As we prepare ourselves for the New Year, the chances are you, along with plenty of other people, have big plans for 2018: Go to the gym, eat healthy, drink less alcohol, quit smoking once and for all, and deal with taxes more efficiently.
For those of you pledging to do the latter, GoSimple Software has compiled five top tips to help make tax simpler, less time-consuming and easier on your wallet.
1. Ditch the accountant
In the past, an accountant was crucial to making your funds watertight. But now they’re becoming redundant, or at least overpriced (by and large) for the services they offer. Whereas an accountant would charge, on average, around £250 to complete your Self Assessment tax return, it’s now easy to do this yourself.
Digital software such as SimpleTax gives you an accurate picture of your income and expenditure, while guiding you on how your Self Assessment should be composed. Cost-wise, these tools start from as little as £25 for an annual subscription.
2. Understand what expenses you’re entitled to
Anyone who needs to complete a Self Assessment has the potential to shave hundreds of pounds off their tax bill by getting savvy on which expenses are eligible for relief with HMRC. There are countless costs that you can claim on, depending on the nature of your earnings. Tax software can help you identify allowable expenses, to ensure you don’t miss out.
3. Keep personal expenses separate
There are harsh penalties for anyone who mixes up eligible tax breaks with those outside of the boundaries. For this reason, it’s wise to keep your non-PAYE earnings and outgoings in a separate account to prevent confusion. That way, you won’t have to waste time sifting through bank statements to distinguish between personal and professional finances.
4. Say ‘goodbye’ to paper receipts
Don’t let scattered, laboriously compiled receipts cause headaches over the next 12 months. Going digital can help you track what you’re spending, store the evidence, and log this on your Self Assessment. The best tools are powered by the Cloud – this means you can use your smartphone or tablet to upload receipts from your camera. Make the New Year a time to banish the chance of losing, forgetting or mismanaging your expenses by recording them directly in your tax return.
5. Streamline your finances
We can’t avoid tax entirely, but we can look to reduce our taxable income. One example for those that trade via a limited company is splitting take-home pay between a wage and a dividend, although HMRC are seeking to reduce this benefit.
You might also consider topping up your pension pot to reduce your tax bill; there are so many ways to streamline your earnings while staying on the right side of HMRC. It’s simply a case of knowing where to save.
The New Year brings taxpayers across the UK a chance to take a fresh look at their finances. By exploring the latest digital tricks for tax assistance, and growing your knowledge of where money can be saved, you can ensure that 2018 is the best year yet.