Individuals who have not yet filed their 2015/2016 self-assessment tax returns need to do so by 31 January or face an automatic penalty of £100.
Stefanie Stapleton, personal tax manager, said: “Individuals who miss the 31 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 six months the penalty will be 5% of the person’s tax or £300 – whichever is higher.”
She added: “Within six months, it could rack up to at least £1,300. The penalties start to become even more serious if your tax return is more than 12 months late and can be as much as 200% of the tax. These penalties will be charged even if the person doesn’t actually have any tax to pay.”
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 let out a property as fully furnished accommodation, make sure you claim a 10% wear and tear allowance.
- Claim all revenue expenses associated with your property – letting agent fees, mortgage interest, ground rent, but not capital expenditure such as improvements or free standing white goods.
- Do you need to claim higher rate tax relief in respect of your pension premiums? Where your pension contributions are paid net of basic rate tax, remember that HMRC ask for the gross figure of your pension premiums not the amount you pay.
- Include all the charitable donations you have made during the tax year to claim any higher rate tax relief. Also, you can include charitable donations you have made after the end of the tax year up 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 included).
- Where you have a P11D form from your employer, include all the figures on your tax return (boxes 9 to 16 of the employment pages) and ensure you include a corresponding claim for relief in respect of any business expenses on the P11D (boxes 17-20 of the employment pages).
- If you use your car for business trips and your employer pays you less 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.
- 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 £11,000 in the year you only need to include these on the return if your total proceeds exceeded £44,000.
- Do you have any capital losses from earlier years to carry forward and use? You need to “claim” these capital losses. Many people think that just because they made a loss it shouldn’t go on your return, but it has to and if not claimed within four years then the opportunity is lost to get the losses allowed against future capital gains.
- If you received foreign dividends of up to £300 in total you can include these in the main return effectively as UK dividends and do not need to include supplementary foreign pages.
- 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 earning over approx. £42k 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.
- According to HMRC approximately one-third of the ultra-high net worth tax payers’ returns are under enquiry. If HMRC finds an issue or several with a tax return, it will open an enquiry. On average four issues are considered per tax payer under enquiry so individuals should always ensure their returns are accurate and be sceptical about any arrangements they might undertake to minimise tax to avoid this situation.
For more information, please contact Stefanie Stapleton at firstname.lastname@example.org