Are you ready for your 2020 tax return?
Most UK tax payers won’t ever have to complete a tax return under the Self-Assessment system as they pay the correct amount of tax through Pay As You Earn (PAYE) via their employer. However many of us will have to complete a return to allowing HMRC to calculate how much tax we owe them (or sometimes they might owe us).
With April now upon us, it becomes important to ensure that your tax returns are fully in order.
Unless you’ve taken adequate time to prepare – you can quickly be left feeling lost, stressed and intimidated by the whole process.
Here is our checklist of the essential elements to cover before filing your tax return, starting with:
1. Your Personal Details
Along with the required normal information to hand, this requires some specific elements that may need to be requested. These include-
Your Unique Tax Number (UTR) that was provided to you upon agreeing to self-assessment, your National Insurance Number (NIN) and – if you are a salaried worker – your P60 will be required. If you left your job during the tax year you will be required to provide your P45.
2. Your Income History
This will allow you to detail and provide evidence about your untaxed income across the 2019/20 period. This includes professional income alongside any money earned from renting out property, tips, commission on sales, income from savings, any long or short-standing investments and foreign income.
Primarily, HMRC will be looking for you to list your sources and you should also include any evidence supporting any additional income received across this period. If you own a limited company, this will include any work carried outside this period.
This also includes other income including unique elements such as gambling income, hobby income, prizes and awards, trusts and more. If you are unsure what income should be listed, it is always best to consult your accountant and validate if it should be added.
3. Your Expenses
These specifically detail the relief you are allowed to claim across the taxable period. While these are wide ranging, some of the most common include-
Travel: If you travel for your work, this can be significant. This requires you to provide the miles travelled and evidence of expenditure.
Equipment: Any items bought for your business such as laptops, hardware, servers etc. are tax deductible expenses. However, these have to primarily be for professional use and can result in issues if you are audited.
Professional Memberships: Any subscriptions or fellowships are generally tax deductible.
We would always recommend checking with your accountant, advisor, or professional who is familiar with your work to ensure that the correct relief is claimed.
Why might I need to complete a return?
If HMRC are satisfied that you are paying the right amount of tax through PAYE, then you should not be required to complete your own Self-Assessment tax return. However, you may have to complete a return if:
- you were self-employed – you can deduct allowable expenses
- you got £2,500 or more in untaxed income, eg. from renting out a property or savings and investments
- your savings or investment income was £10,000 or more before tax
- you made profits from selling things like shares, a second home or other chargeable assets and need to pay Capital Gains Tax
- you were a company director – unless it was for a non-profit organisation (eg. a charity) and you didn’t get any pay or benefits, like a company car
- your income (or your partner’s) was over £50,000 and one of you claimed Child Benefit
- you had income from abroad that you needed to pay tax on
- you lived abroad and had a UK income
- you got dividends from shares and you’re a higher or additional rate taxpayer
- your income was over £100,000
- you were a trustee of a trust or registered pension scheme
What if I don’t submit a tax return?
Unfortunately, it is your personal responsibility to ensure that you submit a return and are fully paying tax on your income. If you have received income on which you have not paid tax through PAYE, it is vital that you inform HMRC by October 5th of the year following the tax year in which the income arose. For example, the last deadline was the 5th of October 2019 for this current tax year.
If you do not do this and submit a return late as a result, then you may have to pay a penalty and interest on any tax paid late.
What if I don’t think I should be completing a return?
Check, check, and check again.
Ignoring the submission of your return can land you in hot water and leave you with a hefty cumulative tax bill. If you don’t complete one, you will automatically be fined for non-submission. If you think you don’t need to complete your return, contact HMRC on the number on the form. They will be able to tell you why they think you need to submit it or – if they agree that you don’t need to submit – they will confirm this with you in writing.
Remember, deciding your eligibility off your own bat without validating it with HMRC will almost always result in significant inconvenience at best and hefty fines at worst.
Always take the time to check.
Completing the return
When it comes to completing your documentation, there are two types of tax return – physical or ‘paper’ returns and online returns:
If you wish to complete the paper return, then you will need to ensure that it is with HMRC by midnight on 31st October following the end of the tax year. If you do so, then HMRC will guarantee to calculate any liability in time for your payment date of midnight on 31st January for any tax that you owe. If you don’t submit the return in time, then HMRC will not guarantee that they will be able to make the calculation in time for the 31st January deadline. This will be classed as a late payment and incur a penalty.
You or your representative can submit your tax return online before midnight on the 31st January in time for the payment deadline. This service is preferred by many companies and carries a number of significant benefits, though it can be intimidating for those that are unfamiliar with the process.
Why should I use a tax return service?
Completing a tax return is extremely time consuming and often complicated, so it is not surprising that over one million people are fined for late filings every single year.
In order to streamline this process, our team at One Click Group offer an all-inclusive tax return service which cuts the fuss out of submission and ensures full accuracy. For only £125 (plus VAT) our service includes:
- Calculating your unique tax position and completing your return
- Any extra help required with your tax affairs
- Full accounting for employment income, pensions, and state benefits
- Inclusion of Capital Gains
- Cover rental income for one property*
- Provide you with a personal copy with detailed explanatory notes
- Submission to HMRC’s online portal
- Dealing with any follow up correspondence from HMRC on your behalf
All you need to do is complete the online submission form and a member of our team will quickly be in touch to ensure we have all the information we need to complete your submission.
Provided you are able to provide this information before 20th January, we will be able to complete your 2019/2020 return in time for the 31st January deadline.
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Along with over 13 years experience in the contractor payroll industry, and after spending most of his working life as a financial advisor in the regulated financial services industry, Mike has garnered an extensive network of contacts in the recruitment industry, many of whom trust both him and the One Click Group to handle their accounting. Mike has also been a member of various industry bodies throughout the years, such as the British Institute of Recruiters, in order to champion best practices across the contractor payroll industry.