The 31 January 2019 deadline for submitting online personal tax returns for 2017/18 is almost here.
Implications for filing late
Late returns incur an automatic penalty of £100, with further penalties being added over time until the return is filed . It is also important to remember that if tax for 2017/18 is not paid by 28 February 2019 there will be a 5 per cent late payment surcharge on the tax due .
While it might seem right to avoid a late filing, it is worth considering whether submitting a return late, or an on time provisional tax return, is better than submitting a return which is not carefully considered as being correct and complete.
Here are some top tips for getting your return done, highlighting the main changes from last year and the most common mistakes made.
Key changes from last year
Some changes to consider which could make a difference to your tax for 2017/18.
- Since April 2017 buy to let property investors who pay tax at 40 per cent or more have not been able to offset the full cost of their mortgage interest against rental income. For 2017/18 landlords can still claim 75 per cent of their finance costs at the higher rate of tax, with the remaining 25 per cent being deducted at the basic rate. From 6 April 2020 all finance costs will only benefit from a basic rate tax deduction.
- The cash basis of taxation has been extended to be available to certain property businesses from 6 April 2017, rather than the previous mandatory accruals basis.
- Two tax free allowances of £1,000 each were introduced from 6 April 2017: the property allowance and the trading allowance. These allowances are of most benefit to those with secondary incomes, for example ad hoc property income and trading income through e-marketplaces.
- Significant changes apply to the tax rules from 6 April 2017 relating to non-UK domiciled individuals (non-doms). The rules are detailed and complex and specialist advice should be sought, but for many non-doms 2017/18 could be the first year that worldwide income and gains will need to be reported.
The most common mistake individuals make when completing their tax return is to miss something out . Remember to check the return thoroughly before submitting it. If necessary, it is possible to make a reasonable estimate if some paperwork is outstanding and then simply update your return when you get the final details .
There is an annual allowance available in relation to pension contributions and the tax calculations may be complicated; it should not be overlooked that employer contributions are taken into account when calculating the tax position for the year, including the possibility of an annual allowance tax charge in certain circumstances .
For more information please get in touch with Sarah Turgoose.