Tax return: acting early could save you time and money

HMRC states that almost 750,000 people missed the annual deadline for submitting their tax return in 2016/17, potentially facing an immediate £100 penalty, even if they had no outstanding tax to pay.

Anyone with a 2016/17 return still outstanding could also be clocking up additional penalties of up to £10 per day.

While HMRC cancelled more than a third of all penalties initially levied in 2014 and 2015, it’s best not to incur the fine in the first instance, even if you have what HMRC calls a ‘reasonable excuse’ – thinking about your tax return early could save you time and money.

You have until the end of October 2018 to submit a paper tax return and 31 January 2019 if you file your return online. You can make your tax return easier, whether or not you take professional advice, by reviewing how you hold your investments:

  • Beware of holding multiple interest-earning accounts with only small deposits. HMRC has started pre-populating some returns with deposit interest data, but the process does not cover joint accounts. Keeping your savings in a single account could make more sense and, if you want to chase interest rates, could make switching providers easier – but remember, only £85,000 per account is protected by the Financial Services Compensation Scheme
  • Consider using investment structures which do not need to be reported ISAs are the obvious example, but there are several others
  • If you still hold certificates for shares or funds, consider transferring the holdings to a nominee account, you will then receive one consolidated tax voucher instead of multiple vouchers

For more information on any of the above, or general tax planning, please contact us – an independent financial adviser will be happy to help you. There is no deadline, but the sooner you act, the easier next year’s tax return will be.

This article is for generic information only and should not be constructed as advice. Please contact us before proceeding with any course of action.

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