This month, Jack Posner (principal) and Darren Stone (manager) of Leon and Company Chartered Accountants in Leeds write about the upcoming tax return deadline and what is involved.
As we are all getting ready for the upcoming festive season, we probably don’t want to think about the cold, bleak January period. But as accountants, we are already gearing up for the annual rush of self-assessment tax returns for 2015/16. This is a busy time of year as so many of us still leave it until the last minute. Notwithstanding the changes on the horizon with the digital tax accounts, which promises to change how we report our income, most of us will still file online – and we have until 31 January 2017.
So, do we have to file a tax return? In the main, it is for those of us with non-standard income, including reporting our annual business results from self-employment or a partnership, reporting capital gains (e.g. the profit on the sale of an investment property), dividends, trust income, property rentals (including expenses), bank and building society interest received, taxable foreign income, etc. This income, for the period ending 5 April 2016, needs to be reported in our tax returns alongside regular income taxed at source, such as regular PAYE and pension income.
We should also report what private pension contributions we have made during the year, along with any charitable donations made under Gift Aid (possibly including annual synagogue subs!). This is particularly relevant if you are a higher-rate tax payer as you can get some tax relief on these payments. We should also disclose any Child Benefit received where over £50k has been earned in the tax year, and also indicate if a student loan is still being paid off.
The bottom line is that if any of the above applies to you, and you are not already completing a tax return, then you may very well have to register as soon as possible.
It should also be said that some of us do not need to file a tax return; mainly those whose only source of income is taxed at source, e.g. a regular salary. Your tax code usually sorts out what tax is due, especially if you have multiple jobs – but we’ll leave that discussion to another article!
The last point to make is if we submit our tax return just one day late, then we incur an automatic £100 penalty, with an increasing penalty scale the longer we leave it.
If you would like more information on whether you should be registered, then we would be delighted to have a chat. In the meantime, enjoy those festivities…