With little time to go before the Self-Assessment tax deadline, it is crucial that if you have not filed your return yet, that you get on with it to avoid a £100 penalty. Even if you are a last-minute filer, there are things you can do to reduce your tax burden. Here are five tips for completing your tax return as efficiently as possible in these final days.
1. Estimate if you need to
If the reason that you are filing late is that you do not have all the paperwork together and are waiting for someone else to send it, do not let this stop you from filing on time. You can use estimated figures if you complete the section on the form to show that estimated figures are being used. You can then go back later and amend it and use the right figures.
2. Grab all your Gift Aid
If you are a higher or additional rate taxpayer and make donations to charity, you can reduce your tax bill by claiming Gift Aid at the higher rate on your self assessment return. The Government pays back the income tax paid on charitable donations, but the charity only claims back basic rate tax. The remaining tax paid will be returned to you if you claim it via your tax return.
Many people do not realise that this Gift Aid can be claimed on annual memberships of organisations such as The National Trust and English Heritage (you can see English Heritage’s article on this here). Annual passes for attractions such as zoos also qualify as long as you complete a Gift Aid declaration and the zoo is a charity (you can see Visit England’s explainer on this here), or if you’ve made a 10 per cent donation on top of a day admission fee. Check that you have included everything.
3. Be precise with your pension
Ensuring you get back all the tax relief on your pension contributions will help to reduce your tax burden, so it is worth spending some time getting this bit right. Ensure that you enter all your individual pension contributions gross, which means including the 20 per cent you’re given by the government as well as your own contribution.
You can also claim back higher rate pension tax relief from up to four years ago, which could also improve your tax position if you haven’t done this previously. The Government website here explains how to amend previous tax returns, or you can write to HMRC with details of payments if you didn’t pay by self-assessment at this point.
4. Remember Child Benefit
If you or your partner receives child benefit, and one or both of you earns over £50,000, you need to liaise with one another over ensuring you pay back the correct amount. Child benefit is gradually withdrawn once you earn over £50,000 and removed completely by the time someone earns over £60,000.
Gift Aid and other schemes such as salary sacrifice and pension contributions can take down your salary so that you receive more of this benefit if you are near the margins, but the bottom line is that the higher earning of you and your partner needs to include the child benefit payments on the tax form if either of you earns over the threshold.
5. File even if you can’t pay
Even if you can’t pay the tax you owe before 31st January, do not make this an excuse for not filing the return. HMRC will usually let you set up a ‘Time to Pay’ arrangement for paying your tax over a longer period, and although you’ll pay interest on this it will be lower than the interest and penalties you will incur for not filing.
Most people can set up a Time to Pay arrangement online. There is more information on how to do this here.
If you do not pay your tax, HMRC can take you to court, send round baliliffs or even make you bankrupt, so do not delay with filing your return and contacting the HMRC with any problems.
27th January 2023