It's a new year and already well-meaning resolutions are flying out of the window.
But if your new year’s resolution was to be more organised with your tax affairs, then time is of the essence as the deadline for self-assessment returns for 2015/16 is 31 January 2017.
At the end of 2016, HMRC forwarded a press release urging first-time self-assessment customers to register for a personal tax account and to see how easy submitting a tax return can be. Following its launch in December 2015, the personal tax account proved so popular and simple to use that 850,000 customers chose to submit their 2014/15 return through the service in January 2016.
The personal tax account is available to everyone and, once registered, each individual’s personal tax details are stored in one convenient and secure online place. Getting in touch with HMRC is faster too, with access to services such as webchat and virtual assistant.
Individuals submitting their tax return online for the first time will need to register for an activation code, which will be posted to them and can take a couple of days to arrive.
Click here to read HM Revenue & Customs' 'Self Assessment is simple with a Personal Tax Account' press release.
Tax relief is available on pension contributions up to an individual’s highest rate of income tax. However, research conducted by Prudential in 2013 indicated that up to a quarter of higher rate taxpayers who contribute to any form of money purchase arrangement using relief at source, fail to claim their additional tax relief.
The additional relief can be achieved either by an adjustment to the individual’s tax code or by the completion of the self-assessment tax return. Unfortunately, some individuals who do complete tax returns are still missing out on tax relief because they do not fully understand how higher rate tax relief works. Many people do not realise that the onus is on them to contact HMRC.
Individuals will need to confirm pension contributions made in the tax year, and the pension provider can normally provide a schedule of contributions for the tax year in question.
However, the clock is ticking and HMRC has already warned that each year they receive a number of unusual excuses from self-assessment customers who haven’t completed their tax return on time. These include ‘My tax return was on my yacht … which caught fire’ and ‘My dog ate my tax return … and all of the reminders’.
HMRC has previously announced that they will treat those with genuine excuses leniently, as the focus for penalties is on those who persistently fail to complete their tax returns and deliberate tax evaders. Customers who provide HMRC with a reasonable excuse before the 31 January deadline can avoid a penalty after this date.
Finally, for individuals who may be considering scheme pays options for pension payments made/received in 2015/16, where the available annual allowance has been exceeded, the deadline to notify their provider/scheme is 31 July 2017.
So, let’s start the New Year by getting our 2015/16 tax position right. Then we can look at what tax planning can be done with the remainder of the 2016/17 tax year!
