We have put together a checklist for you to review, so you can consider any new or overlooked relevant information. If you do identify any items that you think need to be reported, please tell us. We will assume that you haven’t identified anything extra from the checklist if you do not tell us.
1. EMPLOYMENTS AND PENSIONS
What we can get direct from HMRC ourselves:
Employment earnings, taxable benefits and pension income – From late August HMRC can provide us with this information directly. They will give us details of all your taxable income and benefits and the tax they have deducted from you. Please check the tax return I will be sending against your own records, as discrepancies do arise from time to time.
State pension – From the end of the tax year. The department for work and pensions will share with HMRC what you have received for your state pension. We will use this information supplied to us for your tax return. Please check the tax return I will be sending against your own records, as discrepancies do arise from time to time. Remember a state pension is paid every 4 weeks not monthly. You will have received 13 payments of your pension in a tax year, not 12. This is a common mistake people make when checking their bank statements for their tax returns.
Your own company – We will have access to the payroll information and will not need you to provide us with it.
What we need from you:
Employment and pension income – please forward copies of any P11ds benefits, P45s, or P60s you have received. HMRC will be able to provide us with this information from late August onwards (sometimes earlier) but until then we will need copies.
Please send us details of all your P11ds P45s and P60s. If you have a workplace pension you’re contributing to please see para. 10.2 below.
Employment expenses – You may be able to obtain tax relief for any expenses you have incurred for the work that you that hasn’t been repaid to you, these will include:-
- Business travel and subsistence expenses (including mileage paid to you at less than 45p a mile)
- Professional fees and subscriptions related to your work, you have had to pay yourself, have not had repaid from your employer and are on the HMRC approved professional organisations and learned societies list
- Cleaning uniforms or replacing tools you use the occupations list HMRC have prepared, if you are not on the list the default is £60 per year there is a concession given for dentists who can claim at £80 a year
- Any other expenses and equipment your employment contract has said you must provide or pay for yourself
- Working from home allowance. If your employer asked you to work at home for just one day you can claim a whole years working from home allowance
Please send us details of all of your employment expenses.
2. SELF-EMPLOYMENT > £1,000
If you worked for yourself during the tax year and we haven’t prepared your accounts for this business we will need to know the details of this business income and expenditure. Very small businesses with an annual income of under £1,000 may be excluded in certain circumstances.
Please send us a copy of accounts for any self-employment business we have not prepared accounts for you.
If you were a partner in a partnership business and we didn’t prepare the accounts for that business.
Please send us a copy of the tax return for the partnership.
4. INTEREST AND DIVIDENDS
Dividend income – there is an annual tax-free £2,000 dividend allowance but, all dividends must be reported on a tax return. If the shares are owned within an ISA they are tax-free and do not need to be reported. You should get a dividend voucher(s) showing the amounts you have received for the tax year.
Please send us copies of your dividend vouchers.
Interest income – there is an annual tax-free £1,000 interest savings allowance but, all interest income must be reported on a tax return. If it is an interest-paying ISA they are tax-free and do not need to be reported.
Please send us certificates showing details of your total interest.
Managed portfolio of investments – you should provide a tax year-end certificate. If not you can contact your provider and they should be able to help you obtain the tax certificate.
Please send us the tax year-end certificate.
Your own company – We do not need any dividend or interest information from a company we have prepared the accounts for as we retain copies for your tax return.
5. PROPERTY RENTALS
Residential and commercial lettings – if you have any income from renting a property it will need to be disclosed on a tax return. However, there is an exemption for certain property income under £1,000.
Please send us details of your income and expenses from your properties.
Rent a room relief – if you rent out part of your house to a lodger (not a self-contained flat) you must report this income if you’re completing a tax return. There is a tax-free allowance of £7,500 or £3,750 if you jointly own your home but the income still needs to be reported.
Please send us the details of any income from your lodgers.
Use of home for business – We will know you are using part of your home for use in your business. We know what the rent you are receiving is, but we still need you to tell us about the details for your home expenses. We will send you a link to update a spreadsheet to record your expenses.
6. CAPITAL GAINS
Capital Gains Tax (CGT) – is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. It’s the profit you make that’s taxed, not the amount of money you receive.
Capital gains tax is due on any profits from the sale, swapping, compensation (like an insurance payment) or the gifting of chargeable assets such as:
- Property other than your main home or what was your main home and is now let
- Shares not held inside an ISA
- Business assets
- Most personal possessions worth more than £6,000, apart from your car
- Cryptocurrency or any other currency
Capital gains tax is not due on:
- ISA or PEPs
- Government gilts and premium bonds
- Betting, lottery or pools winnings
- Gifts to your spouse
- When you inherit an asset
- When you have total profits from all capital gains for less than £12,300 for the tax year and
- Your main home (if it has never been let out)
Disposals- If the total value of “chargeable” disposals in the tax years exceeds £36,900 or there is a profit of £12,300 or more disclosure will be needed on your tax return. Even if you have made a loss, it is worth registering that loss, as a loss can be offset against any of your future gains.
Please tell us about any disposals you have made in the tax year or if any assets such as loans or shares have become irrecoverable or worthless.
Acquisitions – If you have acquired any “chargeable” assets this year please provide us with the details for our files. From April 2020 you must report to HMRC within 30 days of completion of any capital gains from UK residential property. If we already have the details on our files of any property you own and the initial cost to you it will help us to help report to HMRC you when come to sell your property(s).
Please tell us about any chargeable assets you have acquired.
Managed investment portfolio – If you have an investment portfolio you should have been provided with a tax year-end certificate listing all of your gains or losses. If not you can contact your provider and they should be able to help you obtain the tax certificate.
Please send us your tax year-end chargeable events certificate.
7. TRUSTS AND SETTLEMENTS
If you received taxable income from a trust, settlement, or a deceased person’s estate you will have been given an R185 tax certificate for including on your tax return.
Please give us a copy of the R185 tax certificates you have received.
8. FOREIGN INCOMES AND GAINS
HMRC estimates that 1 in 10 people in the UK has overseas income and assets.
As a resident in the UK, you are taxed on your worldwide income and gains. This is regardless of whether you keep the income and gains outside of the UK or if the income and gain weren’t taxable in the country the income or gain is from.
Any foreign income tax you pay can usually be offset against any UK tax you have to pay on your foreign income.
Please tell us about any income and gains or losses you may have.
9. TAXABLE STATE BENEFITS
The majority of state benefits (also called social security benefits) are managed by the Department of Work and Pensions (DWP) via the Jobcentre Plus.
The most common benefits that you pay Income Tax on and need to report on a tax return are:
- Bereavement Allowance (previously Widow’s pension)
- Carer’s Allowance
- contribution-based Employment and Support Allowance (ESA)
- Incapacity Benefit (from the 29th week you get it)
- Jobseeker’s Allowance (JSA)
- pensions paid by the Industrial Death Benefit scheme
- the State Pension
- Widowed Parent’s Allowance
Other than State Pension (we get this direct from HMRC) please tell us about any taxable state benefits you have received.
CHILD BENEFIT PAYMENTS
Whilst not a taxable benefit. If either your income or your partner’s income exceeds £50,099 a year and you have received payments for child benefits you will need to repay some or all of the benefit to HMRC. This is known as the High-Income Child Benefit Tax Charge (HICBC).
Child benefit is usually paid to the mother as the main caregiver.
Please tell us if you or your partner has received, started, or stopped any child benefit payments and the number of children it was for.
10. EXPENDITURE QUALIFYING FOR TAX RELIEF
There may be tax relief due on expenditure you have made this tax year for:
- *Direct contributions paid into a personal pension shceme
- **Contributions to a workplace pension that uses the Relief at source scheme (RAS).
- *Gift aid payments to community amateur sports club and ***charity donations to any UK, EU or ECC charity registered for UK tax relief. Note you must have signed a gift aid declaration for the charity to claim the tax relief.
- SEIS, EIS or VCT investments – these are usually made with the advice of a financial adviser
Please provide us with any details of these expenses.
*Tax relief is only available to higher rate taxpayers with an income of over £50,270. It is still worth us knowing about these payments as we might be able to advise you on how to make these payments with direct tax relief if you have a company.
** This is where the pension contribution is made AFTER the tax has been deducted, and this tax is then reclaimed by the pension provider directly from the government. So, for every pound contributed to your pension pot, there will be an £0.80 deduction from your take-home pay, and the £0.20 paid in tax is reclaimed from the government by the pension provider.
If you are a higher or additional rate taxpayer, to get the full tax relief you will need to claim back some of the tax on your tax return. This is because tax relief is added to your pension at the basic rate of 20% but you will have paid a higher actual rate of tax on your contribution.
If your payslips show a pension deduction as RAS for at the relief as source you will need to provide us with the total of the pension contributions for the tax year. You can get this from your last payslip of the year.
If your payslip has Net, NP or Net pay marked on your payslips for pension deductions, there is no further tax relief to be obtained.
If your payslip doesn’t indicate your pension deduction type you will need to ask the payroll department to confirm if it’s a net pay or relief at the source arrangement to you.
Note to check if you make both regular and ‘additional voluntary contribution’ (AVCs) as your pension provider could provide you with/without the RAS method fo the two differnet types of contributions
*** Charity donations can often include religious groups, school charities and membership organisation like the national trust