Commonly Missed Tax Deductions
If you have never heard about HM Revenue and Customs forms, it is the right moment to consider the option and start the experience. It is a reliable way to save money and get a considerable sum of tax deductions. Fill in the tax return paper till January 31 with no stress and hustle, and get less tax as a result of your effort.
Employing a pro-active and experienced accountant, you are likely to get all the possible tax deductions included, while a new and inexperienced worker can process only the details you give him/her, without any regard to possible tax savings. Check the list of top 10 most frequently forgotten tax deductions and make sure you have mentioned all of them:
- Gift aid. As a high rate taxpayer, you can save your tax with the gift aid payments. However, you need to inform your accountant about the possibility since he/she may not know about it. Entry fees for zoos, museums, theatres and similar attractions may be included, as they may be paid with the help of gift aid.
- Home expenses. Completing any tasks from your house, you can include household running costs into the list. Most commonly, deductions will include mortgage interest, council tax, heat and light cost, etc.
- Capital allowance. If you use any appliances, such as furniture, computer, car or other equipment, you can claim the capital allowance on it. The partial claim is possible in case you use the asset for both business and personal purposes.
- Vehicle expenses. If you use your car for business, running costs can be claimed. Inform your accountant about the mileage you have run and get extra deduction.
- Missing receipts. Even if you have lost paperwork, it is not the reason to give up. Tell your accountant about it, so he/she could claim the mentioned expenses.
- Family payments. Once your children, spouse or other relatives have completed any tasks related to your business, you can claim it.
- Subscriptions. Professional subscriptions which are associated with your professional deals are deductible. This applies to directors, business partners and other employees, who pay for the subscription on their own.
- Pension contributions. Despite an overwhelming majority of pension contributions are made automatically, you need to include them in the tax return in order to get higher rate tax relief.
- Finance and interest charge. The interest charges that are used for business purposes should be claimed. Such options may include credit card interest, mortgage interest, personal loan and similar ones. Loan arrangement fees and similar payments may also be included.
- Publications and books. The subscription to the business tax saver should be included, as well as other sums of money you spend on publications and books associated with your business.
Despite the options may not be significant, if combined, they can result in a considerable amount.
Basic Tips for Sending Tax Return
Who needs to send a tax return? Following the information, presented on HMRC, there are several groups of people, who need to do it. They include people, who:
- Are self-employed;
- Get over £2,500 of untaxed income;
- Whose income exceeds £50,000;
- Get more than £10,000 from investments or savings;
- Gained extra profit from selling valuable things like shares and need to pay the capital gains tax;
- Are company directors;
- Have taxable income that is over £100,000.
Despite the whole process of filling in the tax return will not take more than 20-30 minutes, you will need to register first. It is necessary only for those people, who have never filed a tax deduction before. It is vital to do it beforehand, as the process can last over 20 working days.
Once you are registered and ready to start the process, you need to collect all the papers, including tax certificated for investments, P60, P45, P11D, PAYE coding notices and similar documents. Sales invoices, bank statements and a range of other papers may be required.
The process may be complicated for people, who do it for the first time, but the assistance provided within the HMRC website will simplify the task and clarify certain complicated issues.
Considering tax deductions, you need to keep basic information in mind. The most typical mistake is forgetting about important things, such as the source of the income, etc. The tax code is another important point to remember. A considerable number of people pay too little or too much only because they have a wrong code. Tax code calculator available online may help you get the idea of the right one for you.
Additionally, there are two other things you should never forget: to pay for what you owe and claim the gift aid. These are essential moments, which will help you save and benefit from tax deductions.