With the 31 January deadline for the 2017/18 self assessment tax returns just days away, Blick Rothenberg offers some last minute hints and tips to help you complete the online process.
Around 10 million people must complete a self-assessment tax form every year, typically because they are self-employed, run their own business or have untaxed income or capital gains, such as from a buy-to-let property, a trust or investment portfolio.
So whether you have just started out as a buy-to-let landlord or you are an established property investor, you need to have filed your 2017/18 self assessment tax return online by 11.59pm on Friday.
Stefanie Tremain, personal tax manager at Blick Rothenberg, said: “Individuals who miss the 31st January deadline and are up to three months late will incur in an automatic £100 penalty. Completing and filing your self assessment form may seem a hell of a lot of work but it needs to be done.
“After three months, HMRC will start charging penalties of £10 per day and after 6 months the penalty will be 5% of the person’s tax or £300 – whichever is higher.”
She added: “Taxpayers should have registered for HMRC online services and set up an online account to file their return online. However, once this is done it can take up to 10 days for the necessary activation code to arrive, so if they have not done this by now then it’s probably too late and they could face a fine.
“Another point which can catch taxpayers out is that the user ID needed to log into their online account is not the same as their unique taxpayer reference number (UTR).”
Here are some tips that should make the process of filing the self assessment form easier:
Don't forget to declare child benefit payments if your income is over £50,000.
If you are renting out a property, claim all revenue expenses associated with the letting including letting agent fees, ground rent, replacement of furniture and appliances but not capital expenditure such as improvements to the property.
Again, on renting out a residential property, 2017/18 is the first tax year when the mortgage interest relief restriction applies, so it’s important to ensure that the restricted deduction is reported correctly.
If you are letting out a room in your own home is it more tax efficient for you to claim the annual £7,500 (£3,750 per owner for properties owned jointly) Rent a Room scheme allowance rather than actual expenses?
Do you need to claim higher rate tax relief in respect of your pension payments? Where your pension contributions are paid net of basic rate tax, remember that HMRC ask for the gross figure of your pension payments not the amount you pay.
Should your pension annual allowance be restricted if your income exceeds £150,000?
Include all the Gift Aid donations you have made during the tax year to claim any higher rate tax relief. You can also include Gift Aid donations you have made after the end of the tax year but before you file your return and carry these back. (Remember, you can’t claim for relief for these donations again next year so keep a record of what you have carried back).
Where you have a P11D form from your employer, include all the figures on your tax return and ensure you include a corresponding claim for relief in respect of any business expenses on the P11D.
If you use your car for business trips and your employer reimburses you at lower than the HMRC maximum approved mileage rate (45p for the first 10,000 miles and 25p per mile above this) you can claim the excess back though your return.
If you are a member of a professional body required for your employment, you can include the cost of the subscription as an allowable deduction.
If you made capital gains of less than £11,300 in 2017/18 you only need to include these on the return if your total proceeds exceeded £45,200.
If you have disposed of a UK residential property, report the disposal correctly to ensure the correct rate of tax is charged (i.e. up to 28% rather than 20% for gains on most other assets).
Do you have any capital losses from earlier years to carry forward and use? You need to “claim” these capital losses. Many people assume that if only losses are realised they don’t need to be reported on the return, but this is not the case and capital losses must be claimed within 4 years to remain available.
Don’t forget to include foreign income and capital gains. New rules have been introduced which can mean that failure to properly declare foreign sources can be a criminal offence.
Don’t forget to include your state pension figures – although the state pension is paid gross, it is still taxable and needs to be included on your tax return.
Don’t forget National Insurance – Class 4 can be the forgotten element of tax bills for self- employed individuals. Also, individuals with two employments may overpay Class 1 and HMRC can overlook notifying you of NIC overpayments.
If you are due a repayment, make sure you claim a refund and include details of the UK bank account you want the refund to be paid into as refunds are made more quickly this way, rather than by asking for a cheque.