Your personal self-assessment tax return

What you need to know about filing self-assessment

It’s a common scenario. As the year draws to a close, the thought of your tax return is there, at the back of your mind. But with so much time before the deadline, you decide not to worry about it for now. Then the weeks start to fly by, the festive season comes and goes, and soon you’re planning for the New Year and getting back to work as normal. Before you know it, it’s the end of January and HMRC’s waiting times are growing longer as thousands of other taxpayers in the same predicament try to get in touch. It’s better to finish your return early on to avoid this last-minute rush – but if the thought of rummaging through old receipts and puzzling over tax calculations fills you with dread, we can help.

Am I included in self-assessment?

When you’re self-employed, it’s up to you to let HMRC know your income for the year and pay the tax you owe. This is done through a self-assessment tax return that we complete on your behalf.
That’s not the only reason you might need to complete self-assessment, though. You’ll need to send a return if you had:

  • income from self-employment, business or partnerships that’s more than £1,000
  • more than £2,500 from renting out property
  • more than £2,500 in other untaxed income, such as tips or commission
  • income from savings or investments of £10,000 or more
  • income from dividends from shares of £10,000 or more
  • employment income of over £100,000.
  • profits liable to capital gains tax.

You’ll also need to complete a return if you:

  • were a company director
  • claimed child benefit, and you or your partner’s income was over £50,000.
  • want to claim tax reliefs or losses to get a refund.

Figures correct for the 2017/18 tax year. You can find a complete list of circumstances in which you’ll need to file a return on the Government’s website, or you can contact us to ask about your situation.

More than a quarter of tax returns in January 2018 – that’s 1,290,948 altogether – were submitted less than 48 hours before the self-assessment filing deadline at midnight on 31 January.

What do I need to do?

The process for self-assessment is fairly lengthy, so make sure you’re aware of the different stages and have enough time to complete them.

Registering

If it’s your first time completing a self-assessment tax return, or you didn’t file one in the previous year, the first thing you’ll need to do is register. The registration deadline for returns relating to the 2017/18 tax year was 5 October 2018. If you missed the deadline, or miss any of the others in the process, speak to HMRC as soon as possible. You may still be fined but this shows good faith and can make the process less painful.

When you’ve registered, you’ll receive a unique taxpayer reference number which you provide to us so we can register with HMRC’s online services.
After we have done this, HMRC will send you a authorisation code in the post. Providing this to us will allow us to access the online services and file your return on your behalf.

Completing your return

To ensure timely completion of your return you need to provide all the relevant records and paperwork to us immediately. The deadline for paper returns was 31 October, and online returns must be filed by 31 January.

We will need the following records:

  • all your business expenses P45, P60 and P11D forms
  • records of any sales or certificates from a taxed award scheme
  • PAYE records (if applicable) information about any redundancy or termination payments
  • VAT records (if registered)
  • records of your personal income.
  • information about income and benefits from your job.
  • If we already act for your business we may just require small pieces of information such as bank interest and confirmation that you have no additional income to include.
  • We do this by sending you a checklist to complete. Providing information as soon as you can helps our hardworking team and allows you to plan in advance for your tax payments.

Approving Your Tax Return

Once we have all the necessary information we will send your tax return and amount due to you. Typically this is via our secure document portal. Paper copies can be posted on request.
You must approve your tax return before we file it on your behalf. If you do not provide approval in good time you will overload our tax team which may lead to an increase in your fees. You may also incur penalties with HMRC.

Paying your tax bill

Your payment will include any tax you owe for the 2017/18 tax year, as well as your first payment on account towards the 2018/19 tax year.
The deadline for paying it is the same as that for filing the return, by midnight on 31 January.

What are the penalties if it’s late?

There’s an initial £100 penalty if your return is up to three months late, but this could increase the longer you leave it.

After three months, there are additional daily penalties of £10 perday, up to a maximum of £900.
Then, after six months, you could end up with a further penalty of 5% of the tax due or £300 – whichever is greater.
After 12 months, there’s another 5% or £300 charge, which will again depend on whichever is greater.
If you pay your tax bill late, you could face additional penalties of 5% of the tax unpaid at 30 days, six months and 12 months.

You can appeal against a penalty if you have a reasonable excuse, but the conditions for this are limited. Circumstances for appeal could include:

  • if a partner or close relative has passed away prior to the deadline
  • serious illness or an emergency hospital stay
  • unexpected delays in the post
  • an IT failure (hardware or software) when preparing your tax return
  • external causes (fire, flood or theft) which prevented you from completing a return
  • issues with HMRC services.

Your return can be completed from the end of the tax year in April
Leaving your tax return to the last minute overworks our tax team, leaves you unable to prepare for payments and could lead to an increase in your fees. You may also incur penalties with HMRC for late filing.

Common problems

When you’re getting your self-assessment return ready, it’s best to get it right the first time. Here are some of the most common mistakes, and how you can avoid them.

Missing out on tax relief

While self-assessment seems focused on calculating the tax you owe, you might forget about what you can claim back.
By working with us, we will claim tax relief where you’re eligible for it, including on charitable donations you’ve made, pension contributions, or work expenses.

Not declaring all your income

All your taxable income needs to be declared on your self-assessment form. Not just from the UK but anywhere in the world. That includes earnings, dividends, pension payments, interest on your bank account, capital gains and rent from a buy-to-let property. It can be especially easy to miss something out if your financial situation is complex, so make sure to share as much as possible with us. Give some extra thought to make sure all your income is included.

Late or inaccurate filing

HMRC statistics show that around 745,588 returns were filed late for the 2016/17 tax year. To make sure you’re not one of the culprits this year, make sure you start well in advance.
To avoid any of these problems from the start, we can handle your self-assessment tax return and ensure it’s completed accurately and on time.

Contact our team of tax experts if you need help. Call 020847770000 or email tax@davisgrant.co.uk

Tax Tips and News – December 2018

Welcome to our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

This month’s topics

  • Company vans update
  • VAT reverse charge in the construction industry
  • Postgraduate Loans – what employers need to know
  • HMRC warn of tax scams
  • December questions and answers
  • December key tax dates

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

Please contact us for advice in your own specific circumstances. We’re here to help!

Read More

Team Davis Grant Bowling Championship 2018

Last night our expert team let their hair down with a night of ten pin bowling and social fun at Rollerbowl at the City Pavillion.

The winning team was made up of Hutaib, Dylan, Sunil and Luke. The winner of the best average score over the 2 games was Gareth. Congrats to the winners and for everyone for having a great night!

Many thanks to Carly for organising and making the evening run so smoothly. The next team event will be the Christmas Party in December.

Are you interested in advancing or starting your career with us?
Learn about our Team and opportunities.

Budget 2018 – 1 week to go until tax annoucement, changes and reactions

As you may be aware, there’s only one week to go until this year’s Autumn Budget. As a pro-active, modern firm, we’re making sure that you are kept up-to-date with the breaking headlines and announcements.

Our Free App

We’ll have all of the tax announcements and news in one place. We’ll will notify you on the day of the Budget when it’s ready and updated via immediate alerts. You don’t need to spend time searching the Internet. Check our App throughout the day for all of the Chancellors key tax announcements, changes and reaction.

If you haven’t already downloaded our App, do so by searching for Davis Grant in the App store on your device.

Full Downloadable Report

The morning after the budget our summary report of all the key announcements will be available for you to download, print or share.

Resource Library

 

We are recognised as “Making Tax Digital Ready” by Xero

Davis Grant is now listed on Xero’s Advisor directory as specialists in “Making Tax Digital Ready”. This means you can be sure our team is prepared to help you deal with the challenges of Digital Tax in addition to our status as a Xero Gold Champion Partner and Xero migration certified.

What is Making Tax Digital?

By 2020, HMRC has set out that all tax returns will be made digitally. From next April all VAT registered businesses will be expected to keep digital records on a system that can submit data to HMRC directly.

Why computerise?

When advocating Cloud Accounting solutions we are often (quite rightly) asked by you to justify our recommendation that you move your accounting online. “What’s in it for me?” you ask, well don’t take our word for it check out the survey results below.

These 11 benefits are waiting for you…

  1. Data not lost if computer fails
  2. Less time to manage accounts
  3. Cost effectiveness
  4. More immediate information on financial position
  5. Easier interaction with advisor
  6. Fewer data-entry errors
  7. Good data security
  8. Better invoice management, enabling faster payment
  9. Help pay suppliers on time
  10. Ability to record transactions immediately from different devices
  11. Easier internal collaboration on accounts

Source: 673 accountants and 1,001 SME owners surveyed by Censuswide between 22.08.2017 – 29.08.2017

Learn more about Xero and our Solution…

Accounting Software Solutions

Speak to us about finding the right solution for you!

Tax Tips and News – October 2018

Welcome to October’s Tax Tips & News, our monthly update letter designed to bring you tax tips and news to keep you one step ahead of the taxman.

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

October 2018

  • Class 2 NICs to remain
  • Help-to-Save accounts go live
  • VAT on holiday accommodation
  • HMRC launch MTD campaign
  • October questions and answers
  • October key tax dates
Please contact us for advice in your own specific circumstances. We’re here to help!

Read More

Tax on residential property

Tax on residential property

Has devolution affected what tax you pay?

Reading Time: 4 minutes
Download PDF for Offline Reading

First-time buyers in England, Northern Ireland – and for a short time in Wales – were the biggest winners in the most recent shake-up to affect property taxes in Autumn Budget 2017.

Philip Hammond’s headline measure was to abolish stamp duty for first-time buyers on homes worth up to £300,000, and the chancellor didn’t stop there.

He also introduced a reduced rate of 5% on the portion worth from £300,000 to £500,000, providing a welcome boost for many aspiring homeowners in London where the average residential property sold for £556,146 in 2017.

But while the chancellor received plaudits for a move that helped 121,500 people take their first steps on the property ladder up until 30 June 2018, existing homeowners still have to pay property taxes – most notably in the form of stamp duty and capital gains tax (CGT) – while devolution means that where you live in the UK also affects the property tax you pay. Read More

Insider – Policy News Digest – September 2018

Keeping you up to date with the top financial policy news stories, rumours and talking points you need to know this month.

Reading Time: 5 minutes
Download PDF for Offline Reading

HMRC confirms ‘soft landing’ for Making Tax Digital

HMRC has confirmed that digital reporting requirements will be relaxed during the first year of Making Tax Digital (MTD) for VAT-registered businesses.

From April 2019, businesses with annual taxable turnover of more than £85,000 will be required to maintain digital records for VAT and submit quarterly returns alongside the annual tax return.

Under the requirements of MTD, any transfer of data between software programs must be carried out using digital software.

However, for VAT periods starting in the 2019/20 tax year, businesses will not need to have digital links for all software, and will be able to manually transfer or cut and paste their records instead.

This does not include the submission of the VAT return itself, which must be shared with the Revenue using an application programming interface (API).

In December 2017, HMRC said it anticipated there would be a “soft landing period without application of record-keeping penalties” in 2019/20 to give businesses time to adjust to the new system.

Its VAT notice, published in July 2018, legally confirmed the relaxed reporting requirements but made no mention of how the soft landing on penalties will apply.

“It would have been completely inadequate for the law to require you to do one thing, but then for HMRC to say informally that they would not enforce it.

“Most businesses want to comply with what the law requires them to do, and this approach from HMRC helps ensure that is the case.”

John Cullinane, tax policy director at the Chartered Institute of Taxation

We can help you get on top of digital reporting with our Cloud Accounting Solution.

Get in touch or download our factsheet if you would like to get ahead of the changes!

Stamp duty tax break saves first-time buyers £284m

Philip Hammond’s decision to abolish stamp duty land tax (SDLT) for most first-time buyers on all properties worth up to £300,000 saved homeowners £284 million in the first half of 2018.

The chancellor scrapped SDLT in Autumn Budget 2017 for most people taking their first steps on the property ladder in England, Northern Ireland and for a limited time in Wales.

Speaking at the time, Hammond expected the move to cut SDLT for 95% of first-time buyers and abolish it for 80% of them.

SDLT was axed on the first £300,000 of all purchase prices up to a value of £500,000, with a 5% rate chargeable on the portion between £300,000 and £500,000.

Those who bought their first home in Wales could have benefited from the move between 22 November 2017 and 1 April 2018, at which point the devolved land transaction tax replaced SDLT.

More than 121,500 first-time buyers have been able to get on the property ladder in the six months between 1 January 2018 and 30 June 2018.

“Our cut to stamp duty for first-time buyers is helping to make the dream of home ownership a reality for a new generation.

“In addition, we’re building more homes in the right areas and have introduced generous schemes such as the Lifetime ISA and Help to Buy.”

Mel Stride, financial secretary to the Treasury

We are committed making sure our clients don’t pay a penny more in tax than they have to. Talk to us about personal tax planning or download our factsheet below.

Inheritance tax receipts reach record high of £5.2bn

The Treasury fetched a record high of £5.2 billion in inheritance tax receipts last year, according to statistics published by HMRC.

Inheritance tax receipts increased 8% year-on-year in 2017/18 to continue a long-term trend, which began when the nil-rate band was frozen at £325,000 with effect from 6 April 2009.

Since then, inheritance tax receipts have grown by an average of 10% a year, with the latest increase £388 million higher than in 2016/17.

“The amount of money raised from inheritance tax has doubled in less than a decade, and a steadily rising proportion of estates are now caught within the inheritance tax net.

“Even the introduction of an additional nil-rate band for families passing on a home to their children was not able to stem the growth in inheritance tax revenues, yet it remains riddled with anomalies.

“Inheritance tax is a complex tax, and the sooner it is overhauled the better.”

Steve Webb, director of policy at Royal London

Rising residential property prices are a contributing factor to the ongoing rise in inheritance tax receipts, with house prices soaring above the rate of inflation over the same period.

However, the most recent statistics do not take into account the full impact of the residence nil-rate band (RNRB), which was introduced on 6 April 2017 in addition to the £325,000 nil-rate band.

Eligible estates qualify for an extra £125,000 through the RNRB in 2018/19 if the deceased owned a home, or a share of one, that was included in their estate and left to their direct descendants.

It enables someone to pass on a family home worth £450,000 without incurring inheritance tax liabilities in 2018/19 – and will increase a further £25,000 in each of the next two years.

“We’ve seen in recent years a more aggressive approach from the taxman that has driven a surge in inheritance tax receipts.

“Simplification of this can’t come soon enough for many families, but taking financial advice should be a priority for anyone with a potential inheritance tax problem.”

Sean McCann, chartered financial planner at NFU Mutual

If you are concerned about the implications of passing on your wealth, get in touch to plan your estate. Out friendly team personal tax team are waiting to take your call.

SMEs cite VAT as ‘biggest administrative headache’

VAT creates the biggest administration burden for around two-thirds of businesses in the UK, research from the British Chambers of Commerce (BCC) has claimed.

The report, which polled more than 1,100 businesses of all sizes, found that 64% were bamboozled by an array of rates and rules to comply with VAT legislation.

This percentage is likely to increase in the near future as VAT-registered businesses with taxable turnover of more than £85,000 prepare for Making Tax Digital to take effect from April 2019.

“It’s time to tackle the huge costs and complexities of the UK tax system, which sap away time and resources that could be better spent raising business productivity and growth.

“We want to see more investment in frontline HMRC support that’s geared towards making compliance easier for SMEs.

“There should also be greater independent scrutiny of new tax proposals with the aim of minimising the administrative burden on business.

“HMRC must be given both resources and a clear remit to focus more on supporting, rather than pursuing and punishing, small and medium-sized firms as they work to get tax right.

“Making tax administration simpler would provide businesses with more time and headroom to focus on investment and growth.”

Adam Marshall, director-general of the BCC

More than half (54%) said payroll tasks were the next biggest compliance burden, with many firms confused by the national insurance contribution thresholds and rates they are required to pay.

Corporation tax (41%) proved to be the third biggest administration headache for businesses in the UK, while three in four (75%) respondents feel HMRC red tape has increased in the last five years.

Speak to us about your business challenges. We pride ourselves on getting to know you and helping to resolve what keeps you awake at night.

Accounting Software Solutions

Tax Tips and News – September 2018

Welcome to September’s Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

This month’s stories (Sept ’18)

  • Employee benefit changes – HMRC consultation
  • Digital Tax is welcomed – even ‘expected’
  • VAT due on vouchers and gift cards
  • New online PAYE platform for the self-employed?
  • September questions and answers
  • September key tax dates

Please contact us for advice in your own specific circumstances. We’re here to help!

Read More

Here’s why HMRC care deeply about kids blankets…

The VAT treatment of children’s clothing has always been a source of confusion. According to HMRC sales of clothing designed for young children are zero rated. No VAT is payable by the supplier or manufacturer of the item.

When is a blanket an item of clothing?

APenalties recent case between HMRC and a supplier of fleeced blankets with sleeves hinged on whether such items are indeed clothing. We can imagine that a hefty tax bill was riding on the outcome of the decision.

The taxman argued that the product was not clothing as it lacked fastenings and was not intended for use when moving. HMRC also said the size range of ages 3-10 years and 10-13 years are more consistent with blankets.

But the seller of the product insists that the product is indeed clothing.

So what was the decision?

The decision by Judge Jonathan Cannan at the First-tier Tribunal agreed that the item is in fact clothing.

Clothing generally refers to items made of fabric or some other material which are worn to cover the body parts of the body in order protect the wearer from the elements, to preserve modesty and/or for the purposes of fashion.

All clothing may be said to be worn.

An item of clothing is worn where it is appropriately shaped to accommodate the contours and movement of the body, having regard to the functions it is intended to fulfil.

Given this definition the defining factor of the fleece was the fact it has sleeves. A blanket cannot reasonably be said to be worn in contrast to this product.

Therefore no VAT was payable to HMRC!

If you need help with your VAT Returns get in contact with us – our expert team is waiting to answer your questions.