A NATIONAL Audit Office report earlier this year found errors affecting around one million taxpayers which can result in significant amounts of tax being over or underpaid.
Tomorrow (Monday if you're posting it) is the deadline for your
tax return to reach the HMRC and the tips below should help. If you have missed that deadline it doesn't mean the HMRC won't work out your tax bill, but there is no guarantee it will do so in time for you to pay by 31 January. If you file online you have until 31 December.
Muriel Robertson, a senior manager with Mazars' tax service in Edinburgh, provides some top tips.
1 Focus on your deadline: If you want a liability of less than £2,000 collected in your PAYE code, you will have to lodge your return by tomorrow if it is a paper return or by 31 December 2007 if it is an electronic submission. Otherwise, 31 January 2008 is the final deadline for submission of the return and payment of any tax due.
2 Gather all the information into a single place: This really is the nightmare part for many people so while you are finding all those vouchers for 2007, buy a plastic wallet and start putting all the 2008 information into a single place now.
3 Order any supplementary pages: Your self assessment return is made up of a ten-page return, including supplementary pages. You usually receive supplementary pages for your earnings but you will often need to ask for more if you have
capital gains, income from property or foreign or trust income. The order line is 0845 9000 404 or online at www.hmrc.gov.uk.
4 Be organised and logical: Put everything into a logical order before you start: all your earnings, all your bank interest certificates/statements and all your dividend vouchers, then work through them methodically (boring but effective).
5 Keep an "audit trail": It is very tempting just to add a number of items up on a calculator and enter the total in the relevant box of your tax return. However, using an Excel spreadsheet or a good old fashioned sheet of paper will be a good investment especially if HMRC inquire into your return or you only get part of the way through it and have to stop.
6 Leave yourself enough time: Almost an oxymoron when talking about tax returns, but remember to factor in a bit of time in case you do not have all of the information and need to ask others, such as your bank, for interest information or a professional about trust income.
7 Calculate your tax: And now we reach the really tricky part. If you file online using the Revenue's application, the tax will be calculated for you. Check first that it covers all your income types. If you have a paper return, you can follow the calculation sheet.
8 Pause and reflect: Do the return entries and level of liability look right? Are they similar to last year? Think through what you did last tax year and make sure you haven't overlooked anything.
9 Keep a copy: Then you can check any calculations that HMRC sends to you or answer an inquiry if they make one.
10 Appoint a tax agent: Get peace of mind by appointing an expert. Choose an adviser who can spot tax-saving opportunities as well as form filling, lodge your tax return electronically and estimate the fee before they start work. Then you will be confident that you are paying the right amount of tax and can plan ahead to minimise your tax liability for future years too.
WHILE LANDLORDS HAVE THEIR OWN RULES TO FOLLOW
TOMORROW- or Monday if you have posted off your form - is the postal deadline for self-assessment tax forms to be sent to Her Majesty's Revenue and Customs (HMRC) and an important date for landlords.
As landlords have raked through records to lodge this year's tax return, Emma Furman, managing director of Dunpark, a letting agency and buy-to-let consultancy, offers advice to ensure savings next year.
1 Minimise void periods: Empty properties cost money. Attracting quality tenants who treat a property well and stay is key to successful property management. Landlords with high tenant turnover should consider using the services of a letting agency.
2 Go green and save: It is imperative landlords keep themselves informed of legislative changes. Many, for example, may not be aware of the Landlord's Energy Saving Allowance (LESA). This act, which came into effect last April, allows landlords to claim up to £1,500 per rented building for the installation of energy efficiency measures.
3 Review insurance policies: Shop around but take care the policy suits the property. Many contain hidden clauses, for example a large number do not cover student tenants because of perceived higher risks. Never choose a policy on cost alone - always read the fine print.
4 Set-up property properly: Resist the urge to provide superfluous extras such as a television. These will only incur outlay when in need of repair or replacement or the cost of a TV licence during void periods.
5 Infrastructure investment: Invest in a few decent pieces of furniture to ensure longevity and forget poor quality furniture and costly, unwanted ornaments and accessories. Always use fittings and fixtures which are to an industry standard.
6 Rental reviews: With rent increases keeping pace with recent interest rate hikes, landlords should consider implementing six-month tenancy agreements with regular rent reviews. Far easier, and more reasonable, to increase rent regularly in small increments than try to negotiate one large hike after a long let.
7 Slush fund account: Set up an interest-bearing account, linked to other savings accounts. Consider setting up an individual savings account (ISA), which allows for tax-free savings of £3000 per annum. A designated account ensures easy tax calculation at the end of the financial year and cash flow when required.
8 Tax rules: To maximise revenue and capital allowance, landlords must familiarise themselves with tax rules as savings can be made. For example, landlords of furnished properties are entitled to an annual 10 per cent tax-free wear and tear allowance. Also, void properties, or those which are undergoing renovation, qualify for
council tax exemption.
9 HMO licence: By law, a rental property with three or more unrelated tenants is classified as a "house in multiple occupancy" and needs a license. To convert a property requires an initial outlay and ongoing fees but may make sound financial sense as these properties tend to command higher rents.
10 Good records: There is no point implementing money-saving measures if documentation and receipts are not readily available. File everything for next year's tax return.
