Time is ticking on filling in your tax return for the period April 2016 to April 2017. Dawn Register, tax partner at BDO, the global accountancy firm, provides her top 10 ‘tips and traps’ when sitting down to file your annual tax return. For many this is a chore started in earnest over the festive period.
Following hot on the heels of watching box sets and online sales shopping, HMRC statistics show that thousands will file their online tax return during the Christmas and New Year holidays, so here’s what to do.
- Set up an online account without delay. This takes some time, particularly setting up the latest security updates from HMRC which include downloading the HMRC app on your smart phone or tablet. For the technophobes this requires full concentration. Don’t wait until mid-January to get started.
- Make sure you have all the relevant papers ready to hand before you start filling in the form – a basic point but crucial to avoid errors or omissions down the line. This will include downloading or requesting bank statements, expense receipt, employment income and self-employed records.
- Check whether your figures are gross (including tax) or net (excluding tax) on items like dividends and bank interest. Always check on the HMRC form which number they require and make sure you fill in the right one.
- Claim all the deductions you are entitled to. In particular, remember gift aid on your charity contributions. This includes many annual subscriptions for example to museums and zoos.
- Check all your numbers thoroughly before pressing submit. Many errors are made by simple transposition. An extra zero can make a big difference!
- For those who are employed, check you have all your PAYE coding notices for the tax year. In particular, check if there is any overpaid or underpaid tax included in your code. This will need to go into your return to make sure the final number is correct.
- Read HMRC guidance notes and manuals where you need help. However, this should be taken with some caution as they are not necessarily the strict letter of the law. If your affairs are complicated then you should always seek expert advice from an accountant or chartered tax adviser. HMRC will expect this. Remember – tax rules can be illogical and counterintuitive.
- Don’t forget to also pay HMRC if you owe money. Even if you cannot afford to pay HMRC it is still best to file on time and then contact HMRC to arrange time to pay. Leaving this until after 31st January means HMRC can guess your bill and take debt recovery action.
- Check you have included all pension details – this includes state pension, the additional state pension, private pensions and those you inherit when someone dies.
- Keep it simple where you can! Don’t include what is not needed as there are a number of tax-free sources of income that do not need to be reported on returns whatsoever. For example ISAs, premium bonds, lottery wins, gambling winnings and the occasional eBay sale.