Friday 25 January 2019

Finance Fridays – Completing your tax return

We were looking at driving in Europe after Brexit for last week's Finance Fridays. This week we are looking at some of the things you need to think about when completing your tax return. The deadline is next Thursday 31st January 2019 for self-assessment forms for the tax year April 2017-April 2018. If you need to get it done do it now!

Who needs to complete a self-assessment form? - Most people who have to complete one will know as they will have previously completed one and HMRC will have sent reminders by email. However there are always people needing to complete one for the first time. If you are self-employed, you received more than £2,500 in untaxed income, your income is more than £50,000 (even as an employee) and you have a child that child benefit is claimed for, your income from savings or investments was more than £10,000 before tax, you need to pay Capital Gains Tax (CGT) on profits you made selling a house or other assets, or your income was above £100,000.

How do I complete one? - The only way to complete one now is online. The deadline for completing a paper version was 31st October. In order to complete it online you need to be registered for the online service. If you aren't already it may be too late now as you have to wait for paperwork to come through the paper for verification purposes to activate your account. Once you are registered you will be taken to your own self-assessment form. One of the benefits of doing it online is that many of the sections that are irrelevant to you are cut out to avoid confusion.

What happens if I don't do it? - If you don't complete and fill it by the end of the day on 31st January you will be subject to an automatic fine of £100. This will increase if you still fail to submit your tax return. You can appeal this penalty if you have a reasonable excuse such as recently suffering illness or bereavement. Remember that even if you don't owe any tax you still need to complete the self-assessment form if required.

Tax owned
– Much is said about submitting your self-assessment form on time but not everyone realises that they also have to pay the tax owed by midnight on 31st January. Hopefully you should have already budgeted for how much tax you owe and put this to one side. You can pay at your bank or building society branch, online or through telephone banking and by debit or corporate credit card for same or next day payments. Note that you can no longer pay using a personal credit card.

Do also bear in mind that you may need to make payments on account as well. This is where you make an advance payment for the tax owed for the next year. You will need to do this if your last self-assessment tax bill was more than £1,000. If you pay your tax through your tax code and have already paid 80% of the tax owed then you won't need to make payments on account. The way it is worked out is usually 50% of what you owed in total last year. Basically you are paying tax on income you haven't received yet. If you have good grounds to prove your income will not be as high in the next year you can put your case to HMRC to reduce or stop the payments on account.

I haven't started it yet. What do I do first? - Hopefully you will have been keeping records as you went along. If you have a business then you should know what money you paid out and what came in. If you have received interest on savings and investments and dividend income you will need to list these so start trawling through your bank accounts and other paperwork you have received.

What expenses can I claim for? - There is a list of allowable and reasonable expenses that HMRC says you can claim. Expenses you have incurred in doing business can be claimed such as buying stock, stationery, travel, business premises and utilities. If you're not sure then contact HMRC before claiming. For anything you claim then make sure you have all the receipts and paperwork for it.

Can I get someone to help me do it? - You can but it may be too late for this year to sort it all out. An accountant may have the time to work out the figures for you to input but you will physically have to input them. You can appoint someone to be your representative but once again it takes time for them to be authorised. Do remember that even if you have paid a professional to sort out the figures needed to complete your return you are the one responsible and liable for what you declare.

Do you need to complete a self-assessment form? Have you submitted your tax return yet?

If you want to join in with this week's Finance Fridays then add your link to the linky below. Any post concerning financial matters is allowed. Full details here. It doesn't have to be published today as you have until 23.55 on Tuesday 29th January 2019 to join in.

Finance Fridays

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