1. Keep Clear Records - Keeping clear records is a tax essential. If your records are clear (and complete!) then there is more chance that your tax return will be accurate and include full claims for all legitimate expenses. Furthermore, knowing you have been keeping clear records means you can worry less about how difficult a tax enquiry can be.
2. Write down every expense - Self employed persons are often surprised at the types of expenses that can be claimed against their income for tax purposes. Generally speaking anything that is ‘Wholly and Exclusively’ incurred for your trade can be claimed, but if you incur expenses and you’re not sure if you can claim for these, then write them down and ask your adviser as you may find that a claim is possible.
3. Finish your tax return as soon as possible after the tax year ends - Finishing your tax return well before the deadline not only means you avoid the penalties associated with late filing, but will also mean that you have more time to prepare for any January bill, or you will be able to reclaim any tax due to you sooner.
4. Make sure your employer has given you everything - Employees are annually issued with a form P60 to show their taxable earnings and tax deducted for the tax year. This form is indispensable for any employee completing a tax return and must be given to the employee by 31 May following the end of the tax year. However many employees are unaware that another form is also essential if they want their tax returns to be correct and complete. For any employees receiving taxable benefits in kind (i.e. company cars or medical insurance) or expense payments where the employer does not hold a dispensation, a form P11d should be issued to them by 6 July following the end of the tax year. The Revenue receive these forms directly from the employers so if an employee misses this from their tax return, then more than likely they can expect HMRC to get interested!
5. Don’t forget your bank interest - Self Assessment is designed to collect information on all of a taxpayer’s income, not just income from business sources. Bank interest from all accounts (but not ISAs) must be shown on the tax return. Banks send HMRC your bank interest details each year and if there is a discrepancy then HMRC may raise an enquiry.
6. Be Generous - Make sure you tell your adviser about any charitable giving you have been doing during the year. Higher rate tax payers can get up to 30% gross tax relief just because they have donated money to a registered charity. This could mean up to £30 of tax saved for an £80 donation. A gift aid declaration should be made when donating the money and a copy kept in your file.
7. Don’t forget tax credits – HMRC provide an easy to use calculator which takes only a couple of minutes to complete, asks no difficult questions and gives you an instant result as to whether or not you are entitled to make a claim. You can find this calculator at http://taxcredits.hmrc.gov.uk/Qualify/DIQHousehold.aspx.
8. Avoid paying a lump sum in January - Anyone receiving income from a PAYE source and completing their tax return by the 30 December is eligible to have any tax they owe ‘coded out’ provided that certain limits are fulfilled. This means that instead of demanding a lump sum payment at the end of January, HMRC will include the tax due in your next PAYE coding notice and collect it gradually via your pay in the next tax year.
9. Don’t panic if you receive an enquiry letter - HMRC can raise an enquiry where they believe information on your tax return is incorrect. They can also raise an enquiry randomly, so don’t just assume that they know something you don’t. Enquiries are best dealt with with the help of an adviser.
10. Seek Advice - Have you got advisers? If you have, are you happy with them? ‘Future proof’ your business by investing in professionals to support you!
For further information/advice on the tips above please contact Robyn Milstead:
No comments:
Post a Comment