Yahoo Finance Five tips to make your tax return simpler
It’s that time of year again — when Brits scramble to finish their tax returns last minute. And some even spend Christmas eve and Christmas day on this task, which can sometimes seem like a tiresome chore.
The self-assessment tax return deadlines for the 2020 to 2021 tax year was 31 October for paper returns and 31 January 2022 for Brits completing their tax return online — which last year was 96% of them.
The impact of the pandemic meant that last year was incredibly difficult for millions of people completing tax returns.
Some 31,400 customers completed tax returns between 24 and 26 December. That included 20,200 on Christmas Eve and 2,700 on Christmas Day.
More than 10.7 million people filed by 31 January this year, and for the remaining 1.8 million, HMRC extended the deadline to the end of February, although people who did this had to pay interest.
“It’s worth making the most of your free time over the festive break to get your tax return out of the way,” said Sarah Coles, senior personal finance analyst, Hargreaves Lansdown.
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She said this year it’s unlikely the government will offer the same leniency as last year.
Here are her top five tricks to make tax returns simpler:
1. Check you can get into the system in advance
Make sure you can sign into the Government Gateway. If you’re doing it online for the first time, you’ll need to sign up, and wait up to seven days for your code to arrive. If you’ve used the system before, sign in now to ensure you remember your log in details.
2. Spend some time on your preparations first
If you’re not great at filing, don’t try to do everything at once.
Day one should be about tracking down paperwork, and ordering copies of anything you can’t find. This includes details of interest on savings accounts and dividends on shares outside an ISA, pension statements, plus proof of any employment income and benefits.
If you work for yourself, you’ll want bank statements, sales invoices, receipts for expenses and paying-in books.
If you received income from letting property, you need letting agreements, and bills for expenses and management fees.
3. Make sure you’re claiming for everything you can
Check you’re claiming for all the reliefs and exemptions available to you. This includes pension tax relief and gift aid for higher rate taxpayers.
If it seems like a lot of bother to claim for something, check if there’s a simpler option. If, for example, you are self-employed and work from home, you can do the calculations and count some of your household bills as expenses.
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Alternatively you can just use the flat rate of £10 a month if you worked 25 to 50 hours a month, £18 for 51 to 100 hours, and £26 for 101 hours or more.
4. If in doubt, get help
There’s loads of information on the HMRC website, which Coles said has improved in recent years. You can find the answer to almost any question that’s likely to crop up.
There are plenty of guides and videos offering tips to save you time and money.
There is also the option to call the self-assessment helpline. But, the closer you get to the 31 January deadline, the busier the helplines will get.
5. If you’re going to need an accountant, get a move on
If you already know that nothing will persuade you to touch your tax return over Christmas, be honest with yourself about whether you’re going to need an accountant to sort it for you, and contact them before the break.
Don’t leave it until January, when accountants are snowed under, and many won’t have the time to take new clients on.
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Coles also said if you’re worried about not being able to afford to pay taxes, the government’s Time to Pay arrangement will let you spread the bill over the next 12 months, providing you meet some criteria such as having filed your tax return on time and having less than £30,000 ($48,000) outstanding.
And if you’re putting it off because you can’t face the paperwork, then it’s worth getting it out the way and heading into New Year with a clear conscience.
“Instead of the guilt pangs and nagging worry that come with leaving everything to the last minute,” said Coles.
