Making your return less taxing

No one wants to be caught out when it comes to their personal tax.

A single mistake can result in penalties and fines, as well as unexpected tax bills, as you navigate the often maze-like gauntlet of tax returns. Like with all labyrinths, it’s easier with a guide. Fortunately, Verallo are here to help.

Where to start?

The first thing to do is to understand the types of income and expenditure which are required to be reported to HMRC on your tax return. Here’s a quick breakdown of some of the most commonly missed:

Interest

Interest income is taxable (unless it arises from savings in an ISA) and should be reported to HMRC on your self-assessment tax return. There are tax free allowances available, however with interest rates at their current high levels these are often exceeded.

Dividends

Similarly, dividends received from investments outside of ISAs are taxable and should be reported to HMRC.

The tax-free dividend amount is just £500 per annum with any amounts received in excess of this being taxable.

Pensions

Pensions are a complex area, especially when it comes to making contributions into your pension either personally or via your employment and PAYE.

There are annual allowances to consider and any auto enrolment employer pension scheme should be reviewed to ensure that maximum tax relief is being given. In some cases, higher and additional rate tax relief can be claimed via your tax return and this can result in additional tax savings.

Gift Aid

If you make charitable donations through the gift aid scheme, higher and additional rate tax is available and should be claimed on your tax return.

Child Benefit

If the higher earner in the household earns in excess of £60k in a tax year, some or all of the child benefit paid to the household in the year may be repayable to HMRC.

Cryptocurrency

Gains arising as a result of trading in cryptocurrency are taxable and reportable. Careful analysis is required to ensure calculations are correct and that the correct rate of tax is applied.

Benefits in Kind

If you are provided benefits in kind by your employer, such as private medical insurance or a company car, a taxable benefit arises and this should be reported to HMRC on your tax return following receipt of a form P11D from your employer.

What now?

If all of this has left your head spinning, don’t worry. You’re not alone. Verallo offer bespoke tax planning strategy advice, tailored to your specific situation. Avoid the many pitfalls, dead ends, and mistimed decisions by finding out what Verallo can do for you here.