As the end of the tax year approaches on 5 April, it is important to consider whether any claims or elections need to be made to ensure the opportunity to benefit from them is not lost. Many claims or elections have to be made within four years of the end of the tax year to which they relate. For example, by 5 April 2017 you need to make claims, where appropriate, for the following matters relating to the year ended 5 April 2013 if you have not already done so (usually via your tax return for the year ended 5 April 2013).
- The personal allowance.
- Overlap relief on cessation of self- employment or participation in a partnership where the accounting year end was a date other than 31 March/5 April, or if the accounting year end was changed.
- Overpayment relief, eg where an error was made on the 2012/13 tax return and tax was overpaid as a result.
- Carry forward of trading losses: if you did not include details in your 2012/13 tax return, you need to formally claim the losses so these can be set against future profits of the same business.
- Capital losses: these have to be formally claimed either via the relevant year's tax return or in writing to HMRC within four years of the end of the year.
- The remittance basis of taxation for non UK domiciled UK resident individuals: even if you do not need to pay the remittance basis charge, the remittance basis needs to be claimed.
- Terminal loss relief, where a business has ceased and you wish to carry back a loss of the final year of business to earlier years.
However, some claims or elections have a shorter deadline, including the following:
- the deadline for claiming that an asset became of negligible value or a loan to a trader became irrecoverable is only two years, so 5 April 2017 is the deadline for negligible value claims for the 2014/15 tax year and for loans which became irrecoverable in 2014/15;
- the deadline for reclaiming class 1 national insurance contributions (NICs) mistakenly paid on earnings which should have been categorised as self-employment is only one year, so claims for NICs overpaid for 2015/16 need to be made by 5 April 2017; and
- claims for exception from class 4 NICs where the same earnings are subject to class 1 NICs must be made in advance of the relevant tax year, so a claim for 2017/18 has to be made by 5 April 2017.
And do not forget that 5 April is also the deadline to undertake tax planning for 2016/17, including but not limited to:
- utilising your 2016/17 capital gains tax (CGT) exemption;
- utilising inheritance tax (IHT) exemptions for 2016/17 (and any excess unused from 2015/16), such as the £3,000 annual exemption;
- making pension contributions to qualify for tax relief in 2016/17;
- utilising your 2016/17 individual savings account (ISA) contributions allowance.
For more information please get in touch with Karen Clark, or your usual RSM contact.