Yes it is, but I’m not talking about Christmas. I’m talking about filing your HMRC tax return online by 31st January 2016, for any income generated between 6th April 2014 and 5th April 2015.
We mentioned in our article in September on Financial Planning and Investment Advice for 2016 about pulling all of your information together, before Christmas and the New Year descends. So, in this article I wanted to highlight the importance further by providing some key facts you may need, particularly if you have not filed a tax return before. I know, it’s not the most exciting of topics to think about at this time of the year, but it is worth making these preparations ahead of the more festive ones.
Who needs to file a tax return?
The Gov.uk website states that you’ll need to send a tax return if, in the last tax year:
- you were self-employed – you can deduct allowable expenses
- you got £2,500 or more in untaxed income, e.g. from renting out a property or savings and investments – contact the helpline if it was less than £2,500
- your savings or investment income was £10,000 or more before tax
- you made profits from selling things like shares, a second home or other chargeable assets and need to pay Capital Gains Tax
- you were a company director – unless it was for a non-profit organisation (e.g. a charity) and you didn’t get any pay or benefits, like a company car
- your income (or your partner’s) was over £50,000 and one of you claimed Child Benefit
- you had income from abroad that you needed to pay tax on
- you lived abroad and had a UK income
- you got dividends from shares and you’re a higher or additional rate taxpayer – but if you don’t need to send a return for any other reason, contact the helpline instead
- your income was over £100,000
- you were a trustee of a trust or registered pension scheme
You can check here whether you need to fill in a tax return. You usually won’t need to send a return if your only income is from your wages or pension.
If you are dealing with the tax affairs of someone who has died, you will need to inform HMRC as soon as possible so that they can let you know whether or not you will need to file a self-assessment on the deceased behalf.
How we can help
There may be areas where you can use your personal allowances to save tax by using your income in a different way – such as paying more into your pension or donating to charity.
From a financial advisory viewpoint, we can help you assess your investments and any income and capital gains you have received from them that will be required for your tax return. In particular, if you have unused allowances from previous years that you can carry forward to reduce your tax obligations in the coming year. This is vital information you or your accountant will need ahead of filing your return.
If you are filing a tax return online for the first time, you will need to register first and it can take anywhere from 10 working days to 4 weeks for this process to be completed, depending on whether you are a sole trader / business or if you are registering for another reason. So giving yourself enough time to compile the information you need and registering is essential.
Whether you file your return yourself or you use an accountant, pulling together all of your income information including bank statements; receipts; investment and; pension details will ensure that you pay the right amount of tax, or you are able to reclaim anything you may have overpaid.
What happens if you file after the deadline?
There are penalties for filing late and for paying your bill late. If you file up to 3 months late the penalty is £100. If you file or pay your bill later than this, then your penalty will be higher. You can get an estimate here. However you can also appeal against the penalty if you have a reasonable excuse for filing late.
If you need any further advice or guidance on the information you will need to submit your Self-Assessment Tax Return online, we are more than happy to help.
The purpose of this article is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice. Tax advice is not regulated by the Financial Conduct Authority. This article represents our interpretation of current and proposed legislation and HMRC practice as at the date of publication. These may change in the future.
These links may be useful: www.moneyadviceservice.org.uk and www.direct.gov.uk
Twitter users: Martin Lewis of MoneySavingExpert tweets general advice and also answers some personal finance questions- @MartinSLewis and @Moneysavingexpert
The Which? Money team (@WhichMoney) tweet smart money guides.