Tax Returns - time is running out!

If you haven't filed your 2008/09 tax return yet then it's time to get your skates on.

They've got to be filed by Sunday 31st January (yes, this Sunday) or you'll get an automatic fine of £100.

If you're in partnership, you've also got to file the partnership's tax return by the same date, or each partner will be fined £100.

And no, you don't get an extra day because 31st January happens to fall on a Sunday this year.

Also, it's not a good idea to file late even if you don't mind paying an extra £100 to Mr Darling, because it means HMRC have a longer enquiry window in which they can pick your tax return to look at further.

And if you file late, some sources say you're more likely to get put on a blacklist and be investigated anyway.

All good reasons for making sure you file your tax return on time.

I can't file on time, but it's not my fault!

HMRC list various "reasonable excuses" that they'll accept for not filing your return on time, such as if your documents are stolen, or you suffer a life-threatening illness. More information here.

You've still got a few days though to beat the ticking clock voiced by Ms Stuart...

Filing online

The deadline's already passed for filing your tax returns in the old traditional way by taking them to your nearest HMRC office as a paper form. That was 31st October.

You've now got to file your return online.

If you don't have an accountant, and haven't already registered with HMRC to file your return online, you'd better dig out £100 because you can't register and file all in one go. Part of the registration process is entering an activation PIN that HMRC send you, and it takes up to 7 days for your activation PIN to come through the jolly old snail mail.

But if you have registered with HMRC in time, where to start?

Income

If you have to file a tax return, then you'll have to put on it, almost without exception, all the income you've received in the tax year 2008/09.

Here are some of the more common examples of income you'll have to put on your tax return:

  • Income from employment, which would be on your form P60 or form P45 as supplied to you by your employer. Remember, if you're the director of your own limited company, the company is your employer, so you'd have a salary to put on your tax return.
  • Benefits from employment, which will be on your form P11D, which again your employer should have given you before July 2009.
  • Bank interest paid to you subject to tax, whether or not it actually had tax taken off it. But don't include interest received from an ISA - and sadly no, you don't get any tax relief on interest paid to the bank, unless it was for a business loan or on a business account.
  • Dividends received in the tax year 2008/09 - that's dividends received, not dividends declared, so if you hold shares in a company that said on 1st April 2009 it was going to pay a dividend but that dividend wasn't paid until 7th April 2009, that dividend goes on your 2009/10 tax return.
  • Rental income and expenses, if you own property that you let out, or rent out a room in your main home to a lodger for more than £4,250 a year, or rent out a room for less than that amount but still decide to complete income and expense accounts for that room (for more information about rent-a-room relief please see our earlier post here).
  • Income from self-employment, less expenses; that might include sales you've made on eBay if you're trading (more about that in a future post).
  • Pension income, e.g. the State Pension or a company pension. If you receive the State Pension, what goes on your tax return is 52 x the weekly amount you receive.

Capital gains

 

If you've sold a large asset, then you may also have a capital gains calculation to do and capital gains tax to pay.

But there are some assets on which capital gains tax isn't due. For more information see here on HMRC's website.

And there are some circumstances in which you might not have to pay capital gains tax, or unexpectedly have to pay, such as sometimes when you give an asset as a gift. For more information see here on HMRC's website.

Reliefs

It's not all bad news. You are entitled to some reliefs which could reduce your tax bill.

Here's a few examples of those:

  • If you make donations to charity through Gift Aid, and you're a higher-rate taxpayer, you can claim tax relief on your donations by putting them on to your tax return. More information on HMRC's website here.
  • If you make contributions to a pension scheme (other than directly from your pay packet, because you'll already have received tax relief on those through your company's payroll), and you're a higher-rate taxpayer, again you'll get tax relief on your pension contributions if you fill in the correct box on your tax return. More information here from HMRC.
  • If you're married, or in a civil partnership, and one of you was born before 6th April 1935, you could be entitled to Married Couple's Allowance. Select here for more information.

So all in all, there's a lot to put in!

How could I make it easier for next year?

  • Try doing it earlier! It's always harder if you're trying to collect everything together and do it at the last minute.
  • Find an accountant to help you. Accountants don't have to cost the earth and can offer a lot of helpful advice about how to simplify your tax affairs and maybe even reduce your tax bill. And they can help you if you're ever selected for investigation by HMRC. For a list of our FreeAgent Friendly accountant partners, please select here.

But whoever said "tax doesn't have to be taxing" obviously never tried to fill in a tax return :-)

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