Day: December 1, 2020

Your self-assessment tax return is the document that is needed to calculate how much tax you owe personally. This return includes your dividends, employment income, rental income etc. One way to ‘stress out’ your accountant is to send them your tax return information in January. However, many people don’t understand why January is so stressful for accounting firms. Therefore we wanted to explain why sending in your information before January is so important.

Important dates explained

The tax year runs from April (of the prior year) to April (of the current year). For example, if we send you a request after April in 2020 for your self-assessment tax return information, it will be relating to information from April 2019 to April 2020. So the start and the end of the tax year.

The deadline to complete the return and pay any tax will be the following January, so in this case the 31st of January 2021. This gives you 9 months to get the return submitted and tax paid from the end of the tax year.

For anyone who has to pay a payment on account, this will be due the following July, so in this case the 31st of July 2021.

The way we work

At 1 Accounts we use a system called Karbon to request self-assessment tax return information. At the end of the tax year on the 6th of April, we send out an automatic email requesting all the information we require to complete the return. We then send an automatic reminder email once a month for five months to those who haven’t uploaded the information. If you still haven’t sent in any information after this, you will get chaser emails from one of the team.

If you haven’t used our Karbon system before, it is nice and straight forward. All you have to do is click ‘manage checklist’ on the email.

This will then direct you to create a pin number (make sure it is memorable). If you forget your pin, just click on the ‘forgotten your PIN?’ hyperlink and follow the steps.

Once you are in, you will be able to see a checklist where you can comment and upload the information we have requested, or ask any questions. These comments come through to the team like an email.

Once you have completed a task we ask you to tick it off. The open tasks are what triggers the automatic reminders and so ticking them off will stop them.

If none of the information requests apply to you, we still need you to write N/A in the comments so we know it doesn’t apply.

Once you have completed your checklist and ticked off the tasks, please just log out or close the window. Your progress will be saved and we will be notified

For anyone sending us information after the 15th of December, there is no guarantee we will be able to complete the return on time.

So why Is January so stressful for accountants?

With January being the deadline for self-assessment tax returns, naturally many people leave it until the last minute. If you are completing your own return, then that’s fine, however waiting until January to give the information to your accountant will not make you very popular. No matter how much accounting firms prepare, January is always horrible. Not only are the Christmas festivities over, last minute tax returns are a given. If you have left your tax return until the last minute, bear in mind, that you are not the only one.

We advise you to send in your information any time between April to August. This will give us ample time to complete your return. The sooner you send us the information the sooner we can complete the return. We prioritise our returns on whoever sends us the information first.

On a side note, if you are looking to buy a house, your returns will need to be completed for your mortgage. If this is the case you will need to send us your information ASAP and let us know well in advance.

Remember your tax is due in January?

Your tax is due in January. This means that if you leave sending your information until the last minute you could end up with a large unexpected tax bill to pay straight away. If you return gets completed early, you will be able to prepare for paying any tax in January. Or for those lucky people, get a refund early.

Overall, accountants all over Britain ask nicely that you send your tax return information between the months of April-August so we can give you the best possible service and eliminate stressful Januarys once and for all.

If you have any questions on your self-assessment tax return please email jade@1accounts.co.uk

…… AND WHY!

It’s that time again ….. tax returns!

From the 6th of April, accountants start to request information from clients. In this blog, we will go through what information accountants need and why.

At 1 Accounts we request the below information from all of our clients via our Karbon software. A secure virtual checklist gets sent to every client automatically on the 6th of April. For more details on when and how to send your tax return information to us please *click here*. Not all of the checklist points apply to everyone, however, we ask all of our clients to write N/A by the tasks that don’t apply, this confirms to us that they aren’t applicable.

Bank Interest

You have to declare your bank interest received on your tax return. You do not have to pay tax on any interest under £1,000 if you are a basic rate taxpayer or £500 if you are a higher rate tax payer. If you are an additional rate taxpayer, you will have to pay tax on all of your bank interest. However, regardless of the amount you still have to declare any interest you have had. Depending on your bank you will get an April summary that will tell you your annual interest. Your bank should also be able to provide an interest statement on request. Failing both of these, you can just look through your bank statements and add up any interest received, however, this could be long, time-consuming and most of all boring.

Details of Dividends

Your dividends are taxable income (after £2,000), so they have to be declared on your tax return. To send us the details we will need the dividend vouchers. If you do not have these you will be able to ask your accountant managing your business to send them to you. If you are a 1 Accounts client and we look after your company, we will have the dividend information for that business.

If you have invested in any shares, you will also get a dividend certificate. Keep hold of these even if just for a small amount as this will also need to be declared.

Details of rental income and expenses

We will need to know the gross rent. This is the amount of rent that you are paid before any management charges. We will also need a list of your expenses obtained throughout the year. If you have an agent you should be able to ask for a ‘rental statement’. If you don’t have an agent please send us a spreadsheet of your expenses and details of the rent paid to you every month.

Some of our rental clients use Xero to keep track of their income and expenditure. If you would like a version of Xero to be able to do this, just let us know.

Donations Under Gift Aid

This one is a little trickier to find the information. If you have donated through ‘just giving’ or have a monthly subscription to a charity you will be able to find the donation given. All we need is for you to add all the donations together to give us the total figure donated, confirm who you donated too and that it was made under gift aid. Remember that donations made under gift aid will REDUCE YOUR TAX if you are a higher rate taxpayer and so it is worth noting down whenever you give to charity.

Pension contributions

This is another one that you could get tax relief on, depending on the type pension scheme and how the contributions are made into the scheme. We will need the details of all the amounts that have been paid into a pension scheme, whether by you or on your behalf by say your employer. Dependent on your pension provider you should be able to get a statement for the year. If this is applicable we will need to discuss this with you further.

Employment income

If you are employed we will need details of this income from either the P60 or P45. This is because it is part of your total taxable income for the year and is needed to decide your tax band. We will need your P60 or P45 from any employer for whom we don’t run the payroll and don’t worry, any tax deducted at source under PAYE will be deducted from your tax bill.

If you are in receipt of you pension, we will also need this P60 as well.

Details of any other income

If you have had any income that we have not listed above, please tell us. Even if you are not sure it applies. This could include the following:

• P11D employment benefits received.
• The sale of capital assets.
• Inheritance income (if not handled within the estate).
• Sole trade income (if turnover is above £1,000 we need to know).
• Sale of shares.
• Cryptocurrency sales.