If the new diet and gym routine is already getting you down, we recommend these four straightforward steps to kick-start your new tax fitness regime and give your morale a boost
1. Get registered with HMRC
If you haven’t done a tax return before but are aware you may need to, don’t rely on HMRC to tell you. It’s your responsibility to find out whether you need to submit one. Most people are able to submit their own return using HMRC’s online system but, depending on the types of income they receive, some will need to buy specialist software or ask a tax adviser to assist.
There is a questionnaire on HMRC’s website that allows you to ‘check if you need to send a tax return’ and guide you through the next steps. Having said that, even if HMRC’s online questionnaire says a return is required, it may be possible to agree with HMRC that one isn’t. For example, it’s not a strict legal requirement for directors to submit a tax return and you may be able to agree that you do not have to if all of your income has been subject to PAYE.
2. Check your expenses
Self-employed individuals are often familiar with the types of expenses they can claim but the relief available on assets bought for use in the business can sometimes be overlooked. It is therefore worthwhile researching or asking an adviser about the ‘capital allowance’ rules.
There are also opportunities for employees to claim expenses against their income and potentially receive a rebate of tax. For example, tax relief could be given for the cost of replacing tools or specialist clothing like uniforms needed for work. Likewise, you could receive relief for business mileage using your own vehicle and fees paid to some professional bodies, including some trade unions fees.
3. Claim the reliefs and allowances you’re entitled to
There are a variety of tax reliefs available to individuals generally and some of the most common are claiming relief on personal pension contributions and charitable donations made. These reliefs can be particularly helpful if your income was between £100k and £124k in the 2018/19 tax year as you could effectively benefit from 40 per cent tax relief.
4. Procrastination is the thief of time
It’s common to need a deadline to kick us into gear but don’t leave things to the last minute. That’s particularly important for those registering for the first time as whilst HMRC’s online process is pretty straightforward, there are security hoops to jump through and you may need to wait for HMRC to send you an activation code in the post.
As you might expect, January is a busy month for HMRC. Last year 400,000 new personal tax accounts were opened with HMRC with just under 1 in 4 people having to wait over ten minutes on the phone to speak to an adviser at HMRC. If you do leave things late, expect to enjoy some time listening to HMRC’s on-hold playlist if you call.