HMRC relishes the idea that tax payers will make errors in their tax returns and then they will pay higher taxes or be fines for making errors. The number of errors by members of the public doing their own self assessments has been rising steeply in the last few years and HMRC has been raking in fines for errors. So its very important to try to ensure you make none.

Why? - Well simply mistakes on your tax returns could cost you a lot of hard earned money.
Solution? - Avoid HMRC penalties and charges by making sure you don’t commit these mistakes during tax return time by getting an expert like Tax Affinity Accountants (one the most highly recommended accountants in the UK) to do calculate and submit the return for you and sleep easy at night knowing you paid the least tax and everything was correct according to HMRC rules.

Key things to keep in double check:

1. Numbers / digits errors. Whether it’s a National Insurance or Unique Tax Reference (UTR) number for income, incorrect numbers on any form could cost you. Be mindful when entering bank account information when opting for refund. The last thing you want is for someone else to receive your refunds. You should double check all numbers entered on your tax returns. 
   
2. Maths errors. Many taxpayers use pen an paper to work out numbers for submission. Even if you use a software package, it will still not catch errors for incorrect data entry. You should double check your numbers and then double check your calculations each time. 
   
3. Not declaring all the earned income. You must, must report all earned income on your tax return. When HMRC find out that you did not report everything, you could owe interest and penalties in addition to the tax owed on that income. UK banks these days can report income to HMRC without the account holders knowledge.
   
4. Not staying up to date with your tax code. Check the latest changes to your tax code before filing your own tax return. New laws affect many taxpayers and they are constantly changing. 
   
5. Filing an incorrect status. With many different filing status options available, the most accurate one for a taxpayer’s situation may not be easy to use. Each filing status could have an impact on the tax liability due to HMRC.
   
6. Mismatched names. This is a common mistake for newlyweds, typically when the wife takes a new last name and has not notified the NI department. Same issue may pop up for same sex marriages. The opposite applies also for divorcees who need to have a name change notified . If your name does not match the name and NI number and HMRC has on file, the tax return could be rejected or a tax refund could be delayed.  
   
7. Declaring multiple country taxes. Don’t forget that income earned in another country must be reported. If you reside in one state and work in another, a non-resident tax return must be filed in the country in which you work. Only the money earned in that country needs to be reported. However, if you fail to declare this, you could face interest and penalties, in addition to the taxes owed. 
   
8. Falling for tax schemes. One of the biggest concerns for the HMRC is tax fraud and identity theft. Taxpayers have lost thousands of pounds because criminals tricked them into believing they owed HMRC. HMRC will never send an unsolicited email or contact you through social media. HMRC does not ask for personal or financial information. If you believe you may be at risk for identity theft, you should contact the HMRC immediately along with your banks etc. 
   
9. Missing deductions or credits. While penalties and fees mentioned above could cost you, missing a deduction or tax break could cost you by lowering a refund or increasing taxes. 
   
10. Forgoting to sign and date the forms. It is an all-too-common mistake to forget to sign and date. While this may not cost you money, it will cause a delay in receiving any anticipated tax refund. Especially for those who owe HMRC and wait until the very last minute to file, forgetting to sign and date could cost you a late fee and penalty when HMRC sends it back for signature and the deadline has passed. 
    

A good tax accountant should save you much more in tax than what he/she charges. And having a Tax Affinity accountant calculate your personal and business tax situation will lead to zero mistakes on your return and a lower tax bill first time every time. Fill out our contact us page to find an office near you and we will be happy to help you sleep easier at night.

 By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts Business, Tax and Accountancy. With branches in Worcester Park and Kingston upon Thames and Epsom and Ewell they are considered in the Industry to be expert business accountants and tax advisors for both individuals and small & medium sized businesses (SME's). Helping and supporting both individuals and limited company owners / self employed people throughout the UK and the world, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success.

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.

Did you know last year more than 30,000 people in the UK did their tax return between Christmas Eve and Boxing Day?

As of writing this, there are only 20 working days left until HMRC's self assessment deadline of 31st Jan 2022. Each year millions of people leave their tax return (self assessment) to the last minute and then stress out if they declared the info correctly and if the tax due is correct.

Statistically the number one worry tends to be if their submission may trigger an HMRC investigation into their tax affairs... death and taxes being the fear we suppose.

Plus in the last tax year due to Covid 19 and lockdown's there were many other sources of income  e.g. council support grants, SEISS (self employed grants), furlough, bounce back loans, universal credit, tax credits etc. Making tax returns more complicated and resulting with higher taxes due for most tax payers.

If your worried we recommend you get in touch with one of our tax experts. Because we have seen a lot more investigations this year than previous years as HMRC starts it claw back to try to shore up the UK government income and focuses even more on tax avoidance and incorrect information.

So if you have not had your 2020/21 (6.4.20 to 5.4.21) tax return (self assessment) completed then you urgently need to get in touch today as the number of working days are fast decreasing and before you know it the time will be gone and you may end up facing badly caclulated tax return paying more tax than you need to or worse a fine by HMRC for missing the deadline.

Contact us today by clicking this link or calling us on the number above. And share this page with your friends and family.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Worcester Park and Kingston upon Thames and Epsom and Ewell they are considered in the Industry to be expert business accountants and tax advisors for small and medium sized businesses (SME's). Helping and supporting limited company owners and self employed people throughout the UK, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success.

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.

Only 20 working days left until HMRC self assessment deadline.

Did you know this year over 2700 people did their tax return on Christmas day this year according to HMRC. Those that did know that they have to get it done before the deadline of 31/01/2021 and that there is only 20 working days left (as of today 31/12/20).

So if you have not had your 2019/20 (6.4.19 to 5.4.20) tax return  completed then you urgently get in touch today as the number of working days are fast decreasing and before you know it the time will be gone and you may end up facing a fine by HMRC for missing the deadline.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Worcester Park and Kingston upon Thames and Epsom and Ewell they are considered in the Industry to be expert business accountants and tax advisors for small and medium sized businesses (SME's). Helping and supporting limited company owners and self employed people throughout the UK, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success.

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./

BUDGET 2014 HIGHLIGHTS

PERSONAL ALLOWANCE
The personal allowance is the amount of income you can receive each year without having to pay tax on it. This amount is to increase to £10,000 for 2014/15  and to £10,500 for 2015/16. The basic rate taxpayer will see a saving of about £112 in 2014-15 and a further £100 in 2015-16 on their annual income tax bill.

HIGHER RATE TAX PAYERS
The threshold for which individuals pay tax at the higher rate of 40% will increase by 1% for both tax years.

ANNUAL INVESTMENT ALLOWANCE
For businesses, the annual investment allowance will increase from £250,000 to £500,000 until 31 December 2015.

HIGHER ANNUAL SUBSCRIPTION LIMIT FOR INDIVIDUAL SAVINGS ACCOUNTS FROM 1 JULY 2014
The chancellor has announced big changes to the Individual Savings Accounts (ISA). The new policy means that, from July onwards, it will be possible to save up to £15,000 in total. Furthermore, the whole sum could be in cash unlike before where only half of the limit could be saved in cash and the rest in shares. Also, the 10p tax rate for savers will be abolished.

CLASS 2 NIC
From April 2016, Class 2 National Insurance Contributions (NIC) will be collected through self-assessment.

CHILD-CARE HELP
Parents paying 80% of childcare costs of up to £10,000 per child, aged up to 12, to a registered provider will get the remaining 20% tax-free from September 2015.

NEW TRANSFERABLE TAX ALLOWANCE
From April 2015, there will be an introduction to a new transferable tax allowance for married couples and civil partners.

PENSION CHANGES
All tax restrictions on pensioners' access to their pension pots to be removed, ending the requirement to buy an annuity. The taxable part of pension pot taken as cash on retirement to be charged at normal income tax rate, down from 55%. There is an increase in total pension savings people can take as a lump sum to £30,000

By Wilson Law at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Kingston upon Thames they are considered to be small business experts helping and supporting business in the UK. They regularly help new business start up and provide valuable support for new businesses.

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.

Properties have always been a relatively safe and sound option for investment. As a landlord, renting out your property can offer an alternative source of income in the form of rent and potentially give a good return on the initial investment through capital appreciation. However, if you’re looking for huge returns over a few days then property investment is unlikely to be your preferred choice. Nonetheless properties have historically been a low risk investment and have provided modest returns over the long term. Here are a few things to consider if you wish to maximise your rental income:

Deducting Allowable Expenses

You can reduce the amount of rental income that is taxable by taking advantage deducting allowable expenses. There more common expenses you can deduct are:

• Utility Bills and Council Tax
• Maintenance and repairs to the property (excluding additions and improvements)
• Interest on the mortgage to buy the property
• Cost of labour/services (Wages for cleaners, gardeners etc.)
• Letting Agent’s Fees
• Accountancy Fees
• Service Charges
• Direct Costs (Advertisement cost, fuel costs incurred in the journey to the property, phone calls etc.)
• Contents Insurance

The costs should be wholly and exclusively incurred as a result of renting out the property. If a part of the expense meets this condition then that part can be deducted from income.

Cost comparisons

Saving costs can only have a positive effect as expenses are the only thing eating into your rental income. Try reviewing your costs on an occasional basis (once a quarter) and you may witness bargains that could help you save a lot of money. Service providers tend to offer sizeable discounts to new customers but only have stagnant prices for existing customers. Getting quotes from different companies that offer the same service can sometimes amaze you at how wide the price range can be. Just be sure you don’t jeopardise the quality of services just to save a few pennies.

Annual Investment Allowance

Expenses of a capital nature are not deductible. You cannot deduct from income the cost of the property you are renting out, expenditure that adds to or improves the property or the cost of renovating a property from a state that cannot be rented out.

However, capital spending can be deducted using the Annual Investment Allowance. From 1st January 2013 (until 1st January 2015), you can deduct up to £250,000 a year for many types of capital spending using the Annual Investment Allowance, such as commercial vehicles, business furniture, computers, machinery and tools. It would be beneficial to take advantage of the temporary rise in the Annual Investment Allowance as it is likely to revert back to around the limit of 2012/13 (£25,000) after January 2015.

Landlord’s Energy Savings Allowance (LESA)

Until April 2015, an allowance of up to £1,500 per let residential property can be claimed for the cost of loft, wall and floor insulation, draft proofing and hot water system insulation. The LESA was introduced to encourage landlords to improve the energy efficiency of let residential properties. These expenditures are usually not deductible from taxable income and are not eligible for capital allowances.

Wear and Tear Allowance or Renewals Allowance

For fully furnished properties, a wear and tear allowance can be claimed for furnishings such as beds, carpets and appliances. The allowance is 10% of the net rental income (gross rent minus utility bills, service charges and council tax) you receive from these properties.

With the renewals allowance, you can claim expenses of any furniture as you replace them. Any money you make from the disposal of the asset must be deducted and the cost of any improvements (e.g. an upgrade from a washing machine to a washer-dryer)

Note that you can only claim either the Wear and Tear Allowance or the Renewals Allowance but not both.

By Wilson Law at Tax Affinity.

Tax Affinity Accountants are considered in the market to be experts in Tax and Accountancy in the UK. Based in Kingston upon Thames they have clients right across the UK as well as Europe, Middle East and North America.

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.

Tips to avoid paying too much tax if you’re self employed

According to Which.co.uk, we paid an estimate of £12.6 billion in unnecessary tax in 2012. People who are self-employed or have their own businesses are particularly prone to overpaying tax. But by doing a bit of research and accessing your tax options, you can maximise your income and safeguard your finances for the future.

Spreading income tax payments among the family

Every individual that is able to work has a personal allowance of £9,440 for the financial year 2013/14. If you are earning over the 20% rate band for income tax, it may be wise to employ a family member to share a part of your workload. Income up to £9,440 would be free of income tax for him or her, and an allowable expense for you. This is especially ideal for any children you have over 16 that can work over the holidays as their wages are also tax deductible. Furthermore, no national insurance is payable if they earn less than £149 per week. Additionally, members earning between £109-148 are entitled to certain state benefits such as building towards the state pension.

Using the personal allowance to its maximum

Rather than one individual holding the bulk of the income and facing a higher rate of income tax, it is of best interest to arrange the finances in a way that lessens the tax burden. This can be achieved by building up a state pension for your partner and/or make pension payments to build up a retirement pot. These contributions are tax relievable at the marginal rate of the payer. On a further note, £3,600 can be contributed per year irrespective of earnings so consider pensioning for any of your children helping out at the business.

Taking advantage of tax free opportunities

Use up you and your partner’s cash ISA limit of £5,760. Gift any surplus funds to your partner if he/she is a lower tax payer than you. Be careful of the liquidity position of the business, it may be troubling to recall back the funds.

The £100,000 ceiling

Try not to exceed earnings of £100,000. For every £2 of income over £100,000, your personal allowance falls by £1. This means that at an income of £118,880 you will have lost all your personal allowance of £9,440. The £9,440 is then taxed at a rate of 20%, and the £18,800 over £100,000 is taxed at a rate of 40%, meaning that your marginal rate of tax on this slice of income is a whopping 60%. You can consider increasing your pension contribution to preserve your personal allowance. Note that the maximum annual allowance is £50,000 but you can use any unused annual allowances dating back three tax years to increase your contribution.

Maximising your tax allowances

Each person has an annual capital gains tax allowance that can be reached before the gain is taxed. This figure amounts to £10,900 for the financial tax year 2013/2014. With sound financial planning, you can get up to £20,340 tax free each year (£9,440 for personal allowance and £10,900 for Capital Gains Tax).

Be well organised and keep good records

The deadline for the online tax return is 31st January (31st October for the paper tax return). Failure to commit to the deadline may result in penalties. Keeping your records in an organised manner can make your life a lot easier especially if HMRC decides to investigate. 


Plan ahead

Good forward financial planning can maximise successful tax strategies. That’s why at Tax Affinity Accountants we make sure to sit with all our clients and run through the options for good financial planning.

By Wilson Law

Tax Affinity Accountants are considered in the market to be experts in Tax and Accountancy in the UK. Based in Kingston upon Thames they have clients right across the UK as well as Europe, Middle East and North America.

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.

In the current economic climate everyone should be looking for ways to save tax. And to help, we at Tax Affinity Accountants have compiled a list to do just that. 

• With tax advice to help save you money on your tax bill
• Income tax advice for employees, the self-employed and pensioners
• Advice on how to save on capital gains tax
• Taxes and your children, taxes and your partner and taxes on your property

If you need help with your tax questions, or any other aspect of your finances, contact Tax Affinity Accountants to get tailored guidance.

The tax codes, allowances and deadlines

1. Tax code
Check your tax code each year (the numbers and letters on your payslip). If you're on the wrong code, you may be paying too much tax.

2. Capital gains tax allowance
Remember that capital gains under £10,600 are tax-free. Married couples and civil partners who own assets jointly can claim a double allowance of £21,200. CGT is charged at 18% if you are a standard rate taxpayer, and 28% if you pay tax at a higher rate.

3. Tax return deadlines
Don’t miss the 31 October deadline if you want to make a paper tax return. You can do your tax online up to 31 January, but paper tax returns need to be in three months earlier than online tax returns to avoid a £100 fine.

4. Annual investment allowance
If you are a landlord or run your own business, take advantage of the annual investment allowance (AIA) to claim for capital expenditure on items such as tools and computers. You can claim relief on up to £25,000 a year.

How to pay less tax if you're self-employed

5. Tax-deductible expenses
If you’re self-employed, don’t forget to claim all your tax-deductible expenses, including cash expenditure where eligible.

6. Self-employed car costs
If you're self employed, you can claim the running costs of a car, but not the cost of buying one. If you use the same car privately, you can claim a proportion of the total costs.

7. Cash-flow boost for self-employed
If you are setting up as self employed, you may be able to improve your cashflow by choosing an accounting year that ends early in the tax year. This maximises the delay between earning your profits and your final tax demand.

8. Annual losses
If you are self employed, you can carry forward losses from one year and offset them against profits from the next. See our page on when the self-employed pay tax for more.

9. Payments on account
If you are self-employed and expect to earn less in 2012-13 than you did the year before, apply to reduce any payments on account that HMRC ask you to make.

Saving tax on property income

10. Rent a room
Rent a room relief is an optional scheme that lets you receive up to £4,250 in rent each year from a lodger, tax-free. This only applies if you rent out furnished accommodation in your own home.

11. Landlord's energy-saving allowance
If you rent out property you can claim special tax allowance of up to £1,500 for insulation, draught proofing and installing a hot water system.

12. Landlord's expenses
If you rent out property, you can deduct a range of costs before declaring your taxable income. These include the wages of gardeners and cleaners, and letting agency fees. 

13. Tax relief on your mortgage
You can claim tax relief on the interest on a mortgage you take out to buy a rental property – even if it the rental property is abroad.

14. Reduce capital gains tax (CGT) on a rental property
Landlords are normally liable for CGT when they sell a rental property. If it has been your main home at some time in the past, you can claim tax relief for the last three years of ownership.

Pay less tax on savings and investments

15. Isa allowance
Use your tax-free Isa allowance. This year, the overall limit is £10,680, of which £5,340 can be put into in a cash Isa.

16. No CGT on shares held in an Isa
There is no capital gains tax to pay when you sell shares or units held in an Isa. For more details see Tax on savings and investments.

17. Junior Isas
Use Junior Isas or Children’s Bonus Bonds to avoid being taxed on gifts you make to your own children. 

18. Transfer assets
Transfer savings and investments to your husband, wife or civil partner if they pay a lower rate of tax than you do. See our guide to tax and your partner for more information.

19. Children's savings
Stop children being taxed at source on their savings by completing a simple form (R85) on their behalf.

Tax savings for older people

20. Age-related allowance
If you are aged 65-plus you may be eligible for an increased personal allowance. This means you pay a lower income tax rate. See Tax in retirement.

21. National Insurance
Make sure you stop making National Insurance contributions if you carry on working beyond state retirement age (currently 62 for women and 65 for men).

22. Gift Aid
If you are over 65, making donations to charity through Gift Aid can reduce your taxable income to below the threshold at which you start to lose out on age-related allowances. 

23. Tax relief on gifts
If you are in a higher tax bracket, you can claim back the difference between the basic and higher rate of income tax on any Gift Aid donations.

24. Inheritance tax
Lifetime gifts are not normally counted as part of your estate for inheritance tax purposes if you live for a further seven years after making them. Known as potentially exempt transfers (PETs) they can reduce your residual estate significantly. See our blog on inheritance tax.

Tax savings through employee benefits

25. Season ticket loan
If you are a commuter, check to see if your employer will give you a tax-free loan to buy your season ticket.

26. Pool cars
Use a pool car for occasional business travel, if your employer provides these. 

27. Childcare schemes and tax credits
If you are an employee and pay for childcare, ask your employer if they have a childcare scheme. Salary sacrifice childcare schemes are easy to establish and can result in substantial savings for both employees and employers. For more details see working for an employer. Child tax credits can also save you money.

28. Company car?
If you are entitled to a company car, consider whether it would be more tax-efficient to take a cash equivalent in pay instead.

29. Going green
If you are changing your company car, consider a low-emissions model . These are now taxed at a lower percentage of their list price, than cars with a high CO2 rating. 

30. Pay in to a pension scheme
Contributions to your employer's pension scheme (including any additional voluntary contributions you make) can be made from your gross pay, before any tax is charged.

For the most up to date and accurate advice speak to tax accountant, as these allowances and benefits do change every year.

Tax Affinity Accountants are expert Qualified Tax Accountants in Kingston upon Thames. To read more visit www.taxaffinity.com/blog and please feel free to comment and share this with your friends.