Member Article

Keep Calm- It’s Tax Returns Time

Five handy tips for filing your tax return – by Mike Stott, Tax Partner at Chartered Accountants DSG

With less than two weeks left until this year’s tax return deadline, small business owners and freelancers are being urged to avoid the last-minute rush and file before January 30th.

This year’s deadline falls at midnight on January 31st and anyone who is self-employed, or who does freelance work alongside a main PAYE job, as well as anyone who earns over £100,000, or over £50,000 if they or a partner claim child benefit, needs to file their return.

This year, HMRC will fully deploy its £100 million supercomputer designed to identify those who may have paid too little tax, for the first time. This means that instead of relying solely on information provided by tax payers - its ‘Connect’ system will use people’s digital financial footprint to assess their total income.

If your finances are in disarray and the thought of doing your tax return is a scary one, consider getting professional help to complete it. Many accountants charge a simple flat fee to file your returns, which is often well worth it!

Remember, if you miss the deadline, you’ll receive an automatic fine of £100 which will grow by £10 a day after three months, so face up to those receipts and don’t leave it too late!

DSG’s taxation expert, Mike Stott, has five handy tips for anyone feeling daunted by the task…

Number one:

Keep calm and start counting – you have to report everything you’ve earned over the tax year from 6 April 2015 to 5 April 2016. This includes income from employment, self-employment, property and interest, and gains on your savings and investments. Income that hasn’t been declared needs to be included on your tax return. State pension needs to be included, and if you or your partner have earned over £50,000 and have received child benefit, there may be an additional charge. Make sure you include interest and dividends and don’t leave anything out.

Each individual has a capital gains tax allowance of £11,100 and a personal allowance (for income) of £10,600 for the 2015/16 tax year.

Number two:

Buy-to-let landlords are still able to claim a ten per cent allowance for wear and tear, and deduct costs such as letting agent fees, mortgage interest and ground rent.

Number three:

If your employer pays you less than the HMRC maximum approved mileage rate when using your car for company trips, then you can claim tax relief on the excess. This rate is 45p for the first 10,000 miles and 25p per mile above this.

Number four:

You can claim higher-rate relief on your personal pension contributions if you’re on a higher tax rate. Remember to quote your gross pension contributions figure – not the net amount.

Number five:

If you’ve been charitable over the last 12 months – this will also play in your favour, and you’ll be able to claim higher-rate tax relief on your donations (if you are a higher rate taxpayer). This also applies to memberships of organisations like zoos, conservation organisations and museums. You can also deduct the cost of membership of any professional bodies that are required as part of your employment.

This was posted in Bdaily's Members' News section by Maria Carr .