The Sunday times have compiled five tips to help ease the stress for your tax return next year. These tips should help to make next year’s return more straightforward and less prone to be postponed until the final few days.
Set up a tax file
If you, like many people, have been turning your house upside down to find the missing papers for your tax return, then you should think about setting up a tax file – or box or even a carrier bag. That way when any paperwork relevant to your tax year shows up you can shove it into your chosen storage device. Also, to minimise the hassle, set up a tax folder on your email account so you can file relevant e-mails away.
If you share the government’s enthusiasm to make tax digital you can even download smartphone apps to help with the return. For example, those who are self-employed can use a free app to take photographs of receipts for business expenses and store them securely. It then allows you to extract automatically the supplier, date, payment amount and even the self-assessment tax category. You can also email digital invoices to the app for processing, share the information with your accountant and see the totals for expense categories.
File by December 30 to spread payments
You can spread the cost of a tax bill of less than £3,000 across your monthly payslips if you are on the pay-as -you-earn (PAYE) system, but only if you file your return on paper by October 31 or online by December 30. Paying via your PAYE tax code means you will not face a big bill in the depths of January. It can work for anyone with a PAYE code, so not just employees but also people receiving a company pension.
Take advantage of new allowances
Grab the chance to earn extra income without paying tax, using the new personal; savings allowance and dividends allowance. Since April 2016, basic-rate taxpayers have been able to earn up to £1,000 in interest on savings before paying tax, while higher-rate taxpayers can earn up to £500 tax free. Additional-rate taxpayers do not get any allowance. It means most people will no longer need to pay tax on savings interest. All taxpayers will also be able to earn up to £5,000 in dividends on shares tax-free. If you let a furnished room in your home to a lodger, you can now earn up to £7,500 a year before paying tax since Rent a Room relief was increased last April.
Prepare for changes to Buy-To-Let
Landlords should brace themselves for tax changes that will erode profits on buy-to-let. The “wear and tear” allowance has been scrapped; it used to allow landlords to offset 10% of their rental income against tax for maintenance, even if they had not spent a penny on repairs. Since April 2016 they have been able to claim the cost of “wear and tear” only if the improvements have been taken place. Receipts will be needed. Other changes to the buy-to-let scheme are that the reduction in the mortgage interest tax relief will come into effect in April 17, so will not affect your 2017 tax return.
If you have any questions regarding these changes, contact us for further advice.
Info provided by Sunday Times
Picture from Flickr