This year many of our clients are likely to experience higher tax bills, due to the changes in Dividend Tax and increased profits on their property rentals. Others might find themselves affected by the High-Income Child Benefit rules.
No Shocks or Horrors
To avoid any nasty surprises, we are aiming to get all tax returns completed and filed in the coming weeks.
Therefore, please gather together your self-assessment information and email, post or hand deliver your records to the a4c team in Newdigate by 31st October.
We appreciate that knowing where to start can be daunting and we have many templates we can email to help, but this guide gives a brief overview of the information we need from you.
Self-Employed or Partnership
We need the details of your trading income and business-related expenditure, between April 2017 and March 2018.
- A list of sales invoices, or evidence of money received from customers
- Bank statements showing money in, money out and closing bank balance
- Details of expenditure, such as:
- Tools & materials
- Professional memberships
- Training courses undertaken
- Fuel or mileage
- Telephone / internet costs
- Stationery & postage
- Advertising and marketing
- Anything else that is a legitimate expense in order to deliver your products or services.
Creep it Real
Remember that any costs you deduct from your turnover to reduce your profits (and therefore bring down your tax bill) must be real and supported by evidence. You should always keep supplier invoices / receipts and bank transaction records as evidence in case HMRC ask to see these in the event of a business records check.
If you had PAYE employment we need your P60 for 2017/18. If you received taxable benefits then we also need your P11d.
Income from a pension is treated in the same way as PAYE employment and you should have been sent a P60 from each pension you receive. In most cases you will have already paid tax on the funds but you may owe additional tax, depending on your other sources of income.
Property or Land
If you own a property or land which is rented out then you need to declare the rental profits. These are calculated by taking a list of the income (rents received) and deducting expenditure (management fees, services charges, rates, repairs etc).
You can also claim finance costs, for example in relation to interest paid on a mortgage but this year the relief is limited to 75%, meaning that your property profits will be higher than in previous years.
Remember if you jointly own property or land then you only have to declare your share of the profits, therefore we need to know your ownership split.
Savings & Investment Dividends
You need to declare interest received on savings and any dividend payments received on shares that you own. Your bank or the company you own shares in should have provided certificates.
A few clients have interests overseas, so be sure to declare this, albeit there are double tax treaties with most countries, meaning that if the income has had tax paid on it in the originating country then you are not likely to be taxed in the UK also.
If you disposed of an asset during the year then you need to calculate how much of a gain or loss was made. For example, if you sold a second property, jewellery, art works etc and made a profit this needs to be declared with possible Capital Gains Tax due.
Treats for Subbies…
There are many subcontractors working in construction who haven’t yet filed their tax returns but are likely to be due a Tax Rebate. HMRC are turning these around in approximately 4 weeks so submit your paperwork asap to receive a bonus before Christmas!
Avoid Skeletons in Later Years
It’s easy to forget to include some things on your tax return, but our experience is that they always come back to haunt you in the future.
Make sure you declare ALL your sources of income.
Savings accounts earn interest (not always a great deal) and tax is no longer deducted at source so this need to be included on your tax return.
Remember to tell us if you, or your partner, receives Child Benefit payments, as you might need to pay some back if earnings in your household exceed the allowable limit.
If you’ve made charitable donations these can help extend your Basic Rate band, thus saving you tax, so don’t forget these!
As always the team at a4c are on hand to give support and answer any questions you have so get in touch today.