Last minute tax return tips
Jan 29 2008
The January tax returns deadline on 31 January is looming large. Even so, it is not too late to submit it in time. SmallBusiness.co.uk and Andy Hardy from TaxCalc.com offer this reminder and some last-minute tips for filing your return.
Avoid unnecessary fines
Filing your tax return after the 31 January deadline leaves you open to a fine of £100. HMRC is currently reviewing the fine and it may rise significantly in future years.
A warning about interest
2006/07 income tax is due on 31 January 2008. A payment on account of the 2007/08 liability will be payable on the same day. This is 50 per cent of the previous tax year. In a business’ first year this means that your tax bill could be 150 per cent of the tax you owe.
Interest will start to run immediately on unpaid tax. In addition, there is a five per cent surcharge on all tax still owed 28 days after the deadline. This equates to an annual interest rate of 65 per cent and this surcharge is repeated in July.
Check the tax relief to which you are entitled
Tax relief is due for expenses which are incurred wholly and exclusively for the purposes of the business, although in practice HMRC does allow proportionate claims to be made for assets such as cars, which are used partly for business and partly for private purposes. Bear this in mind when you are filling in your form.
If you run your business from home a proportion of the expenses of the residence used for business, such as a study or workshop can be charged against profits. Provided a discrete room or space is for the business, it is usual to calculate the proportion of the house occupied by the business and charge the appropriate percentage of council tax, heating, lighting and so on to the business.
Sign your return
An unsigned tax return cannot be accepted. If you submit your tax return online, the combination of your ID and password is sufficient and you do not need a signature.
Submitting your tax return
The deadline if filing online is midnight 31 January 2008. While it is technically the same for paper filing, in practice you will avoid the penalty if you hand deliver it on 1 February 2008.