Tax returns – we all love them

Tax return
Not. But we all have to do them. It’s like going to the dentist – you know you have to do it, but you put it off as long as possible. And after all it’s a long time before you have to file your tax return, all the way to 31st of January in the following year.
 
We are all busy. We need to deal with today’s problems today. Tomorrow’s problems are for later. But unfortunately tomorrow does come with its problems, and at some point you will have to deal with this. 
 
Timing is everything
 
Over the years we’ve discovered that one third of the tax returns that we do in December and January create a repayment. One third of our clients have been lending the government money for six months or more longer than they needed to. Their money, which they can spend to expand their business, or go on holiday, pay off a credit card bill, and generally make life easier for themselves.
 
Another one third of the tax returns in those last two months produce a tax bill. Tax is due on 31 January. If it’s not paid you pay interest, and if it’s not paid by the end of February you pay a 5% penalty as well. These clients are all amazed at the amount of money they’ve got to suddenly find. It causes them a real issue. They have to take it out of the business if they can, or borrow it, or arrange payment terms with HMRC. And that costs them even more. If only they had known earlier they could have planned for this. They may have made different decisions.
 
We try and make it easy with electronic tax checklists which pre-populates some of the information, and sometimes we know some the information already because we’ve dealt with the payroll and the accounts so we know the dividends et cetera. But we can’t fill it all in. 
 
Make it easy
 
You can do your bit by sending us information as soon as you get it. If you have a job, you’ll get your P60 at the end of April or in early May. Just scan it and send it. If you have benefits from your job, you will get a P11d at the latest by 19 July. Again, send it soon as you get it. If you have bank interest or building society interest these are now usually printed on the statement that covers the year-end – so probably the April statement. Scan it and send it, or just copy into an email – the gross interest, tax deducted, and the net. Or if it just shows the net amount that will do. Anything else you get, send it immediately. If that’s a bit of a fuss have a file, and as the stuff comes in put it in the file so you don’t have to go hunting for it months later. That takes ages and you need to deal with that day’s issues, not hunt for stuff that’s months old.
 
If you have a pension from an employer or pension provider, you will get a P60 as though you were employed. If you have a state pension, that still taxable so we do need to know about it. You should get a notification from the government in about February as to what your pension is going to be for the next year. Give us that so that we can pre-populate the year after and then we don’t have to bother you. Pensions are paid weekly, four weekly, or monthly. If you can’t find the letter from the previous year, check your bank statement and make sure you’re telling us which payment period you’re getting this amount of money for. We can do the sums, but people frequently muddle four weekly and monthly. If it arrives on exactly the same date every month, it’s monthly. If it’s slightly different it’s probably four weekly and it will be helpful if you check to see whether you had 13 payments in the tax year (remember the tax year is 6th of April to 5th of April the following year) or just 12.
Stocks and shares, unit trusts and the like are a bit like bank interest. Quite often you’ll get a consolidated tax voucher from whoever is looking after your share portfolio, and that’s all we will need as long as it has what you bought and sold on it and the income with the tax deducted. We may have to work out capital gains on the sale of the shares. We don’t need anything to do with ISAs or PEPS. They are tax-free. You don’t need to send them to us.
 
Sooner the better
 
The earlier we can do your tax return the more notice we can give you of any tax you’ve got to pay, and the quicker we can claim a repayment for you. As you spend a lot less time looking for things, you will manage to cram this in the today jobs so it will never turn into a big job and mess up one of your tomorrows.  Try and make a virtue out of necessity.
 
Share this: