your employment, you can often include the cost of the subscription as an allowable deduction.
Don’t forget to include your state pension figures. Although the state pension is paid gross, it is still taxable and needs to be included on your tax return.
- Avoid the most common errors!
Don’t leave things out – this is probably the most common mistake is to miss something out – maybe a source of income you have forgotten about, and estimate if you have to! If you have some paperwork outstanding that’s not going to get to you in time, you can submit an estimated return and update it when the paperwork arrives. You won’t pay a fine for this – whereas you will if you wait for the paperwork in order to submit the return.
- Don’t confuse your numbers!
Another common error is, say, mixing up net with gross.
- Do you know your tax code?
Thousands of taxpayers may well be paying too much (or too little) tax as a result of having the wrong tax code!
- Don’t forget gift aid!
Include all the gift aid donations you have made during the tax year to claim any higher-rate tax relief. If you donated £100 using gift aid, the total value of your donation to the charity was £125, so if you pay tax at 40% you can personally claim back £25.
- Don’t forget to pay what you owe!
The deadline for paying any tax owed is also 31 January. Payments can clear on the same day if you pay by debit card, but will sometimes take a day to go through. If you pay by BACS or direct debit it can take three days, or five days if this is the first time you have paid HMRC by direct debit – so keep this in mind.
If you need help with anything tax-related, then please do get in touch with us here at DNA Accountants we are always happy to talk business.