We must have been reading the Chancellor's mind. As we were ready to go to press, the budget delivered potentially huge changes to how HMRC will collect information on our tax affairs. However, for the time being, we still think professional advice is invaluable. From what the Chancellor proposes, we can still see a huge potential for errors.
If you are not completing a tax return, have you ever wondered if you should?
There are so many rules surrounding this issue and they have changed over the years so do not assume just because you are in a PAYE scheme you can forget about it.
For example you need to file a return if:-
- your untaxed income was £2,500 or more, e.g. from rent or investments
- your savings or investment income was £10,000 or more before tax
- you made profits from selling things and need to pay Capital Gains Tax
- you are/were a company director
- your income was over £100,000
We work with a select group of local accountants who can help you make sure you are on the right path.
For example, Anthea Grange of Ingalls Chartered Accountants in Kendal told us of a specific checking service they provide,
“We will discuss with a client what types of income they receive and check a few points with them. We can see whether they fall within the criteria for submitting a return. It’s just £100 plus VAT for a Tax Return Review. If we then go on to actually submitting the return we only charge a further £70 plus VAT. It just gives peace of mind, because the last thing anyone wants is an unexpected tax bill."
Perhaps you have been filling in a self-assessment form…
But do you worry you are getting it right? "I’m fortunate we have an in-house management accountant that checks it over for me, but if we didn’t I don’t think I would feel so confident." says FMB's Ruth Power.
Top three most common tax return mistakes:
- Forgetting to include employment income – although taxed via PAYE it must still be included
- Completing the form but not clicking on “Submit” (Ruth admits that she did this once but avoided the fine because she had paid the tax due in advance of Jan 31st)
- Not including pension details- this income may or may not be taxed at source
Paul Hornby of JF Hornby and Co Chartered Accountants in Ulverston pointed out it’s not just about checking whether you have paid enough tax, you could be paying too much!
“Not many people realise but you need to complete a self-assessment tax return if you are a higher rate tax payer or have untaxed income. It’s up to the individual to inform HMRC and failure to do so can result in fines. The return itself can be quite confusing and even though you can register online to complete your own return you could be missing vital tax allowances. UK tax legislation has grown so much over recent years it’s easy to get confused. Every year we have clients who just want their tax checked only to realise tax has been calculated incorrectly. Just because you are under the PAYE system doesn't mean you are paying the correct amount of tax. For piece of mind we offer a free consultation where we would gladly check your tax and then only commence any work if the benefit was greater than the fees. If you need to complete a self-assessment tax return hopefully by utilising J F Hornby & Co our input into the taxation calculation would again outweigh the fees.”
When all is said and done small, innocent mistakes quickly spotted are unlikely to attract fines, but add up unpaid tax over several years plus interest and you could end up with a rather nasty bill.
For more information of who must submit a UK tax return click here.