Christmas is the day for elf-assessment

20 December 2023

Some people will do anything to avoid spending more time than necessary with their in-laws on Christmas Day but using HMRC as an excuse is a bit of a stretch. Despite the fact the deadline for submitting tax returns is 31 January, thousands choose to submit their tax returns on Christmas Day rather than watching the King’s speech.

Perhaps the net present value of what has been spent on gifts proves too much for some to bear and sparks the need to make that tax reclaim. With that in mind, here are some of the top tax return tips for those preparing and submitting their tax returns over the festive period.

  • Claiming capital allowances – self-employed workers, those with furnished holiday lets and sometimes even employees are amongst those who can potentially claim tax relief in the form of capital allowances. Capital allowances provide tax relief on certain acquisitions of capital items, such as equipment used in a business. Where the asset qualifies and is used solely for business purposes, it can be possible to get tax relief on its full cost in the tax year it was acquired.

  • Check those recent charitable donations – if the Christmas season of giving has extended to charitable donations then it may be possible to claim tax relief on those early. Donations qualifying for gift aid can help reduce tax bills for higher and additional rate taxpayers. For example, a 40% income taxpayer could effectively benefit from £25 for every £100 cash donation. A claim for tax relief on qualifying donations can apply to donations made in the relevant tax year, as well as some later donations. Provided the donation is made before the tax return is submitted or by 31 January at the latest, it may be possible to obtain tax relief on it earlier than usual.

  • Review those employee expenses – it is often harder for employees to claim tax relief on work-related expenses than it is for self-employed workers but it’s still worthwhile checking what can be claimed. One commonly overlooked claim is for mileage allowance relief. Employers may pay their staff a certain amount per business mile driven in their personal vehicles but if this is below HMRC’s ‘approved amounts’ then employees can make a claim for tax relief on the difference. The ‘approved amounts’ per mile in the 2022/23 tax year for cars and vans is 45p for the first 10,000 miles and 25p per mile thereafter. Claims can also be made for business mileage on a bike or motorcycle.

  • Claim those losses – sometimes losses in earlier years can be overlooked so it is worthwhile checking and entering these manually on HMRC’s software if necessary. Those who have suffered a loss in the tax year or in earlier years should ensure they are maximising the tax relief on it. For example, it may be possible to carry back losses to earlier years when earnings may have been higher and the tax relief can therefore be more valuable. Similarly, special claims for tax relief, known as negligible value claims, can sometimes be made, including by some victims of investment scams.

For those who have had their fill of turkey on the big day, it’s important they are not stuffing themselves by rushing through their tax return and missing out on important tax reliefs and claims available to them.