We like lists and we know you do too. So here is a short list about a few things to bear in mind when tax deadlines are looming:
1) Keep all necessary paperwork organised and make sure to keep all paperwork even after the tax years passed a minimum of 5 years as HMRC can put you under a tax investigation at any point reaching as far back as 10 years. 2) Make sure to plan ahead with your finances so you don’t fall short when deadlines arrive. Save and put money aside for the tax due. HMRC gives you approx 9 months from your year end to budget for this and will not normally extend the deadline without penalising you with extra charges and fees, 3) Be conscious of when the deadlines are arriving and what state your finances are in. Don't forget when its due and keep a reminder on your calendar for it. It’s important that you know how much tax you’re due to pay as this helps you to plan your finances around how much is due. So the earlier you get your paperwork together the earlier an accountant can put it together and let you know. Leave it to the last minute and you may be left short of both information and time. HMRC offer a ‘Budget payment plan’ if you are struggling to pay the tax - which allows you to pay over a number of months as determined by HMRC (not you). You may also be permitted to stop payments for up to 6 months, this option needs to be set up with HMRC for payments through direct debit and when payments are made they need to be regular. If you would rather not use the HMRC’s budget payment plan then you can design your own budget plan which could allow you to put money aside for your tax payments eg borrow money from elsewhere, the pro’s for this is that you don’t get charges the fees from HMRC and have the restrictions which HMRC place. The cons are that you need to be self motivated to keep up payment with the your budget plan or lender. Alternatively if you prefer to pay in one lump sum then it’s even more important that you’re aware of how much tax you’re due to pay, how far away the deadlines are and your financial state. Overall awareness of the deadlines and you’re own particular financial situation can guide you to making a budgeting plan for tax returns. It’s also worth bearing in mind that just a bit of planning ahead can save you from unnecessary fines and penalties from HMRC. By Anon at Tax Affinity Accountants Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Surbiton , Worcester Park , Kingston upon Thames , Cheam and Epsom they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice and support. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.
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Thousands of reminder letters from HMRC have begun to drop on across door steps in the UK. The tax year ended 5/4/17 ie 2016 -2017 self assessment is now due to be completed and the sooner you do it the sooner you can get a refund of income tax or know how much you need to save and pay.
If you already have a personal UTR - unique tax number then the letter may have already arrived or will be on its way. If you do not then you may need to ensure you or your accountant has applied for one to allow for its submission. Who needs to do a tax return? You’ll need to have a personal tax return calculated and submitted if, in the last tax year:
By Anni Khan at Tax Affinity Accountants Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting self employed people throughout the UK, they regularly help clients grow their business providing tailored advice. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends. As of today there are only 7 working days till the 31st January 2017, which is HMRC's online self assessment deadline.
The submission of the personal income tax return and the payment of any tax and NI due for the period 6/4/15 to 5/4/16 is midnight 31/1/17. And anyone who has not yet had their tax return done and paid for should start to worry about the up to £1300 fine plus interest on late paid tax imposed by HMRC for missing the deadline. The self assessment / personal tax return is required from the following types of people: 1. Self Employed (even partially) during the tax year 15/16 ie 6/4/15 to 5/4/16 2. Employed and earning over 100k for the year ended 5/4/16 3. Director or shareholder of a Company and taking dividends in the period as above 4. If you have received rental income in the period 6/4/15 to 5/4/16 5. You received savings and investments income in the period 6/4/15 to 5/4/16 6. You sold something and made a profit on the item, so are required to pay the Capital Gains Tax (CGT) eg selling shares, a property, an antique, Plant and Machinery etc 7. You have received income over £50,000 and you claimed Child Benefit 8. If you have not notified HMRC that you have left self employment and they have not confirmed that you do not need to do a 15/16 return 9. A letter / email / text from HMRC has been received by the tax payer advising them that they need to submit a tax return for the 15/16 year (note: only new registrants may get a reminder as HMRC expects old registrants to already know the deadlines and protocols required). 10. You received income from overseas 11. You lived abroad and had income from the UK 12. You are retired and receive more than one type of pension and annual income payment pushing you over the personal income allowance 13. You have had a P800 from HMRC saying you have not paid enough tax in the year 14. You are minister of religion or and Underwriter 15 Even if a person has died they may still need to submit a tax return to make sure they have paid the correct tax and those that receive an inheritance may need to pay for Inheritance Tax (HMRC will advise further). 16. If you have received a P11d and not paid the correct tax for the benefit in kind eg company car, private medical, gym, travel etc So if you haven't already had your tax return done and still need to send / drop in your income and expenses information, please take heed of this final reminder. Those that have handed in their information we will make sure it is done before the deadline. We can even have your deadline extended in some cases as we are registered authorised agents for HMRC. And if your thinking of using an accountant, note, that not all accountants are the same. We recommend you use an expert in tax so he/she saves you far more in tax than you ever have to pay them for their service. With fines up to £1300 plus interest on the amount of tax due. In some cases penalties are greater than the tax that would have been due. So don't delay as you have no time left and most excuses and appeals are rejected by HMRC after a penalty has been imposed. By Anni Khan at Tax Affinity Accountants Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends. Deadline: 31/10/16 for Paper Tax Returns
For everyone already registered with HMRC for the tax year 6/4/15 to 5/4/16 they are required to submit their paper tax return by the 31st October 2016. And then to pay all tax and National Insurance payments for that period by the 31/1/17. So if you have to declare a tax return for 2015/16 year then we urgently recommend you contact a reputable and experienced tax accountant like Tax Affinity Accountants (one of the most highly recommend companies in the accounting industry) as soon as possible. It is of course possible to submit a tax return yourself and HMRC will direct you to do this, but what they purposefully fail to clarify is what various expenses and industry specific allowances are allowed to be claimed as legitimate deductions to help decrease your tax bill. And a good accountant, as any successful business person will tell you, is usually worth his/her weight in gold when it comes to getting your numbers right and paying the correct and least amount of tax. At Tax Affinity Accountants our motto is that 'an accountant should legally save you far more in tax than they should ever be charging for their service' ensuring every client gets the very best service at a fair and reasonable cost. So our service more than pays for itself for all our clients. So if you have to do a 2015/16 tax return (or any other year) and would like us to help you. Or are already one of our very satisfied customers then please get in touch with us as soon as possible and avoid the late rush and have the most time put into your accounts. Importance of Submitting Personal Tax Returns to HMRC before 31 Jan Deadline The UK tax year starts on the 6th of April every year and finishes on the 5th of April the following year e.g. the tax year for 2013-14 would have started 6th April 2013 and finished on April 5th 2014. Under current legislation, if you are a self employed sole-trader, partner in a business partnership, a company director or earn above £100,000 per annum then you will be required to submit a tax return to HMRC; unless you work for a non profit organisation in which you don’t receive pay or benefits e.g. travel expenses or company cars. If you are not sure of your situation then you should contact HMRC for further clarification. The Deadlines: There are three main deadlines to follow:
The Penalties There are a few penalties and interest charges that with be applied if your tax returns are not received by the deadlines noted. If the final deadlines to file your tax returns are not met then you will get an initial fine from HMRC of £100. If there is continued failure to meet the deadlines then the following fines will be placed.
Also penalties can be issued for incorrect tax returns:
As each person’s situation is different and the tax rules and regulations regarding tax free allowances, income tax, inheritance tax, capital gains tax on property, stock and shares etc can be quite complicated. Therefore it is highly recommended that everyone should seek the help and support of an experienced and qualified accountant or tax advisor. A s a reputable firm of accountants such as Tax Affinity Accountants will usually save you far more money in saved taxes through their tax planning than they will ever charge. Leaving you more time and money to concentrate on your business. By Mohammad Khan at Tax Affinity Accountants. Keeping records for HMRC inspections for at least 5 years If you are self employed or have some part of your income which is self employment then you are required to send or submit a tax return to HM Revenue & Customs (HMRC) for any relevant tax years applicable. This also means that you will have to keep all the records that aided you in completing the tax return accurately and correctly. Because HMRC can decide to double check your accounts and tax return at any time, without reason, and ask you to present all your records relevant to that year at one of their offices. And if the investigation officer feels that you have not kept sufficiently detailed records, then he or she may apply a penalty and further taxes based on their estimate for the period. As you can imagine this can be very stressful and difficult time for anybody. However, you won’t have to pay a penalty or extra tax if you can clearly demonstrate that you took reasonable care to get your information and therefore tax return right and any errors if present were unintentional. This can be demonstrated by being as helpful and available as possible to the HMRC staff. Below are some of the ways in which you can show you have tried your best to have the correct information and have taken reasonable care for the tax return to be correct:
Keep five to ten years worth of records at least. HMRC guidance states that if you are self employed or in a partnership, then you are required to keep all your records for at least five years from the 31st January following a tax year (a tax year run from 6th April to 5th April each year). And corporation tax (company tax) records will normally have to be kept for at least six years from the end of the companies annul accounting period (as stated on your Companies House records). But if the submission is overdue or is required to be double checked by HMRC then the records need to be kept for longer and there is no specific guideline as to how many years this can go back. And to complicate things further, the exact time you need to keep your records will fluctuate depending on your situation and the opinions of HMRC’s investigating staff’s opinions. So it is highly recommended to keep at least 10 years worth of records if not all of them from the start. Don’t forget the filing. If you do not have a safe and accurate record keeping system in place, it can very rapidly descend into in whole lot of stress and trouble with HMRC. Relying on excel spreadsheets or pen and paper records to do your accounts are not always reliable either. As paper can get damaged or lost, ink can fade, spreadsheets can unintentionally be altered, formulas can become corrupted and before you know it your books could be in a right old mess. And when you come back to look at them 4 years down the line, it’s highly likely you won’t remember what the figures relate to or what the formula was. Recent research carried out by as software provider of 500 small business owners found that a huge 75% rely on pen and paper or spreadsheets to track their finances. And of that amount, 31% have made errors with HMRC returns which for 14% resulted in a fine - worrying statistics indeed. How can you avoid problems? So what can you do now to help yourself? - Well below are some of the records you will need to keep:
Clients often ask how long they should keep their records for expecting us to say for at least a year or two. And are surprised when we say at least 5 years and up to 10 years because we have seen firsthand HMRC amend tax liabilities due for up to 9 years in the past. And, that if the client has not kept the evidence to argue against the charges they have little chance in getting HMRC to change their mind. So it’s not worth the risk. An experienced and qualified firm of accountants, such as Tax Affinity Accountants, will also securely hold their own records for your accounts also and this can lead to a safety net in case of any investigations or tax amendments further down the line as the precise type of records required will depend on the type of business that you run and the type of tax that you need to pay. HMRC won’t accept excuses for why you have not kept the precise records but when it’s you and your accountant against the tax man – two against one will always have a better outcome. By Tahir Malik and Andrew at Tax Affinity Accountants. CIS: Sub-contractor Tax in the construction industry The Construction Industry Scheme, CIS, details payments for sub-contractors from contractors. As the name suggests, it is only applicable in the construction industry. When a contractors needs work from a different skills set (like an electrician, plasterer or plumber), the person(s) they ask to complete the work will be a sub-contractor. The rules as to what qualifies as construction are complex and it worth seeking professional advice to ensure you are not over paying tax. If you are a sub-contractor in construction, you need register under CIS and be registered as self-employed. As the contractor gets a sum of money for the work as an entirety, it is the contractor who is responsible for paying the sub-contractor. As it is a service based position, income tax and NI contribution are taken off the wage of the sub-contractor by the contractor and paid to HMRC at a rate of 20% of the total pay. The tax year for any sub-contractor or self-employed persons is 6th April until 5th April the following year. During this time, all gross pay and deductions will be added together to work out a total pay. Then the profit for the sub-contractor will be worked out after deducting cost of materials and then any other business expenses such as training, travel or phone bills from the income. If, at the end of the year, the contractor is below the personal allowance threshold (£9,440 for the year ending 2014, going up to £10,000 for the year ending 2015) they will not have to pay any tax. Therefore any tax paid by contractors to HMRC out of the sub-contractors pay will be refundable. See below example for Mr J Bloggs, a plasterer:
As we can see, the profit for the year is below the personal allowance for the year ending 2014 (£9,440). Therefore, Mr J Bloggs should not have paid any CIS deductions so he is able to reclaim the £2,400 from HMRC at the end of the year. See below example for Mrs J Smith, an electrician, when the profit for the year is above the personal allowance:
In the above example, the profit for the year is above the personal allowance by £5,360. Therefore tax paid should equal 20% of £5,360, which is £1,072. However, we have paid £4,400 from CIS Tax deductions. This means that Mrs J Smith is eligible for a Tax refund of £3,328. The same tax rules apply for sub-contractors and self-employed persons as those in employment meaning when you hit the upper threshold (£41,450 in the year ended 2014 rising to £41,865 for the year ending 2015) you will have to pay 40% tax on that amount. The summary is below, using the 2015 figures:
To try to make the above simpler, we will look at how much tax should be paid by Mrs O McKenzie who had an income (profit) for the year of £55,000:
If all of her income came from sub-contracting, the amount of CIS Tax already paid would be 20% of £55,000 which is £11,000. She is due to pay £11,627 so she would have to pay HMRC an extra £627 to avoid a potential fine in the future for Tax Evasion. This profit figure is very high so most sub-contractors who register under the CIS as self-employed will get a tax refund. It is advisable that if you qualify for this scheme, you do so as it will more often than not result in you getting money back from HMRC at the end of the tax year. There are also National Insurance (NI) contributions that need to be paid. These are more complicated as the amount you pay will vary with the amount of profit you have at the end of the year. There are different classes and different personal allowances depending upon what type status of employment you have and what your level of income is. It is worth seeking a professionals help at this point to ensure you do not make a mistake and pay the wrong amount. If you are still confused, or think that you should get a refund, and want to know what the next step is, get in contact with us here at Tax Affinity. Use any of the contact details on the website and we will gladly assist you on the next stage. By Owen Cain at Tax Affinity Accountants Personal Tax Return Deadline Approaches
Completing a personal tax return can be a stressful, complex task and an unwanted hassle for self assessment taxpayers. At Tax Affinity we provide a simple, price competitive service to alleviate your concerns over personal tax returns. If you currently complete your own tax return then you could certainly benefit from our services to ensure that you don’t overpay on tax. Mistakes on your tax return could cost you a significant amount and it is therefore worth taking advantage of expert advice to make sure you report the correct level of taxable income. We will assess all of your income and expenses information to ensure you minimise your tax liability. If you are already taking advantage of our tax help, please ensure you send us all your income and expenses information (bank statements, invoices and receipts) for the period 6th April 2012- 5th April 2013 as soon as possible. With the busy Christmas and New Year period approaching, it is vital that we receive all this information in the next 3-4 weeks so we can ensure all of our clients’ tax returns are submitted before the deadline. By leaving your tax return right up until the last minute you risk incurring a late filing penalty. Here is a summary of the HMRC penalty charges you may face: Length of Delay - Penalty incurred 1 day late A penalty charge of £100 even if you have no tax liability for the year or have paid the tax you owe 3 months late A penalty charge of £10 per day up to a maximum of 90 days- £900. This is on top of the initial £100 charge. 6 months late £300 or 5% of the tax due (whichever is higher). On top of the penalties listed above 12 months late An additional £300 or 5% of tax due. However, in certain cases the charge may be up to 100% of the tax due or higher. Please avoid any of these penalties by sending us all your information as soon as possible. Feel free to pop into the office or just email us the necessary documents. Rushing a tax return can result in a number of unnecessary errors so please ensure you get on top of the situation in the coming weeks. By Tom Hoadley at Tax Affinity. Tax Affinity Accountants are experts in Tax and Accountancy. Based in Kingston upon Thames they regularly submit tax returns for their clients peace of mind, providing a great value for money service for people from all walks of life. For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends. Every year many people across the UK get a tax credits renewal pack. If you do get one you need to check your renewal forms and make sure you pass on the correct information to the Tax Credits Dept.
This article can help you find out some of the information you need to check, how to work out your personal income(s), and how to avoid common mistakes. Check the information presented Renewal packs usually include the an Annual Review notice (TC603R) plus an Annual Declaration form (TC603D or TC603D2). And everyone needs to renew by 31 July or whatever date is shown on letters from HMRC. A tax year runs from 6 April one year to 5 April the next. The important information that you need to check on your Annual Review notice is:
If there is anything incorrect you must tell HMRC straight away. Especially if anything is wrong on your notice or if anything has changed and they have the wrong information. If previously you have claimed tax credits as a single person - or as a couple your notice should say this, a couple is known as a 'joint' claim. You should be making a 'joint' claim if you are:
Your form should also show the country you live in most of the time. It doesn't matter if you sometimes go to other countries for holidays for up to 8 weeks (and in some cases up to 12 weeks) as this is usually still allowed. And you may also be able to get tax credits if you live outside of the UK for a valid reason. But you will need to confirm these extra conditions with HMRC before applying for them. Your work or benefits should also be reported, showing the country you work in most of the time with the number of hours a week you usually work. It can also show you if you got any benefits, for example Income Support or Employment and Support Allowance. If you have any disabilities your notice will explain if you were paid the disability part of Working Tax Credit. This also applies to severe disabilities and their allowances receivable. If you have a child or children then your notice should show the correct information about them. You can usually get Child Tax Credit for a child up to 20 years old, with the conditon that they are in full-time education or an approved training course. And if you work are working at least 16 hrs per normal week and have to pay for a registered or approved child minder or carer, you may be able to get an extra Working Tax Credit payments to help with these costs too. How to work out your total income for your Annual Declaration It is worth noting that some social security benefits are taxable, such as contribution-based JSA (Job Seeker's Allowance), and as such they will count as income when you make a tax credits claim. Other types such as Disability Living Allowance, don't count as income. So be careful to be sure if your benefit is taxable. If your not sure ask rather than guessing and getting the claim incorrect. If you're in employment, you should have a P60 from your employer at the end of the tax year (5th April), which will show your earnings and tax paid for the whole tax period (6th April to 5th April). You need to include income from all types of jobs you have had in the tax year so it may need several P60's for filling it in. If you cannot find your P60, then don't worry as most payslips usually show a running total of all earnings and tax paid for the year. If you still cannot get the full information you can provide an estimate but make sure to give the actual income figure no later than 31 January or again it can mean having to pay tax credits back at a later date if you've claimed to much. You must also remember to add in:
If you're self-employed your income will be the net profit you made in the tax year. If you haven't had a profit or loss drawn up prior to sending in your tax return, then you will need to give an estimate of your profit and again you must provide an actual by the 31st January or you may have received too much or less in Tax Credits. If you made a Net Loss on self employment, just give a figure of zero. But please do note if you had any other income during the year, you can take the loss off this income. Be careful to get the best advice and support Bear in mind that other income like pensions, shares, income from property (sale or rental), income that you receive from abroad and savings need to be also declared. If in doubt the best thing to do is ask a professional as the self employment and other incomes can become a bit tricky and you could end up claiming less or more than your due. Tax Affinity Accountants are experts is tax and accountancy. Based in Kingston upon Thames they cover the whole of the UK and help make sure clients get the correct amount of tax credits for their situations. Visit www.taxaffinity.com for more information or if you feel you need help in filling in the forms. Follow Tax Affinity on twitter at @tax_affinity to find other useful tips and advice. Leaving a tax return to the last minute means you are more likely to do it in a hurry. There are still six million people in Britain who have not yet filed their self-assessment tax form, HM Revenue & Customs said this week – and time is running out ahead of the 31 January deadline.
Leaving it to the last minute means you are more likely to do it in a hurry and therefore more likely to make careless errors. Filing online is a good way of avoiding mistakes because calculations are done automatically and there is on-screen help if you need it. But it is still easy to trip up, due to carelessness, not being organised enough, or lack of knowledge. Here are the five most common errors: • Don't leave things out. "Probably the most common mistake of all is the omission of a source of income, typically the interest arising from a bank or building society account, which in some cases can be quite substantial," says Giddens. So before you start, gather together the documents relating to all your savings accounts and investments – statements, passbooks etc. You have to include the interest you receive on bank, building society and other savings accounts, and on any loans to individuals or organisations, including those made via "peer-to-peer" lending websites such as Zopa. You must also include interest received from credit union and friendly society accounts. And if you have enjoyed a payment protection insurance (PPI) compensation payout, any interest included in the payment must be declared, too. You don't have to declare interest from Isas. You must also include dividends from UK companies and unit trusts, open-ended investment companies and investment trusts. • Don't get your numbers in a twist. Another common error is, including the gross amount of interest instead of the net amount after tax that is being asked for. For example, with box 1 on page TR 3, relating to taxed UK interest, you need to put in the net amount – the interest etc after tax was taken off. Some account statements will explicitly give this figure; others just show gross interest and tax taken off. • Is your tax code wrong? Now's the time to check. Thousands of taxpayers may well be paying too much (or too little) tax as a result of having the wrong tax code. In some cases people have received refunds running into thousands of pounds after belatedly spotting that they have been paying too much for years. Your tax code can usually be found on your payslip – it's typically three digits followed by an L, such as "744L", and it tells your employer how much to deduct from your pay packet. If your employer provides you with company benefits, such as medical insurance or a car, you will probably have to pay tax on them. Last year, analysis has found that a quarter of all taxpayers may be paying the wrong amount of tax due to incorrect codes, and added that pensioners appear to be particularly vulnerable to problems. To check you're on the right tax code, try moneysavingexpert.com's online code checker. • Don't forget gift aid. You can tell the taxman about donations by filling in the section "gift aid payments". Gift aid boosts the value of donations by allowing charities to reclaim basic rate tax on your gift: £10 using gift aid is worth £12.50 to the charity. If you pay higher-rate tax, you can claim extra relief on your donations, says Chas Roy-Chowdhury, head of taxation at ACCA (Association of Chartered Certified Accountants). For example, if you donated £100 using gift aid, the total value of your donation to the charity was £125 – so you can claim back £25 if you pay tax at 40%, or £37.50 if you pay tax at 50%. When you're asked about gift aid payments made in the year to 5 April 2012, enter the actual amounts given – don't add on any tax relief that you think the charity will obtain. • Don't forget to pay what you owe! As well as pressing the button to send your form, you must pay what you owe by 31 January – this applies whether you filed a paper or online return. So in conclusion most self employed people are so busy working that they just don't have the time needed to make sure that they are getting all the tax relief that they are entitled to. Many pay the wrong amount of tax and many more are late with their submission or payment. That's why its always better to consult a qualified accountant like Tax Affinity Accountants who can save you a lot of stress, time and money in the long run. Tax Affinity Accountants provide Tax Return services and throughout the UK, and are based in the London Borough of Kingston upon Thames. |
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