The self assessment deadline is Wednesday 31 January 2024 and taxpayers could face penalties if they file their return late.
The tips cover tax free allowances, national insurance, child benefit, available tax reliefs and cryptoassets.
Taxpayers who have been issued a notice to file a tax return but don’t think they need to file should double check this, then tell HMRC so that they don’t receive a late filing penalty.
Caroline Miskin, ICAEW Senior Technical Manager, Digital Taxation, said: “Millions of people have still not filed their tax return, and if you are yet to file yours, don’t wait until the last minute.
“By following these tips, you can avoid unnecessary penalties, ensure you take advantage of the appropriate reliefs available, and avoid overpaying. If you’re unsure about anything, it’s always worth consulting HMRC guidance or a chartered accountant.”
Tax free allowances
Taxpayers should be aware of their income allowances and ensure anything additional is reported, ICAEW said.
Higher interest rates will result in more people being liable for tax on their savings interest. Basic rate taxpayers have a £1,000 tax free personal savings allowance; for higher rate taxpayers the allowance is £500 and additional rate taxpayers have no personal savings allowance. Interest must be reported on your tax return if you exceed these limits. Dividends over £2,000 also need to be reported.
ICAEW also warned people who do extra work outside their regular job, sometimes known as a side hustle, to check whether they need to declare any additional income above £1,000. While there is no new tax on online sellers, and income from selling personal possessions is generally not taxable, income from property or trading may need to be declared.
National insurance
If your income from self-employment is below £6,725, then you can choose whether to make voluntary Class 2 national insurance (NI) contributions.
You won’t need to pay national insurance if your income is between £6,725 and £11,908, but it’s worth checking your NI contributions history to make sure that you have received a credit for the year.
Thirty-five years of NI contributions gives you entitlement to the full state pension, so check how many years of contributions you’ve made and are likely to get before you reach state pension age. You may be able to top this up.
High-income child benefit charge
It can be easy to miss liability for the high-income child benefit charge, especially if an increase in income or taxable benefits has tipped you or your partner over the £50,000 income threshold for the first time, so check whether you need to pay this.
Reliefs and other allowances
There are several allowances and reliefs that taxpayers should bear in mind when filling out their self assessment return.
You can claim tax relief on qualifying tax deductible expenses, and be aware that rules for self-employment are different for rules for employment.
Some married couples and civil partners can claim marriage allowance. If it’s worth doing so, ICAEW recommends that the person with lower income, known as the transferor, submits their return at least 72 hours before their spouse, who is known as the transferee. This avoids delays to HMRC’s systems when processing the returns.
You can claim relief on pension contributions if you pay tax above the basic rate and relief has not been given through payroll.
Additionally, you can claim tax relief on gift-aided charitable contributions. This can particularly help taxpayers whose income is above the £50,000 threshold for the high-income child benefit charge, or at the £100,000 threshold above which the personal allowance reduces, because you will get relief at higher marginal rates. It is possible to carry back gift aid to the previous tax year, but claims must be made in the tax return filed prior to 31 January and amendments are not possible.
Cryptoassets
If you own cryptoassets, including cryptocurrency, check whether any gains need to be declared, even if no money has been exchanged or received. Trades exceeding £49,200 must be declared even if they are the result of a large number of small trades, and any gains exceeding a total of £12,300 should be reported.
ENDS
Notes to editors:
CONTACT: ICAEW media office stephen.froome@icaew.com or 07970 402 073
- Taxpayers can check if they need to send a self assessment tax return, see guides to stop self assessment for the self-employed, and find out about stopping self assessment online.
- More information about declaring additional income is available.
- More information from HMRC on the rules on tax deductible expenses for employment and self-employment.
- HMRC guidance on the marriage allowance is also available.
- There is guidance from HMRC on self assessment tax returns for cryptoasset holders. An ICAEW article also covers this subject, as does HMRC’s cryptoassets manual.