Five tips to help you tackle a tax return
1 January today, so the deadline for tax returns has started to look close! Here The Times gives its tips to help you to get your figures into HMRC on time.
Here, we highlight five important facts to keep in mind to make sure that you get your tax return in on time and without any errors.
• 1 Have all the necessary information to hand
To begin with, you will need your unique taxpayer reference number, which is a ten-digit figure issued when you sign up for self-assessment and should be on most letters you receive from HMRC.
Also keep your national insurance number handy. Bob Fraser, a partner at Towry, the financial adviser, adds: “You will need your P60 for each employment or pension, details of interest on bank accounts, dividend statements for shares and tax statements for any investment held. You will also need details of any capital gains that you have made from selling property other than a main residence or investments. If you have sold investment bonds, you will have to declare any chargeable gain that you have made.”
• 2 You don’t need to fill out the entire return in one sitting
The system will let you save your progress and you can begin where you left off. That also means you should take as long as you need to double-check everything you are entering.
Anita Monteith, from the Institute of Chartered Accountants in England and Wales (ICAEW), suggests comparing the return with last year’s and taking a closer look if there is a huge discrepancy. “Make sure you put all your paperwork into date order. Taking the time to do this now will save a whole lot of stress and make the filing process smoother,” she adds.
• 3 Keep records of everything
Stuart Aikman, of Smith & Williamson, the accountancy group, points out that Revenue may ask to see your records if they want to check your return. Generally, this means keeping records for two years after the end of the tax year, but for the self-employed and those with rental income it is a five-year requirement. Ms Monteith says that there is “a maximum penalty of up to £3,000 for each tax year for which records have not been kept.”
• 4 Being late is not really an option
There is an automatic £100 penalty for filing a late return, even if you do not owe any tax. If you are three months late, you are penalised £10 per day, up to a maximum of £900, as well as the £100 penalty. HMRC says documents being lost through theft, fire or flood, serious illness and bereavement are acceptable reasons to miss its deadline, but the return needs to be filed promptly afterwards or you could still face a penalty.
• 5 Consider an accountant
If you find the whole system confusing, or would rather have someone else take care of the hassle for you, a professional accountant might be just what you’re looking for. Expect to be charged about £200 for a basic self-assessment service, though the exact price will depend on how complicated your tax return is.
Karen Barrett, the chief executive ofunbiased.co.uk, says: “Bringing in a professional tax adviser or accountant will not only save you time but more crucially they are best placed to advise you on your finances and could ultimately save you money in the long run.
“Particularly if you are self-employed or own a business, a qualified tax adviser is able to leave you free to focus on running your business, whilst they look at your business as a whole and are able to spot things that you wouldn’t necessarily pick up on, such as under-used tax reliefs.”
Anyone can call themselves an accountant, so check if they are members of a reputable body — Mr Aikman lists the Association of Chartered Certified Accountants, Association of Taxation Technicians, Chartered Institute of Taxation, ICAEW, Institute of Chartered Accountants of Scotland, Institute of Indirect Taxation and the Society of Trust and Estate Practitioners. ICAEW has a “find an accountant” service on its website, while unbiased.co.uk also offers a free service to find an accountant near you