· For all employments held during the tax year, you should have either a P60 or P45:
· P60 - issued by your employer(s) at the end of the tax year (5 April) to detail your taxable income and tax deductions for that year. If you made student loan deductions, this figure will also be provided.
· P45 - issued by your employer(s) when you leave a job during a tax year. Similar to the P60, it details your taxable income and tax deductions for that year. If you made student loan deductions you'll also need to provide your payslips for the year at these aren't included on your P45.
If you have received taxable benefits during the year that aren't on your payslip your employer should provide you with a P11D:
· P11D - issued by employer(s) at the end of the tax year (5 April) to report taxable benefits provided to you that aren't taxed on your payslip. Examples of benefits provided by employers are company vehicles & private medical insurance. Your employer has until 6 July following the end of the tax year to provide you with your P11D. If you had two jobs during the year, you may have two P11Ds.
If you receive income from rental property, we will need the following documentation:
· If you are a new client this year, details of the property being let (date purchased, price paid, legal fees and other costs on purchase, mortgage taken out, improvements made to the property, history of dates lived in property and dates property let, whether it is furnished or unfurnished, expected current value)
· Details of rental receipts during the tax year with any management fee paid split out separately
· Details of all expenditure on the rental property during the year (Insurances, Service charge, Ground rent, Repairs and Maintenance, Capital improvements (e.g. new kitchen), Utilities paid, details of trips made to the property (miles), advertising costs or any other costs directly related to renting the property).
· Mortgage statement showing the capital/interest repayment split for the property - you can request this from your bank if they have not sent you one.
· If you sold your property during the year, we will also need the date sold, selling price, legal fees and other costs on sale.
If you rent a room in your house then we will need details of the income received during the tax year.
Sole Trader Business
If you have a sole trader business, we will require the records of the following:
· All sales and income
· All business expenses
· VAT records (if you're registered for VAT)
· Records about your personal income
· Your COVID-19 support grant
If you use online bookkeeping software, please notify us once your records are up to date and they are ready for review. Login information required.
If you keep a spreadsheet, please email us your spreadsheet for the relevant period.
You may not need to submit all the above as part of your Self Assessment tax return. However, HMRC may ask you for them should they launch an investigation.
If HMRC does launch an investigation, you'll need to provide evidence of your finances.
This will need to come in the form of:
· Receipts for goods and stock
· Bank statements and chequebook stubs
· Sales invoices, till rolls and bank slips
Only with all the above will you be able to safely claim any relevant expenses and stay on the right side of HMRC.
Tape UK require the following information to complete your return:
· HMRC login information
· National Insurance number
· Personal and business details.
· Nominated bank account for any tax owed to you
Your bank should issue you with a statement for each bank account showing how much interest you received for the tax year or you can add up the amounts for each month. All interest should now be paid gross (no tax deducted).
You do not need to send us information about interest from cash ISAs, premium bond receipts or interest from NS&I tax-free products, namely Fixed Interest Savings Certificates and Index-linked Savings Certificates as these are not taxable.
If you hold personal investments that are not contained within an ISA, then you should provide us with the dividend vouchers for the tax year.
If you are a director of a Limited company and we complete your company accounts then we will review your dividends as part of our accounts service so you do not need to provide us with details of these.
Dividends from your Limited Company are declared throughout the financial year of the company. These are reported in the Company Accounts.
However, the company accounting year won’t necessarily align to the Self-Assessment tax year. You must work out what will go on each self-assessment by reference to the date that the Dividend was declared & taken.
As an aside, for most one person or small limited companies and to simplify things, dividends are declared and taken on the same day.
Aligning Your Dividends
The only way to align your dividends to the self-assessment tax year is by reference to the date that the dividend was made.
Let’s show this by way of an example.
Your company has a year-end of 30th June.
In the accounts to 30th June 2020 the dividends taken were £24,000 as follows:
In the accounts to 30th June 2021 the dividends taken were £30,000 as follows:
Self-Assessment 2020 / 2021
As this runs from 06/04/20 to 05/04/21 then the following dividends would be included on the self-assessment for 2020 / 2021:
That’s total dividends of £31,500 for the tax year 2020 / 2021.
It’s worth noting that the dividend taken on 5th April 2021 is included on the 2020 / 2021 self-assessment showing just how important it is to get the dividend dates and timings right.
All too often people get in a muddle with dividends as they have not kept their bookkeeping up to date and have taken random amounts from the company that could be for anything from salary payments due, expenses reclaimed to dividends.
It is essential that you keep your books straight and show the money that you take from the Limited Company in the correct way as you go. Doing it this way makes it much easier to see the figures that you need for your self-assessment as well as ensuring that you are not making an illegal dividends could bring you trouble further down the line.
Payments that you make from your company should be for one of three things:
· Expenses – the reimbursement of out-of-pocket expenses i.e. money that you have spent from your own funds on behalf of the company e.g. mileage, train tickets, parking, some stamps or stationery. You should keep a record of your expenses so that you can support the amount taken from the business.
· Salary – amount that you need to pay to yourself for your salary as shown through your payroll system
· Dividends – amounts that you have declared and withdrawn from the company supported by the necessary paperwork When you withdraw amounts from the company’s bank account you should record the transaction as either expenses, salary, or dividends.
Keeping the books up to date is the right way to do things. It avoids the muddle plus it allows you to easily establish what you can withdraw from the company by way of dividends after establishing the profit and allowing for any corporation tax which will be due.
If you have got into a mess with your accounts and have been taken random amounts from the company bank account without reference to expenses, salary, and dividends then you need to sort this out as soon as possible. Likely you’ve plonked everything into a “Director’s Account” pot. You will need to chronologically record the amounts taken from the business subtracting any expenses, the recorded salary and necessary dividend transactions to eliminate your Director’s Account balance.
Tax Dividends Allowance
The dividend allowance for 2021/22 is £2,000. This is a significant reduction from earlier years. For up to £2,000 of dividend income, there is no tax to pay - regardless of how much other income you have.
Dividends Tax Relief
For higher amounts of dividends, the rate of tax depends on your total income - including other, non-dividend income: the first £2,000 of dividend income is still tax-free.
any extra dividend income within the basic rate band of up to £50,000 for someone with a personal allowance of £12,570 is taxed at 8.75%.
for dividends that fall within the higher rate band (up to £150,000), the rate is 33.75%.
For dividends in the additional rate band, the rate is 39.35%.
Self-Assessment customers must declare any COVID-19 grant payments on their 2020 to 2021 tax return. You don’t need to repay a SEISS grant – it’s not a loan. However, SEISS grant awards are subject to Income Tax and Class 4 National Insurance contributions.
The SEISS grants are taxable in the tax year in which they are received. So, the first three SEISS grants are taxable in the 2020/21 tax year, and they should be reported in full in your 2020/21 Self-Assessment tax return. If you’re self-employed and your sole trader business receives a SEISS grant in the fourth or fifth rounds, they’re taxable in the 2021/22 tax year and should be reported on your 2021/22 Self-Assessment return.
More than 2.7 million customers claimed at least one Self-Employment Income Support Scheme (SEISS) payment up to 5 April 2021. These grants are taxable, and customers should declare them on their 2020 to 2021 tax return before the deadline on 31 January 2022.
The SEISS application and payment windows during the 2020 to 2021 tax year were: SEISS 1: 13 May 2020 to 13 July 2020 SEISS 2: 17 August 2020 to 19 October 2020 SEISS 3: 29 November 2020 to 29 January 2021
SEISS is not the only COVID-19 support scheme that customers should declare on their tax return. If customers received other support payments during COVID-19, they may need to report this on their tax return if they are: Self-employed Partnership Business
State pensions - these are paid on a 4 weekly basis. HMRC will normally send a letter annually explaining how much the pension is increasing to. You will need to provide us with this document or bank statements which show the payment figures for a 4 week period during the year. Private pensions - you should receive a P60 for this income which we will need.
Jobseeker’s allowance - is a benefit for people who are actively looking for work Maternity allowance - you can claim maternity allowance as soon as you’ve been pregnant for 26 weeks. Payments can start 11 weeks before your baby is due.
Capital Gains Tax - if you sold any shares or other assets in the tax year, we will need a breakdown of what you sold, when you sold it and the amount you sold it for. We will also need the purchase date and price and any other costs associated with the asset. Foreign income - if you are UK resident then you need to declare your worldwide income on your UK tax return. You'll need to provide details of any foreign income received during the tax year including any foreign tax paid. Other - if you have some other income not mentioned above then discuss this with us to see if it needs to be included on your tax return. If in doubt, it's always better to double check.
If you personally pay for expenses related to your employment you may be able to claim additional tax relief. The most common examples of these are:
· Mileage - if you receive less than 45p per mile for business mileage in your own vehicle from your employer, then we can usually reduce your tax liability. We will need the number of business miles travelled and the rate your employer reimbursed you.
· Uniform Allowance - if your employer has a set dress code then you may be eligible to various reliefs including uniform and cleaning allowances - suits & ties are generally not allowed.
· Professional subscriptions - if your job requires you to hold a membership to a professional body (and your employer does not pay for this) then we can usually claim the cost of this and reduce your tax liability. We would need proof of payment (invoice and/or bank statement).
Personal pension contributions - if you contribute to a personal scheme, then you may be able to claim additional tax relief. You will need to provide:
· The name of the provider
· Your contract/membership number
· The amounts and dates of the contributions.
Company pension contributions - there are two types of arrangements whereby your company makes pension contributions on your behalf:
· After tax contribution - this scheme will be referred to as 'relief at source' in your pension documents. You may be able to claim additional tax relief on these contributions so you will need to provide us with your payslips for the full year (April to March).
· Before tax contribution - this scheme will be referred to as 'net pay' in your pension documents. You have already received full tax relief on these contributions. We will only require information if you've exceeded the pension threshold (see details below in other information).
If you are unsure which arrangement your company uses then send us your most recent payslip and we can advise further.
If you invested in an Enterprise Investment Scheme (EIS/SEIS) then you will probably be able to receive tax relief. You should receive a certificate from HMRC (form SEIS3) for each investment and will need to pass this on to us.
Tape UK may require further details about the investment but will discuss this on a case by case basis.
If you made donations to a qualifying charity and claimed gift aid then you may be able to claim additional tax relief (if you are a higher rate taxpayer). We need the following details (a good tip is to login to your just giving account and print out your past donations):
· Charity name
· Donation date of donation
· Donation amount
· Gift aid claimed? Yes/No
Change of Cirumstances
Please let us know at Tape UK if your circumstances have changed so we can update our records, this includes:
· Name change
· Marital status change
· Address change
· Change to number of dependents
Tape UK will need your tax coding notices from HMRC over the year.
If you receive child benefit, are earning over £50,000 & when compared to your spouse, you're the highest earner - we need to add this to your self-assessment tax return. Let us know when you started receiving child benefit, how much you've received and how many children you have.
If one spouse is below the higher rate threshold (£50,000 for 2020/21) and the other spouse is below the personal allowance (£12,500 for 2020/21) you can claim the marriage allowance - this will save you just over £200 in tax. We will need your partners details (i.e. name, national insurance number & date of marriage)
If you have less than £110,000 of taxable income per year, then you can contribute up to £40,000 per year into a pension scheme for tax relief purposes.
For every £2 of adjusted income (this is the income shown on your P60 plus your pension contributions) above £150,000 per annum, £1 of this allowance will be lost (up to a maximum reduction of £30,000). This means that some higher earners may only receive a pension allowance of £10,000 per year. There is also a lifetime allowance of £1,055,000 (2019/20)
Therefore where you earn more than £110,000, please provide us with details of your pension contributions (employer and employee) for the current year and the three previous years (you can normally bring forward unused allowances). You should receive annual statements from your providers.
Pay Self-Employed Tax
When you submit, you should get a confirmation message and a reference number. HMRC will calculate the tax you owe, as well as the National Insurance contributions you need to pay.
The deadline for paying your tax return is the same day as the deadline for filing – 31 January.
If you file your tax return late, you’ll get a £100 penalty (if it’s up to three months late – it’s more if it’s later
The fastest ways to pay your tax bill are:
· online or telephone banking
· debit or corporate credit card online
· at your bank or building society
You can also pay by BACS, cheque or Direct Debit, but these take longer.
Remember that most self-employed people usually need to make a payment on account too, which can catch newly self-employed people out – make sure you have enough set aside.
Struggling To Pay HMRC
HMRC’s Time to Pay service is available if you can’t pay your tax bill by the 31 January deadline.
This is for those struggling financially – so if you can pay your tax bill, you should, not least because through Time to Pay you’ll pay interest on what you owe. This makes your bill more expensive.
You’ll need to complete your tax return first, so don’t leave it until the last minute. If you miss the deadline for either filing your return or paying your bill, HMRC may give you a fine.
You can call the HMRC Self Assessment payment helpline on 0300 200 3822 to discuss a Time to Pay plan.
HMRC Tax Return Guidance
There is lots of guidance on the www.gov.co.uk website and you can also call the Self Assessment helpline on 0300 200 3310.
If you have any questions or queries, please do hesitate to contact our team on email@example.com and we’d be more than happy to assist.
The right accountant can help your small business grow. If you run a small business near Liverpool but don’t have an accountant on staff, you may need some help to stay on top of your finances. Let the experts at Tape UK take care of all of your accounting needs. We offer accounting for small businesses because we want to see you succeed and grow, so take advantage of our low-cost solutions.
If you’ve ever tried filing your taxes on your own before, you know how difficult it can be. Our team will take care of your bookkeeping all year so that you’re more prepared when tax season rolls around. When it’s time to file, you can depend on our experts to get you the most deductions possible so that your business can stay in the green.
Without the right resources and expertise, payroll can take a lot of your time. Hand that burden over to our team so that you can focus on your business. Whether you pay your employees weekly, bi-weekly, or monthly, our team is prepared to handle all your payroll needs.
We can also handle P45s, P11Ds, sick pay, statutory maternity and paternity pay, and even pension schemes. So no matter what your business needs, you can trust Tape UK to deliver.
If you need a small business accountant, take some time to learn about our comprehensive accounting services and contact us today.
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