Needs some tips for preparing of UK tax returns? Most people don’t look forward to preparing tax returns. But following these tips would make it easier as it will mean more cash back in your pockets.
Tips for preparing of UK tax returns
Take advantage of new allowances – Those earning an annual gross income below £1,000 from rentals (ex. Airbnb) or from self-employment (ex. selling items on eBay), casual jobs or hiring out equipment don’t have to declare it or make tax returns.
Utilise pension tax relief – Different pension schemes work in different ways.
Use buy-to-let tax breaks – Buy-to-letters paying tax at rates higher than 40% can claim tax relief on 75% of any mortgage interest payments. It will reduce from 100% to zero gradually between April 2017 and 2020 and will be replaced by a 20% “tax credit”.
Avoid tax penalties on child benefits – Where one or both parents earn over £50,000, benefits have been reduced on a sliding scale under the government’s high income child benefit charge. Such tax can be reduced by measures like paying more pension and reducing “adjusted net income”.
Claim gift aid at higher rates – Charities can claim an extra 25p for every £1 donated without extra costs. Higher-rate taxpayers can also claim the difference via their tax returns.
Make a charity donation now to reduce your tax bill for the previous year.
Utilise spouse or civil partner benefits – A couple could benefit if your earnings were below £11,500 and your partner’s earnings below £45,000. When preparing tax returns, you can transfer £1,150 of your personal allowance to your partner if their earnings are higher than yours.
Claims for work-related expenses – Subscriptions to magazines or newspapers for work, clothing exclusively for work are included.
Declaring everything – All income from savings accounts, investments, interest from various sources should all be included.
Penalties have to be paid for late tax returns.
Who should do tax returns? – Self-employed sole traders or limited company directors; those earning over £2,500 from renting out property; shareholders; if you or your partner received child benefits and one of you earned an annual income over £50,000; you received over £2,500 in other untaxed income, or are an employee claiming expenses over £2,500; you earn over £100,000 annually; or you earned taxable income from abroad. Paye Tax Refunds should also be considered. Registration for UKTax Refunds can take up to 20 working days.