Next year, don’t leave your tax return to the last minute
Did you, like many others, have to run the mad dash to get your tax return finished over the weekend?
HMRC estimates that around six per cent of tax returns are filed on the 31 January deadline day each year. For those leaving it to the last minute, HMRC’s online filing system can be slower than normal and the automatic £100 penalty for late filing is a constant threat.
How can you avoid this deadline day rush in years to come? Here are our top five tips for a stress-free 2016-17 tax year.
The most difficult part of self-assessment is gathering all of the information. Once you have all the proper paperwork, it’s really just a case of filling in the blanks.
Organising yourself throughout the year and holding onto important documents is essential for a stress free tax return. Documents that you should keep hold of include:
· P60 form (if you have an employer).
· P45 form (if you have left a job in the tax year).
· P11D or P9D form detailing any benefits and expenses.
· Interest statements from your bank or building society.
· Details of your expenses, including receipts and breakdown of your mileage.
Gathering all of these documents on the eve of deadline day is a nightmare, especially because everybody else is trying to get hold of them at the same time.
Next year, make things easier for yourself by collecting all of this paperwork as it comes through the letter box and store it in a file marked ‘ tax return information’.
2.Register as soon as possible
If you have filed a self-assessment tax return before then this won’t apply to you, but if you are a first time self-assessor then you should make sure that you register as soon as possible.
On their website, HMRC are clear that it can take 20 working days to complete the registration process, which is usually four full weeks.
The next deadline for registration is 5 October 2016 for the previous tax year. If you’re late, don't worry; you won’t get a penalty as long as you pay your self-assessment bill in full by the deadline.
3.Use your holidays
In the build up to this year’s deadline day, HMRC reported that record numbers of self-employed people were using holidays like Christmas Day and Boxing Day to file their returns.
Of the 11 million or so people who file each year, more than 2,000 used Christmas Day to file and 5,400 people spent Boxing Day submitting their form online.
HMRC also reported that nearly 25,000 people submitted their online form on New Year’s Eve, although this probably had something to do with the 31 December deadline for PAYE taxpayers, who want to spread their payments over the next tax year (see below).
4.Don’t file a tax return
This is a very useful tax trick, but it only applies to people in PAYE employment who owe less than £3,000 in tax.
If, for example, you have a full time job but also do a bit of freelance work on the side, then you may be able to spread your tax payments over the next tax year by arranging deductions through your PAYE tax code. And best of all, you might not need to file a tax return.
For these people, a simple phone call to HMRC will do. But be warned, you must register your taxes before midnight on December 31, and the HMRC phone lines can be very busy at this time of year.
5.Use an accountant
There are hundreds of articles and websites out there that claim to make filing tax returns easier, but it does require effort, discipline, and often a large dose of frustration. The only true way to avoid this pain is to use an accountant.
Outsourcing this work to an accountant is useful if finances aren’t your strongest skill and you find that the annual tax return is distracting you from what you are actually good at.
If you use an accountant then you are almost guaranteed to file on time and without mistakes. An accountant might also be able to suggest ways of increasing your tax efficiency, so you pay less of your hard earned cash to HMRC.
Do you want to sit back and relax next year? Talk to Umbrella Accountants about our self-assessment tax return services. Telephone: 0800 121 6513.