Rajiv Vadgama, associate director at Baker Tilly's Professional Practices Group, shares his hot tips on tax returns:
- Do submit your tax return on time - the deadline for a 'paper' return is 31 October following the end of the tax year. If you or your agent files your return online then you have until 31 January following the end of the tax year. There are some limited exceptions where HM Revenue & Customs (HMRC) will allow paper filing after 31 October following the end of the tax year.
- Don't get charged penalties - If the return is one day late a penalty of £100 is charged, which applies even no tax is due or the tax has been paid. If the return is three months late then £10 for each following day up to a 90 days maximum of £900. If the return is six months late £300 or five per cent of the tax due, whichever is the higher. If the return is 12 months late £300 or five per cent of the tax due, whichever is the higher. In serious cases you may be asked to pay up to 100 per cent of the tax due instead.
- Do remember you have a personal allowance - each UK domiciled individual is entitled, the 2012/13 rates are:
- basic - £8,105 (income limit £100,000)
- age 65-74 - £10,500 (income limit £25,400) and Age 75 and over - £10,660 (income limit £25,400)
Remember if your income is just over £100,000 you can pay into your pension scheme, which can be set against your income preserving your personal allowance. - Do remember your capital gains tax (CGT) allowance - each UK domiciled individual is entitled to a capital gains annual exemption. The 2012/13 rate is currently £10,600. You should consider transferring assets between spouses to reduce capital gains tax using two allowances. CGT is charged at 18 per cent if you are a basic rate taxpayer and 28 per cent if you are a higher rate taxpayer. Remember also gains in some case can be structured to straddle two tax years doubling the exemption.
- Do remember to check your tax code - if you are employed remember to check your tax code when it is issued to ensure the correct amount of tax is being deducted. If you believe it is not correct then advise HMRC.
- Do remember to include your P11d in your return - if you receive benefits in kind as an employee remember to include those benefits in the tax return. You may claim a deduction for some benefits if they are wholly, exclusively and necessarily for the purposes of the employment. The most common benefit is private medical insurance, which is not claimable.
- Don't include your ISAs - you do not have to put the interest earned on your ISA account in your tax return. There are other tax-free investment products that also do not need to be included.
- Don't include your children's income - a child's interest arising on his savings account does not have to be included in the tax return unless the capital was given to the child by the parent and the interest exceeds £100.
- Do remember to include your pension contributions - remember to include these in your return to claim the appropriate relief. If you pay contribution under salary sacrifice arrangements they do not need to be included.
- Do remember to include your gift aid donations - remember to include these in your return to claim the appropriate relief. If you pay contribution under salary sacrifice arrangements again they do not need to be included.