Friday 27 March 2015

New tax year checklist

Happy New Year! What do mean it's March? What I'm talking about is the end of the 2014/15 tax year and the beginning of the 2015/16 financial year. With the close of the year falling on Easter Sunday this year there is going to be a mad rush for some people to get their finances in order before the the Easter Bank Holidays start. For many people the passing of the new tax year may mean nothing to them but there are still some things that everyone can do to spring clean their finances.

Check your tax code – If you were born after 5th April 1948 and you are employed with just one job the standard tax code for 2014/15 is 1000L. Basically this means that the first £10,000 you earn in a tax year won't be taxed. From 6th April 2015 this will change to 1060L to reflect the increase to £10,600. If your tax code is different but you have only one job it may mean you are being taxed for benefits-in-kind such as a company car, health care, gym memberships. If you no longer receive such benefits you need to contact your payroll department and HMRC to get it corrected. You can check your tax code here.

Sort out your Self Assessment paperwork – If you need to fill out a Self Assessment tax return (a list of those needing to is on the HMRC website) it's time to think about what you have earned and paid out in expenses in the past tax year. The deadline for submitting your tax return and paying the tax owed is many months away but don't let it slip. Hopefully you should have been keeping note of all your finances but if you haven't take time to get everything in order now. You don't want to be panicking in January next year when you only have a few hours left to submit and pay the tax due. Remember any late submissions will occur a penalty.

Top up your pension – You can contribute up to £40,000 to your registered pension fund in this tax year. This figure also includes any contributions made by your employer. Remember pension contribute attract tax relief at your highest tax rate. If you are paid through PAYE you get instant tax relief as pension contributions are taken off first and then income tax is calculated on the remaining amount. You will still pay National Insurance Contributions based on your full salary.

Fill up your ISA – From April 2016 you can receive up to £1,000 in savings interest without paying tax on it. This means there's a whole year of tax-free savings to be taken advantage of. You still have a chance to make contributions to this year's ISA if you haven't already put in £15,000. You have a choice of a Cash ISA or a Stocks and Shares ISA. You can split your investment between the two.

Register for Married Tax Allowance – From this April if you are legally married or in a civil partnership you could transfer part of your tax allowance to your spouse or partner. If you were both born after 6th April 1935 one of you will need to be earning less than £10,600 whilst the other has to be a basic rate taxpayer (earnings less than £42,385 for 2015/16). It works by allowing the transfer of up to 10% of an unused tax allowance. This could be worth up to £212 a year. To apply for this you must register your interest on the HMRC website.

Use your Capital Gains Tax (CGT) allowance – If you are thinking of disposing of some of your assets you may need to think about your CGT allowance. This is the amount you can make as profit if you sell, give away or transfer ownership of something you own. For this current tax year the limit is £11,000 before you will be taxed. This is rising to £11,100 for 2015/16. Items will can be considered for CGT are the sale of property that isn't your main residence, profit from the sale of stocks and sales and selling items for profit such as antiques. CGT is complicated and it may be best to consult a qualified accountant for advice.

Don't throw out your paperwork! - It may be tempting to do a spring clean of all your paperwork from previous tax years and chuck it out but don't. The general rule is to keep paperwork for six tax years plus the current one. However, in cases of fraud HMRC can go back 20 years and you really don't want to mess with them. I batch all mine up and store them in box files.

What are your financial plans for the new tax year?

I am unable to give personal financial or legal advice. Any links provided in this post should not be seen as endorsements. Other advice sites are available. Figures and rates correct at time of publishing.

Mums' Days

1 comment:

  1. Very useful post huni. Thanks for putting this together and for linking up to #TheList x


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