Self-employed? Go back to those accounts
If you’re like most of us, tax return time also means finalising (all right, preparing) your business accounts information to accompany the return. When you do this, you should take a look at any unpaid invoices owed to you at your year end. If they’re still outstanding, do you think they’ll ever be paid? If not, provide for them as bad and reduce your profits: no sense paying tax on income you’ll never receive.
If you’re like most of us, tax return time also means finalising (all right, preparing) your business accounts information to accompany the return. When you do this, you should take a look at any unpaid invoices owed to you at your year end. If they’re still outstanding, do you think they’ll ever be paid? If not, provide for them as bad and reduce your profits: no sense paying tax on income you’ll never receive.
While you’re at it, take a look at things you contracted for before the year-end but didn’t pay for until afterwards: if you’d taken on the obligation to pay a business expense before your year-end that expense counts as an expense for the year, even if you didn’t pay it until later. The same can also go for capital allowances; if you ordered equipment before the year end and received and paid for it within four months, you can claim the capital allowances on it as at the date of order.
Employed? Can your tax payment be put through your code?
If you have employment income and a tax liability of £3,000 or less, you can ask HMRC to collect it through your PAYE code. That’s twelve interest-free instalments between next April and the following March, instead of finding a lump sum by 31 January.
If you have employment income and a tax liability of £3,000 or less, you can ask HMRC to collect it through your PAYE code. That’s twelve interest-free instalments between next April and the following March, instead of finding a lump sum by 31 January.
But if you want to take that option, you can’t wait until January; your return has to be filed by 30 December (not the 31st).
Don’t leave HMRC registration until the last minute
If you plan to submit your own tax return, you can file it online at any moment up to midnight on 31 January, but only if you’ve registered for self-assessment with HMRC already. This process can take weeks at the best of times, not least because you have to wait for HMRC to post you an activation code, so get started as soon as you can. Once you’ve registered the first time, you stay registered.
If you plan to submit your own tax return, you can file it online at any moment up to midnight on 31 January, but only if you’ve registered for self-assessment with HMRC already. This process can take weeks at the best of times, not least because you have to wait for HMRC to post you an activation code, so get started as soon as you can. Once you’ve registered the first time, you stay registered.
Now, where did you store your password? Dig it out and check it’s the right one, so that you’re not caught out at the last minute.
Check that you can use HMRC’s self-assessment system
The HMRC tax return program can’t cope with every entry. For example, if you want to claim gift aid relief you can’t use HMRC’s free system. Instead you need to either pay someone to file your return or buy a commercial software package.
The HMRC tax return program can’t cope with every entry. For example, if you want to claim gift aid relief you can’t use HMRC’s free system. Instead you need to either pay someone to file your return or buy a commercial software package.
Carry back charitable donations
If you made charitable donations in 2014/15, you can elect to treat them as if they were made in the year before (2013/14). That will be especially handy if you were liable to higher rates of income tax in the earlier year but not in 2014/15. If you want to claim carry-back, you must include it in your return when you submit it; you can’t amend your return later to claim the carry-back.
If you made charitable donations in 2014/15, you can elect to treat them as if they were made in the year before (2013/14). That will be especially handy if you were liable to higher rates of income tax in the earlier year but not in 2014/15. If you want to claim carry-back, you must include it in your return when you submit it; you can’t amend your return later to claim the carry-back.
Lost paperwork?
If you’ve genuinely lost some of your records, you have a twin problem. You must flag up any estimates you rely on to give HMRC the chance to raise enquiries. If you’ve not got all the necessary records and HMRC think you’ve lost them through carelessness they may chase you for a penalty for failure to keep your records as well.
If you’ve genuinely lost some of your records, you have a twin problem. You must flag up any estimates you rely on to give HMRC the chance to raise enquiries. If you’ve not got all the necessary records and HMRC think you’ve lost them through carelessness they may chase you for a penalty for failure to keep your records as well.
If you’ve mislaid information and have to apply to (for example) your bank for duplicates (and you can’t download them through internet banking) you shouldn’t use an estimate, because you will be able to get the correct figure. In that case, use your best guess and mark the figure as provisional, then you can (indeed must) correct it as soon as the information comes available.
Practical Tip:
Assess how this year’s going - when you’ve completed your return and self-assessment, you’ll have a figure for your final tax payment for 2014/15. HMRC’s system will also throw up any payments on account for 2015/16, but if you are sure that this year your income (excluding dividends) will be lower, you may consider claiming to reduce your payments on account. Why pay too much too soon? The season of goodwill only stretches so far!
Assess how this year’s going - when you’ve completed your return and self-assessment, you’ll have a figure for your final tax payment for 2014/15. HMRC’s system will also throw up any payments on account for 2015/16, but if you are sure that this year your income (excluding dividends) will be lower, you may consider claiming to reduce your payments on account. Why pay too much too soon? The season of goodwill only stretches so far!
