UK: September Is A Taxing Time For Millions
Last Updated: 20 September 2006

The self employed and people with buy-to-let property are among the millions who should complete an annual tax return for the 2005/06 tax year – and a key date for submitting tax returns falls just at the end of this month.

“If you want the taxman to do the complex calculations on your behalf, you should get your tax return to HM Revenue & Customs (HMRC) by Friday 29 September 2006,” said Andrew Penman, associate tax director at Smith & Williamson, the accountancy and financial advisory group.

“Besides working out your tax bill, there are a number of other advantages to sending off your tax return on or before the end of the month. In particular, if you have underpaid tax for 2005/06 of up to £2,000 and pay tax under Pay As You Earn (as most people in employment do), the taxman will collect the underpaid tax each month through your usual code. This does mean that the tax is paid a little earlier but can be better for cash flow than paying the amount as a lump sum! People with a pension with tax deducted under PAYE are in the same position”, said Andrew.

If you have not received a tax return but think you may need to pay tax, you must tell HMRC by 5 October 2006. A tax return will be sent to you and if you submit this within 30 days of the date of issue, HMRC will still calculate your tax bill.

In addition to the self employed and people with buy to let property, others who need to complete a tax return include anyone with invested money (which is earning interest) on which more tax is due and people with some new source of as yet un-taxed income.

Andrew continued:

“Take care to complete the return fully and correctly. Each year, HMRC rejects a surprising number of tax returns due to simple errors such as people forgetting to sign the form, or ticking boxes and then omitting relevant information.”

“There are strict rules about keeping tax records. If you are in business, which includes having a rental property, you must keep your records for five years from the 31 January following the tax year, so for the 2005/06 return this means 31 January 2012. All documentation should preferably be kept for six years.”

If you are able to file your tax return on-line by 30 December, the taxman will allow small amounts of outstanding tax – again typically up to £2,000 – to be paid under your PAYE code.

“However, it’s good practice to think about your tax return in September, rather than leaving it to December or January, as from 2008 hard copies will have to be in by 31 October as HMRC is bringing the deadline forward.”

Credit / for further information:

Andrew Penman at Smith & Williamson, the accountancy and financial advisory group

Tel 020 7131 4379andrew.penman@smith.williamson.co.uk

Weblink: www.smith.williamson.co.uk

PR enquiries Kate Harrison / Layisha Laypang 020 7131 4228/4550

Disclaimer
By necessity this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Information correct at time of writing.

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