So it’s that time of the year
again…. And no. I don’t mean Christmas!
The time of the year when some
of us panic at the realisation we are not as organised for the imminent
Self-Assessment Tax Return deadline as we would like to be. We’re full of mince
pies. We’re Christmas shopping. We’re putting our trees up. But self-assessment?
It’s achingly dull and it’s not due for AGES…right?
Like Christmas itself
self-assessment rolls around much quicker than you’d expect, and it takes time
to complete it correctly.
Do I NEED to complete a
Self-Assessment Tax Return?
If you receive income from any
other source other than through your employer through PAYE then you will most
likely need to complete a Self-Assessment Tax Return.
Common reasons for needing to
complete a self assessment include:
Landlord rental income
Being a company Director
Being a minister of religion
If you are unsure as to
whether you need to complete a tax return, then you need to contact an
accountant or HMRC (Prepare yourself for some funky hold music) and inform them
of your circumstances and get tailored advice. Ignorance is NOT excuse
and you will receive penalties for not paying tax on or declaring any relevant
How do I register for
Like with most things these
days most people choose to sort all their self-assessment dealing online. You
need to pop along to the HMRC website and follow the instructions, make note of
the many many reference numbers you’re provided with along they way paying
attention to your Unique Taxpayers Reference (UTR). You will also need to enrol
for the Self-Assessment Online service.
You will then be sent an
activation code which you will need the first time you log on to your online
account. You can replace your activation code should you misplace it but it may
take 10 days to reach you in the UK and up to 21 days if you live
abroad. Our advice is just don’t misplace it.
There is a different
registration processes for those who are self-employed, those who are not
self-employed, those in partnerships etc so make sure you do your research and
fill in the correct forms for your circumstances. Alternatively, you can talk
to us regarding your circumstances and let us navigate the process for you.
What expenses can I claim?
When you are self-employed, a
large proportion of your running costs can be deducted from your tax bill such
Internet and phone bills
Running a limited company
allows you to deduct some of your business costs from your tax bill also. Such
Phone and internet bills
Advertising and marketing costs
Business premises costs such as business rates and heating
Stock or raw materials if you are intending to sell them
Clothing and other uniform costs
Office supplies such as stationery and computers
To get the most from your
expenses and therefore reduce your tax bill as much as possible, it is a good
idea to talk us about your personal circumstances and what constitutes an
expense for you or your business.
We hope you have now completed
your tax return, or at the very least have everything prepared ready to fill in
your online form. The deadline is the 31st January and there is an immediate
fine of £100 for not submitting it on time. Not something you really want to
pay after the expense of Christmas!
If you have not had the time
to complete it, or don’t fancy jumping through the hoops above when all you
really want to do it eat pigs in blankets and watch Die Hard, then please do
not hesitate to contact us.
You love paying tax, right?
Hmmm. Maybe not. Here’s the good news though – there are perfectly legitimate
and legal ways of paying less tax. Happy? Have a little read!
1. Use your Personal Savings Allowance
You can save up to £1,000 in
interest from savings without paying ANY tax.
The Personal Savings Allowance (PSA) is applied automatically
and is £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.
Current accounts, fixed-rate
bonds and regular savers, credit unions, peer-to-peer platforms, corporate
bonds and Government bonds are all covered by the PSA.
Given the low level of
interest rates now, you’d need at least £20,000 in a best buy savings account
to even get close to exceeding the PSA for basic-rate taxpayers, so this isn’t
a solution that would work for everyone.
Once you’ve crossed the £1,000
/ £500 threshold, you should put your other savings in an ISA.
2. Open an ISA
The Personal Savings Allowance
doesn’t mean you should ditch your existing ISA or not bother opening one at
all. That’s because ISAs shield your savings from taxes over the long term.
The 2019/20 ISA allowance for
adults is £20,000, which can be saved in a Cash ISA, Stocks and Shares ISA,
Innovative Finance ISA or Lifetime ISA.
Children under the age of 18
also get a tax-free savings allowance with a Junior ISA. In 2019/20, up to
£4,368 can be put away in a Junior ISA (Cash and/or Stocks and Shares). You get
to pay less tax now, and your kids thank you later. What’s not to love?
But that doesn’t mean you
should be satisfied with making the lowest contributions.
When you pay into a pension
scheme, you benefit from tax relief on your contributions based on the highest
rate of Income Tax you pay. Plus, you can sit back and decide which luxury
cruises you can take when you finally retire.
4. Don’t blow pension savings
Pension freedom laws
introduced in 2015 allow anyone aged 55 or over to take all the cash
from their pension savings for the first time. You can then do whatever you
want with it. Wey hey!
But beware! Withdrawing your
whole pot could land you with a massive tax bill.
Pension rules say you can take
25% of your pension pot as cash in one lump sum, or multiple withdrawals,
5. Stop paying National Insurance
Older people that carry on
working beyond the State Pension age (66 years old presently) don’t have to
make National Insurance Class 1 and Class 2 contributions.
Make sure you stop these being
taken from your wages by showing proof of age to your employer or writing to
HMRC to get a letter confirming you have reached State Pension age.
6. Know your Capital Gains Tax
Capital Gains Tax (CGT) is
payable on the profits made from selling assets like property (not your main
home) and investments.
You don’t have to pay if your
gains are under your tax-free allowance. In 2019/20, the capital gains you can
get tax-free is £12,000.
After the tax-free allowance,
CGT is charged according to your tax band.
The rate of CGT for basic rate
(20%) taxpayers is 10% (or 18% on residential property) and the rate for higher
rate taxpayers (40% or 45%) is 20% (or 28% for residential property).
There are lots of savvy ways
to save on CGT, including using an ISA, investing in certain small businesses,
making extra pension contributions, offsetting losses against gains and
spreading gains over tax years.
7. Sharing economy tax relief
The Government has finally
caught up with the proliferation of eBay, Gumtree and similar sites, with the
launch of two tax relief schemes for the ‘sharing economy’.
The first £1,000 you make from
selling your old stuff online, or items you’ve made, is now tax-free
– beyond that, you’ll have to pay income tax.
Additionally, the first £1,000
you make from your property, for things like renting out your driveway, is
tax-free. That’s on top of the Rent-a-Room scheme, if you’re eligible. Best get
cracking with that long overdue clear out eh?
8. Get married
Ding dong the bells are gonna
chime! Not something usually associated with saving money, but a wedding does
come with some surprising financial bonuses. Married couples and civil partners
born after 6 April 1935 may be able to take advantage of a tax break
called the Marriage Allowance.
It allows a partner who
generally earns less than £12,500 a year to transfer up to £1,250 of their
Personal Allowance to their higher-earning spouse (providing their spouse is a
basic rate taxpayer).
The Government estimates the
scheme could reduce the amount of tax by up to £250 every tax year.
Both you and the charity can
benefit, but it depends on how you donate.
Donating through Gift Aid
means charities and community amateur sports clubs (CASCs) can claim 25p for
every £1 you give back from the Government.
Higher rate taxpayers can
claim the difference between their rate and the basic rate on the donation on
their self-assessment tax return.
Those that donate through a
Payroll Giving scheme will donate from their gross wage or pension, so
you’ll then pay less tax on your remaining income.
And don’t forget that those
that donate at least 10% of their estate in their will get a reduced
Inheritance Tax rate.
10. Stick to deadlines
This is a pretty obvious one,
but worth outlining. If you must file a self-assessment tax return, make sure
you don’t miss the deadlines as you’ll be hit with an instant £100 fine, and
more charges will be levied the longer you leave it.
Self-employed people and
private landlords can deduct some business expenses before paying tax on their
Allowable expenses for the
self-employed include travel costs, the running costs of the business premises
(including a home office) and buying stationery.
Meanwhile, private landlords
can claim for things like agent fees, maintenance, repairs, services like a
gardener, legal fees and direct costs such as phone calls, stationery and
advertising for new tenants.
They can also offset 25% of
the tax on their mortgage interest and for wear and tear on their property, but
the Government is reducing this tax break and will end it completely in 2020.
Landlords and those that run a
business can also take advantage of the Annual Investment Allowance (AIA)
to claim tax back for capital expenditure on specific items.
The limit has temporarily rise
to £1 million until 31 December 2020, up from £200,000.
If any of the above appeals to
you but you don’t fancy the legwork, don’t forget we’re here to help. Call
Advanced Accountancy today on 01384 271858 and start saving money.
The wonderful Bonded Warehouse
have had food festivals a plenty over summer – have you been lucky enough to
attend one? If so did you see our Advanced banners displayed proudly on the
premises? We think they look amazing. If you haven’t managed to get over there
yet fear not; they still have loads of stuff going on right up until Christmas.
Stourbridge Navigation Trust –
Open Weekend on Saturday 19th and Sunday 20th of October for instance! All the
details can be found on their Facebook –
Canal boats, classic bars,
real ale….it’s got it all. Best of all, it’s free admission! Please head along
and see what this fantastic organisation has to offer…and of course don’t
forget your Advanced Accountancy banner selfie!!! #lookinggood
A new month means it’s high
time for a fresh blog.
As the weather sways from
tropical heat to biblical rainfall and back again (usually on the same day),
here at Advanced Accountancy we’ve also been keeping ourselves busy.
Most excitingly, we’ve
recently featured in the Stourbridge News who wrote a wonderful piece about our
new corporate sponsorship arrangement with the famous Bonded Warehouse
community group. It was a real joy to see our hard work celebrated in the local
press and we look forward to a mutually beneficial relationship with one of the
most esteemed volunteer-led projects in the region. We’ve given the Bonded
Warehouse team a cool £1,000 which will allow them to keep the iconic 18th
Century building ship shape and Bristol fashion for years to come. We’re as
thrilled as ever to support an organisation which has spent so many decades
improving their local area. Read more about how the money
will be put to good use here.
In the news!
However, it’s not only the
Bonded Warehouse who have benefited from our good fortune; we’re also delighted
to provide the shirt sponsorship for Wolverhampton-based football team Claregate Park Rangers FC. We wish them all the best
for the forthcoming season and look forward to cheering on the boys from the
sideline. If they continue working as hard for each other as we do for our
customers, we’re sure they’ll enjoy a successful season. We’re also pleased to
have assisted The Duncan Edwards Foundation
(DEF), who help
children from all walks of life achieve their sporting ambitions, achieve their
long-awaited charity status after a great deal of hard work by Advanced
Accountancy company director and valued DEF trustee DEF and the their lovely
founder Rose Cook-Monk.
In accountancy news, the first
VAT quarter (1 April-30 June) following the Making Tax Digital changeover is
due for submission next week. The VAT return and payment due date for this
return is 7 August 2019, so we’ve been working hard integrating all our VAT
registered clients into the new system of late. If you are a VAT registered
business with a taxable turnover above the VAT threshold (£85,000) you are
required to keep digital VAT records and send returns using ‘Making Tax
Digital’ compatible software from 1 April 2019 or risk running foul of the law
– does this sound like it affects you? Are you baffled by the whole process?
Have a query? Why not get in touch with our friendly team today so they can run through your options and put your
mind at ease.
In other news, we’ve enjoyed a
few celebrations in the office as bookkeeper Jake and payroll manager Maddison
both had their birthdays in the last few weeks. It was also Advanced
Accountancy’s company director Marina Parry’s birthday recently which we all
We’re also delighted to
announce Advanced Accountancy’s youngest fan, courtesy of our lovely staff
member Stacey-Leigh who gave birth to her beautiful little girl Alannah back in
May. We can’t wait to see her in the office again soon, she’s breath-taking!
So that brings you pretty much
up-to-date with what we’ve been busying ourselves with over this Great British
Summer. Naturally, we’ve also been occupied keeping our clients as happy as
they’ve ever been and ensuring we always go the extra mile to help out you and
your business interests. As ever, here at Advanced Accountancy we’re open to
any questions you may have – big or small, daft or serious – and also are
always looking for new businesses to bring into our little family. Why not call
by for a quick chat and a coffee? There might even be a little bit of birthday
cake left over… Until next time!