Tax return deadlines: taxpayers’ worse nightmare

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Have you ever felt overwhelmed by not having enough time to cope with your tax affairs in time?
During the tax year (6 April one year to 5 April the next) there are important dates , let’s call them key dates, by which you need to send in your tax return and make certain payments. It’s important to be aware of these dates as HM Revenue & Customs (HMRC) imposes penalties, interest and surcharges if you miss them.
• 31 January
This is the formal deadline for sending back a tax return received by the previous 31 October. If it arrives after this deadline you’ll be charged an automatic £100 penalty.This is also the deadline for paying the balance of any tax you owe, referred as ”balancing payment”.HMRC will charge you daily penalties until they receive your payment.
• 30 September
Paper tax returns for the tax year that ended on the previous 5 April must reach the HMRC by this date if you want them to calculate your tax for you, tell you what you have to pay by the following 31 January or collect tax through your tax code (if possible) where you owe less than £2,000 .
If they receive your paper tax return after 30 September and process it by 30 December, they’ll still calculate your tax and try to collect tax through your tax code; but they can’t guarantee to tell you what to pay by 31 January.
If you file your tax return online the deadline is later (see below) because the system calculates your tax liability for you automatically on-screen.
• 28 February
If you don’t pay the balancing payment by 31 January, you’ll be charged an automatic 5% surcharge on top of the amount still owing. This is in addition to any interest payments.
• 31 July
This is the deadline for making a second ‘payment on account’ for tax owing for the preceding tax year.
If you still owe tax that you were due to pay by the previous 31 January, you’ll be charged a second automatic 5% surcharge on top of the amount you owe.
Taxfile‘s tax accountants in South London took a group policy for all their customers in order to protect them from any extensive work generated by an enquiry from the tax office. In order to help us protect you from the taxman you need to send your tax return in time.
Taxfile can also protect new customers for their last tax return, provided they sent their return in time, before the deadline.

Allowable expenses that you can deduct from your lettings income

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As promised last week, today we are going to discuss expenses and tax allowances that you can deduct from your rental income when you work out your taxable profit or loss. If you have several UK residential properties you let than you need to add them together in terms of receipts and expenses on the Land and Property Pages provided by HMRC. What you need to bear in mind is that you have to work out your holiday lettings and overseas lettings profits separately.
As i mentioned last week if you choose to use Rent a Room Scheme then you cannot claim any expenses.
The following allowable expenses are deductible in computing your rental business profits, provided they are incurred wholly and exclusively (omnipresent words in the Land and Property tax guides) for the purpose of the business:

• letting agent’s fee;
•utility bills like gas, electricity,water;
•rent which you pay to your own landlord for a property you are subletting;
•cost of insurance , whether of the building or of the contents;
•services you pay for like gardening or cleaning;
•Council Tax;
•maintenance and repairs, but not improvements;
•interest on property loans, provided they incur wholly and exclusively for the purpose of the business;
•accountant‘s fee;
•cost of rent collection;
•legal fees for lettings of a year or less, or for renewing a lease for less than 50 years;
•other direct cost of letting the property like advertising, phone calls and stationery.

So, if the tax on property income still leaves you in dark, Taxfile’s tax accountants can help you as a landlord get a better picture of it. Their accountants in South London will assist you with filling in tax forms, preparing your accounts and dealing with Inland Revenue on your behalf.

Rent a Room Scheme

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If you’re thinking about letting furnished rooms in your home, you may want to take advantage of the special Rent a Room Scheme . Under this scheme you can be exempt from income tax on profits from furnished residential accommodation in your only or main home if the gross receipts you get (that is, before expenses) are £4,250 (£2,150 if letting jointly) or less. But you can’t then claim any of the expenses of the lettings.
A lodger can occupy a single room or an entire floor of your home. It does not apply if your home is converted into separate flats that you rent out. In this case you will need to declare your rental income to HM Revenue & Customs (HMRC) and pay tax in the normal way. Nor does the scheme apply if you let unfurnished accommodation in your home.
There are certain advantages and disadvantages of using this scheme –Taxfile in South London can help you choose the best option according to your specific circumstances. Their tax accountants will work out whether you’re better off joining this scheme or declaring all of your lettings income and claiming expenses on your tax return.
The main point to bear in mind is that if you are in the Rent a Room scheme you can’t claim any expenses relating to the letting (for example, wear and tear allowance, insurance, repairs, heating and lighting).
If you don’t normally receive a tax return and your receipts are below the tax-free thresholds for the scheme, the tax exemption is automatic so you don’t need to do anything.
If your receipts are above the tax-free threshold, you must tell your Tax Office – you can do this by completing a tax return and claiming the allowance.

That’s all for today. Next week we will discuss, in more detail, the allowable expenses that you can deduct from your lettings income, provided you don’t use the Rent a Room scheme.

PAYE forms: P45, P60, P11D

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PAYE (PAY As You Earn) is the HM Revenue and Customs system for collecting income tax from the pay of employees.

As an employer, you need to deduct income tax and National Insurance contributions (NICs) from your employees’ pay and send it to the HMRC.

As an employee, you should receive a P45 or a P60 from your employer that show you the tax you pay on your wages. If you receive benefits or expenses your employer has to send a form P11D to the tax office.

P45 form

You receive a P45 from your employer when you stop working for them. It shows:
•your tax code, tax reference number and Tax Office
•your NI number
•when you were last paid
•your earnings in the tax year from all your jobs
•how much tax was deducted from your earnings

You are entitled by law to get a P45 when you stop working for your employer.

P60 form

P60 is a summary of your pay and the tax and the tax deducted during the year.

Your employer should give you a P60 at the end of every tax year (tax year runs from 6 April to 5 April the next year)

It is very important to keep your P60 safe as you might need it to prove your income if you apply for a loan or to claim back any overpaid tax.

P11D form

Your employer doesn’t have to give you a copy of P11D but he must tell you the details included on the form. This form shows the expenses payments, benefits and facilities provided by the employer.

For more information, you can visit Taxfile‘s tax accountants in South London. Their multilingual staff (including English, Polish, French, Hungarian and Dutch) are ready to help you with any type of tax affair.