Tax Return 101
Financial Adviser at Amicus Wealth
Christmas is over and it’s that dreaded time of the year again. We all hate tax at the best of times but I’ve put together a few pointers that will hopefully help you slay those tax demons.
Main Tips:
- DON’T call HMRC unless you really have to! Everything you need is online.
- Be organised! Don’t spend hours searching for documents... again. Once you get everything in order this year, keep it in order for next year.
- If you’re self-employed check what expenses you can claim!
- If you find your Self-Assessment overwhelming, get yourself an accountant.
Dates I need to know
You have to get a wriggle on - You must submit your online tax return by the 31st January or risk a £100 fine, plus a further £10 for every day after that up to 90 days - plus interest! Last year more than 400,000 taxpayers left it until the deadline day of January 31 to file their tax return. Don’t be that person! If you haven't previously registered to complete returns online, be aware that it can take HMRC up to seven working days to send you an activation code.
Not registering in time is NOT a valid excuse for missing the deadline.
All tax owed - whether you file your returns on paper or online - must be paid before midnight on the 31st January.
There is an additional deadline of 31st July for those who make advance payments towards their bill - known as payments on account. Basically you pay half of your tax bill now and half in July.
How do you know if you need to submit a tax return?
Most UK taxpayers have the money deducted from their pay packet - that is called PAYE - but around 10 million of us need to complete a tax return;
- self-employed, a business partner, or director of a limited company
- employee or pensioner with an annual income of £100,000 or more
- minister of religion, landlord, trustee or representative of someone who has died and has any taxable gains to declare
- if you have investment income over £10,000 or any capital gains
Do I need an accountant?
In the past, I’ve filed my tax return myself but in recent years I’ve asked the help of an accountant. It makes life so much easier. If you decide to use an accountant, you will of course have to pay for their time but you can rest assured that you are in expert hands and everything has been done correctly (and on time). If you are anything like me - despise paperwork and form filling - an accountant cuts out all of this stress.
Online tax returns
However, if your accounts are simple and you are organised - completing your tax return online is pretty straightforward. It’s too late to file a paper tax return - October - but the key benefit of filing online is that you have an extended deadline which allows you three extra months to return the forms.
First, you will need to register with HMRC. As mentioned above, it takes up to seven working days to receive your activation code in the post and you can’t file your tax return without it!
From past experience, I suggest you submit your online tax return a few days before the deadline as HMRC’s website usually crashes due to the sheer volume of people using it. In addition, I don't advise calling HMRC as you will be on hold for millennia. If you need some help visit www.gov.uk which will provide the answers to most questions.
BONUS – completing your return online means your tax is calculated automatically and you potentially get paid faster if HMRC owes you money!
What paperwork do I need?
This is probably the most time-consuming part so take note and learn how to be organised for next year. You will need your P60 from your employer showing your income and the tax you’ve paid on it; a P45 if you have left a job within the tax year; a P11D or P9D detailing benefits and expenses; a spreadsheet of your expenses if you are self-employed (see HMRC's allowable expenses), plus details of any interest on bank accounts, dividends from investments and any other income you receive.
What if I've submitted my return but now I need to change it?
After you have filed your tax return you may need to alter it at some stage. It can be updated within 12 months of the original deadline or you can write to HMRC for any changes after that.
To change an online tax return
Can I appeal if I do get fined?
If your tax return forms are filed late you will receive a penalty letter. Your appeal will only be successful if you have what HMRC class as a "reasonable excuse”.
For a comprehensive guide on how to challenge your penalty take a look at our handy guide.
What if I can't afford to pay the tax?
If your bill is correct but you can't afford to pay it, contact HMRC as soon as possible as you may be able to avoid late payment penalties by coming to an arrangement to spread your payments over a period of time.
I hope this helps and good luck ladies!
*This is not a sponsored post* The articles and information made available on Vestpod are provided for information and educational purposes only and do not constitute financial advice. You are advised to consult with an independent financial advisor for advice on your specific circumstances
Written by Rachel Copley, DipFA, M.S.
Rachel is a Financial Adviser at Amicus Wealth.
As a child I always wanted to be a vet. I know my job now couldn’t be further from that but I guess the same principles could apply in that rather than helping animals, I am helping people. I know from a young age that I wanted to do something meaningful.
I graduated from Oxford University with a Masters in Chemistry. Although I loved working in science and looked great in lab glasses, I knew that a career working in research and development was at the time hard to find. A lot of pharmaceutical companies were going through large cut backs and by simply doing the maths this area unfortunately couldn’t offer me the financial benefits I need to do everything I personally aspire do to in life (if anyone has ever owned a horse, you know what I’m talking about). In addition I wanted the freedom and self-fulfilment of building something that was my own.
The financial adviser industry when I started was known for being stuffy, backdated and dominated by 50 year old men. I saw a great opportunity within Amicus Wealth to break this mould and work with like-minded ambitious individuals who want to apply their life skills to their career and in turn advise their clients in the best way they can by using simple language we all understand, uncomplicated by financial jargon and ultimately helping clients draw the parallels between their financial planning, their lifestyle and their personal success and happiness.
Start laying your financial stepping stones by arranging an initial chat or consultation with Rachel. You can contact her on: rachel.copley@amicuswealth.co.uk or 02037276670 / 07533478925.
Amicus Wealth Limited is an appointed representative of Intrinsic Financial Planning Limited and Intrinsic Mortgage Planning Limited, which are authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No. 08861673. You can find out more on the website www.amicuswealth.co.uk.