5 Things you Need to Know about Your Personal Tax Return
Each year the Tax Man asks you to state what you have earn’t so that they can check you’ve paid the right amount of tax. The UK tax year runs from 6th April in one year to the 5th April the following year, and just to be clear, this tax year is for your personal tax, not your Company’s (Corporation) tax.
For a lot of people, it’s a daunting task. Pages and pages of forms to fill out, different figures to enter, lots of declarations to commit to and the horrible fear that a huge figure of tax owing will pop up at the end.
So how can you manage this better? How can you be better prepared and feel more equipped? Here are our 5 Tips to help you get in control.
1. Get registered with HMRC as soon as you know that you need to complete a tax return.
Get registered early and you won’t miss any deadlines or get a fine. If you don’t register, then you’ll have tax liabilities mounting up in the background (which will catch up with you eventually) and you could end up paying huge fines and interest on the amount owed. Remember you can’t submit a tax return until you are Registered.
If you’re unsure whether you need to complete a tax return, then check with HMRC but essentially you will if:
You were self-employed
You were a company director
You got £2,500 or more in untaxed income
Your income from dividends from shares was more than £10,000
One person’s income in your family was over £50,000 and one of you claimed Child Benefit
You have income from abroad that you need to pay tax on
You lived abroad and had a UK income
Your taxable income was over £100,000
There are other circumstances when you would need to complete a tax return, so you should refer to HMRC for explicit detail.
It’s really simple to register with HMRC, you can do it online via their website at here.
Registration can take up to 20 days so make sure you do this before your tax submission is due.
2. Go Virtual, Go Digital
When you’re recording your income and expenses (bookkeeping) use software like Xero to do the heavy work for you and to track your cashflow and tax liability. Make provisions for your tax and set aside the money – we recommend having a separate bank account. Accurate records make life much easier for your accountant at the end of year which will save you money too.
Use tools like Skype or Zoom to have virtual meetings with your bookkeeper and accountant to save you valuable time. Set up a virtual chat room with a provider like Slack to keep in touch when you can’t be physically together.
2. Keep Your Documents
Keep hold of the following documents and store them in a safe place as you’ll need the information to complete your tax return:
If you are employed, then keep your P60 and P11D. Your P60 gives details of the money that you’ve earn and how much tax you have paid, whilst your P11D details any benefits in kind that you have received.
P45 if you have left a job.
If you are a sole trader or self-employed, you need to keep full accounts for your business and include them in the self-employed pages of your tax return.
End of year Bank statements which show how much interest you’ve paid, or interest paid to you as well as any tax deducted.
Dividend vouchers for any dividends that you have received during the year.
If you own a rental property, then keep full records of income and allowable costs.
Mileage expenses paid by your employer if paid at less than the tax-free allowance
If you use an online bookkeeping or accounting system, then you can upload these documents and store them electronically.
4. Learn or Outsource
If you are going to submit your own personal tax return, make sure you are up to date and have sound knowledge. HMRC run a series of helpful and useful webinars which you can sign up to attend free of charge. Plus, you can call HMRC at any time and ask them questions if you get stuck or aren’t sure.
If learning about Tax doesn’t float your boat, then use consider using someone who knows what they’re doing. Remember that Bookkeepers and Accountants train for years to do what they do and to be qualified, so if you really want to be safe, then outsource and employ a professional.
When you’re considering outsourcing always look at testimonials and check relevant qualifications. Month-to-month professional support can make the difference between having a stressful tax return, or an easy, simple tax return.
You’ll also reap the rewards of having up to date correct income & expenditure, regular financial reviews, tax provisioning, strategy sessions and the peace of mind that you are tax compliant.
5. Be Organised
Always submit your personal tax return on time.
OK, I know it sounds simple, but 890,000 people missed the deadline last year, and all those people will have received a £100 fine and many of them will have gone on to pay daily interest charges. So, save yourself the stress and money by making sure that you submit on time.
Here are the key deadlines (put them in your diary now):
31 October for paper filing
31 January for online filing
If you are going to submit your own personal tax return, then take accounting and tax advice to make sure that you are maximising your personal tax situation. Also, make sure you are keeping up to date with tax changes via HMRC.
The only sure-fire way to file a stress-free tax return is to have great bookkeeping systems and employ an Accountant - they’ll make sure nothing has been missed and you can relax knowing your taxes are in the hands of an expert.
This article was shared by Green Zebra Business Solutions who enjoy working with companies to provide brilliant Accountancy, Bookkeeping and Business Support Services to save you time and money. We are knowledgeable, friendly, trusted, approachable and passionate about helping businesses to grow.