Friday, January 9, 2009

Tax Return Preparation - Some Useful Tips To Help

Now that the festive season is out of the way, you can no longer put off completing your tax return. The 31st January is not just the deadline for filing online tax returns and paying the balance of tax owed but also a good chance to review your overall tax affairs.

All self assessment taxpayers must pay HMRC the balance of any tax owed by 31st January, or risk being charged daily interest after the deadline (currently at 5.5%). Taxpayers may also be asked to make their first 'payment on account' for the current tax year.

Preparation is Key

Leonie Kerswill, tax partner at PricewaterhouseCoopers LLP, gave the following advice:

“You probably find that getting your tax return in tends to slip down the priority list over the festive period but after the expense of Christmas it would be a shame to incur a £100 fine for not getting your tax return in on time, so the sooner you get the form in the better.

“Preparation is key so get your information together before you start and if you need help, ask HMRC or a qualified tax adviser. And do remember that you have to pay your tax – plus any payment on account due – it’s not just about getting the form in.

“The eve of the new year is also a great time to think about some New Year tax resolutions – such as checking tax codes, thinking about tax efficient investments and benefits, inheritance tax planning and generally that you'll take tax seriously!”

Top Tax Return Tips

Here are PwC's top tips for completing your tax return this year:

  • read all the questions carefully;
  • get all relevant paperwork together – such as P60s and P11Ds - before starting;
  • make sure the benefits listed tie up to the P11D (Benefits Statement) and that appropriate expense claims are made;
  • remember that not all benefits are taxable. Although State Pensions and Job Seekers Allowance are, benefits such as Child Benefit are not;
  • include personal pension contributions from post tax earnings;
  • list Gift Aid payments and any other charitable donations and enter the amounts that were actually given;
  • make sure the bank or building society interest received plus the tax that has been deducted (usually 20%) add up to the gross amount;
  • register for the HMRC online filing system by the 22 January to ensure the activation pin is sent out in time.
  • miss out any questions that are set;
  • enter income from ISAs or PEPs;
  • leave it until the last minute - mistakes are more likely to be made if the process is rushed. The online filing system also gets very busy during the last two weeks before the deadline;
  • include pension contributions to an employer’s pension plan deducted directly from pre tax earnings;
  • forget to complete all the relevant supplementary pages eg employment or land and property sheets;
  • forget to tick the box if a repayment is due and include the bank account details where the money should be sent to;
  • forget that any tax owed needs to be paid by 31 January – it’s not just a case of getting the form in.
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