17 Nov Top tips for completing your Tax Return
Although it is always better to plan ahead, it still isn’t too late for those yet to complete their return. Some useful tax saving tips are outlined in this post.
Tis the Season
It’s that time of year again. The time where you are feeling excited about the upcoming festive period and possibly to a well-earned break with family and friends. Unfortunately, like many individuals, you may not have yet got round to completing your Self-Assessment tax return.
The deadline for filing your online Self-Assessment for the tax year ending 5 April 2018 is 31st January 2019.
This is also the deadline for paying any income tax that is due, Class 4 National Insurance Contributions and for making your first payment on account for 18/19.
What is a ‘payment on account’?
If you don’t know, you are not alone. It is essentially an additional tax payment made twice a year, in January and in July. It was designed to align the tax payment to the current tax year so that HMRC are not waiting so long between when you earn your income and when you pay across the tax. The payment on account is calculated based on the current year’s tax bill (17/18 in this example) and divided equally between the two instalments. It is possible to adjust your payment on account if there is a genuine reason – contact us to discuss your circumstances.
Specialist tax planning for contractors
Are you confused about your options? We can help. AJN Accountants are specialist contractor accountants and can help you plan your retirement in the most tax efficient way.
Send us an email for some initial advice – firstname.lastname@example.org
Although it is always better to conduct tax planning exercises during the tax year, it isn’t too late for those that are yet to complete their return. Some useful tax saving tips are outlined below;
- Make sure you complete your tax return by 31st January 2019 – this will ensure you are not subjected to a £100 late filing fee from HMRC; try not to leave it to the last minute
- Hire an accountant to complete the tax return for you – a professional eye is more likely to identify opportunities you may not be aware of to mitigate tax; the cost of paying for this service is likely to reap dividends
- Include any sole trader losses – according to official figures there are well over a million people trying to earn extra income via a “side hustle” or a business outside of their 9-5. If you have been involved in something like this which hasn’t been profitable then you can offset the losses against other income and reduce your tax payable. Of course, don’t forget to include any profit if it exceeds £1k as these would be taxable earnings
- If you are a higher rate taxpayer you could consider making charitable donations to registered charities under Gift Aid. An election can be made in the tax return to consider this as made in the previous tax year, thus increasing the amount of earnings subject to basic rate tax as opposed to higher rate tax
- If you work from home you can claim a tax deduction to cover part of your home running costs. HMRC allows £18 a month without asking for any evidence. If you think the actual cost is higher (based on proportion of home used for work purposes) then a bigger claim may be made, but be prepared to justify it
- If you use your car for business purposes and you are reimbursed by your employer at less than 45p a mile (first 10,000 miles and 25p a mile above this) then you can claim the excess. If you are not sure ask your employer to confirm this
- If you are a member of a professional body and the membership if required for your job then you can include the cost as an expense in your tax return – see here for more information
- Reduce your payments on account if income in the current tax year is lower than in 17/18