Are you prepared for the tax return deadline?
The tax return deadline of January 31st is fast approaching. If you are a self-employed parent or a parent in the higher income tax bracket then you may need to complete a tax return. Heather Dore, Regional Manager of Easy Accountancy answers some commonly asked questions from her clients about how to complete their returns.
My husband and I have three young boys and we both earn over £50,000 a year, so are classed as higher income parents. As we receive child benefit we are required to complete a tax return. We both earn over £50,000 so do we both need to complete a tax return?
You and your partner are only required to submit one return to HMRC between the two of you. Whoever has the highest income out of you or your partner is the one who is required to complete the tax return.
I am planning to pick up some freelancing work whilst I am on maternity leave; I expect to earn around £1000. Am I still required to complete a tax return as this amount is below my personal allowance?
No matter how large or small your income you must declare it through completing a tax return. HMRC will then work out the amount of tax that you are required to pay based on the amount that you have earned over the year.
I am a full-time mum, but in my spare time I make soap and bath products and sell them on eBay. I earn approximately £200 per month, because this is such a small amount do I need to declare this income?
Whatever your income and however you earn it, if you work for yourself, you are required to complete an annual tax return so that you can declare your income. HMRC can then use this information to work out the size of your tax bill.
I am a qualified hairdresser, but I stopped working when I had my children. Now that they are at school I would like to start working as a freelance mobile hairdresser. How do I declare my income and how do I pay tax?
If you decide to start working on a self-employed basis then you will need to record your earnings, which is how much you are paid in total by your clients. It is a good idea to keep an appointment book and keep copies of sales receipts as proof of income. If you are working on a sole trader basis then you will need to complete an annual tax return where you declare your income to HMRC, once they have this information they can then calculate how much tax you need to pay. It is worth remembering that you should keep proof of income and proof of any expenses for seven years.
When is the tax return deadline for this year?
The deadline for the 2013/14 tax year is 31st January 2015.
What happens if I submit my tax return late?
If you wanted to submit a paper return and have missed the paper tax return deadline, which was 31st October 2014 then you must complete your tax return online. If you miss the online tax return deadline, which is 31st January 2015 then you will automatically receive a £100 penalty. It you have still not submitted your return three months after the deadline then you may be liable to further penalties.
What happens if I pay my tax bill late?
If you cannot pay your tax bill by the deadline then you should contact HMRC and let them know as you may be able to negotiate the option to pay your bill in instalments or a deadline extension.
If you do not pay your bill by the deadline and you fail to contact HMRC then you may receive a penalty.
Is it possible to edit my return once I have submitted it?
You are able to edit your return once it has been sent in, if the amends are submitted within the deadline, which is 12 months after the tax return deadline. If you submitted your return online then you can make amends by logging into your online account. If you submitted a paper return then you simply need to send your updated pages to HMRC marked for amendment.
How will I know if HMRC decide to look into my return?
You will be contacted within 12 months in writing if HMRC decide to look into your return. HMRC are entitled to an extended enquiry window if you made amends to your return or submitted it late.
Do I need to keep my records and how long should they be kept for?
HMRC could ask to see proof that an expense was incurred; proof of income or to see other records such as bank statements. It is therefore a good idea to keep copies of all your records for seven years in case you are investigated by HMRC.
To view Easy Accountancy’s tax return infographic please visit: www.easyaccountancy.co.uk/infographic-tax-returns-are-you-ready-31st-january-deadline