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.
We have found out that figures show Her Majesty's Revenue and Customs officials made almost 14,400 authorised views of "communications data" on taxpayers during tax evasion investigations.
This compares to more than 11,500 such views in 2010, which equates to a rise of almost 25 per cent, according to statistics released under Freedom of Information laws.
Using the Regulation of Investigatory Powers Act 2000, HMRC can access details on what websites are viewed by taxpayers, where a mobile phone call was made or received and the date and time of emails, texts and phone calls.
From October 2011 to the end of September last year, HMRC was given 172 authorisations for "directed surveillance", covert surveillance, mainly in public places. This had decreased from the previous year.
But critics today accused tax officials of pursuing wrong targets.
"HMRC should be focusing on the estimated £35bn lost tax, not snooping on hard-working people,” said Stephen McPartland, the Conservative MP for Stevenage who is campaigning for large companies to be more open about tax.
It is not clear how many times the surveillance has led to a successful prosecution for tax evasion or whether those found to be innocent are told that they have been spied on.
HMRC did not respond to requests for this information from the members of the press.
Officials also refused to disclose how many times it had been given warrants to intercept and read peoples' private emails, or listen to their phone calls.
This is the most intrusive type of surveillance, which needs to be authorised by the Home Secretary.
It also refused to disclose the number of times it had carried out "intrusive surveillance", which can include covertly filming a person's house, or bugging their property or car.
An HMRC spokesman said: "Tackling serious organised crime is a priority for us and access to communications data and directed surveillance have a vital role to play in meeting that challenge.
"In 2011 communications data enabled us to prevent £850m of tax revenue being diverted into the pockets of fraudsters.
“Our use of these powers is subject to regular independent inspection, ensuring it is both proportionate and lawful."
Fortunately at Tax Affinity Accountants we are authorised HMRC agents and can quickly and effectively help in all matters investigations and penalties.
Also read this article in the Telegraph. Tax Affinity Accountants are the small business experts, helping the public in grow their businesses in Surbiton, Surrey.
You should act as soon as possible to avoid tax penalties. As HMRC are becoming increasingly aggressive in enforcing penalties.
The tax return deadline is 31st Jan 2013 and all self employed people can be fined £100 for late submission in the first month then after that a daily charge of £10 on top of all previous fines. Which if can easily become £380 after just 2 months. Or simply £680 if it is 3 months overdue.
This rule applies even if there is no tax to pay or the tax they owe has been paid!
Uniquely however, this year the taxman has offered taxpayers a small extension of 2 days before imposing penalties. This is because of a strike by its call centre staff which meant HMRC would not be able to handle a similar volume to last year.
At Tax Affinity Accountants, we see far too many people each year who loose a huge amount of hard earned money to fines. While we are experts in Tax and can in many cases successfully appeal for discretionary discounts on fines, the fines are not normally completely cancelled by HMRC especially when they have already given a 2 day extension.
So we recommend that all local businesses and self employed people make sure to have their tax returns submitted as soon as possible well before the 31st Jan 2013 deadline.
At Tax Affinity Accountants we are an authorised HMRC agent and are very experienced in all types of Tax eg Self Assessment, Corporation tax, PAYE, VAT, Personal Tax, Construction Industry Schems (CIS) to name a just a few and would be happy to help local people resolve their tax issues.
For more useful information about accounting and tax accounting issues in Kingston upon Thames visit www.taxaffinity.com/blog
Tax Affinity Accountants are Companies House Registered and HMRC Authorised Agents
All employers in the UK are being urged by HM Revenue and Customs to get ready for major PAYE changes that come into effect in three months’ time.
In April 2013 employers will have to start sending PAYE returns electronically, using RTI-enabled payroll software, to HM Revenue and Customs (HMRC) each time they pay their employees as part of routine payroll processes. The returns will include details of all employees’ pay, tax and deductions. This new process will replace sending a separate return at the end of the year.
To be ready employers should follow these three easy steps:
1. Visit a PAYE Expert Accountant, like Tax Affinity, for comprehensive information about RTI, including how to prepare, payroll software options and hints and tips to help avoid some common pitfalls.
2. Acquire new or updated payroll software – employers will need to talk to their PAYE Expert Accountant or their payroll service-provider (if they have one) about this.
3. Start checking and updating employee information. It’s vital that the information employers have about their employees is accurate and up to date.
Ruth Owen, HMRC’s Director General Personal Tax, said:
“To avoid a last minute rush it’s vital employers act now, if they have not already done so.
“Employers will need to send their first return – called a ‘Full Payment Submission’ or ‘FPS’ for salary or wage payments made to employees on or after 6 April – and if they have 250 or more employees they will have to send an Employer Alignment Submission before the first FPS.
“Although reporting PAYE in real time will be straightforward for most, some preparation is needed. There is more to it than simply buying or updating software – although this is key. Employers may need to add employees such as casuals or those below the Lower Earnings Limit to their payroll system and must think about their payroll practices to make sure that they work for real-time reporting.”
Background about the new HMRC RTI - PAYE
Employers are required to begin to report in real time in April 2013, unless HMRC has specified a different date.
The RTI pilot was launched in April 2012 with just 10 employers. Since then, the pilot has expanded three times. By 31 March 2013, HMRC expects PAYE records for around 6 million people to be reported in real time.
Reporting PAYE in real time will bring it into the 21st century and will allow HMRC to receive information on employees’ earnings, tax and National Insurance Contributions as they are paid, rather than at the end of the year. RTI will make it easier for employers to administer PAYE and will make tax more accurate.
RTI will also support the operation of Universal Credit – the Government’s flagship welfare programme – which brings together means-tested in and out-of-work benefits, Tax Credits and support for housing, and will improve work incentives and make work pay.
Our experienced accountants and tax advisers provide valuable insights into practical every day questions and issues.
Add blog to our blog directory.
Ask your own question: If you would like to have a tax related question answered here, please send your question to email@example.com.