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Getting your tax affairs in order prior to death

Getting your tax affairs in order prior to death

Your tax liabilities don’t end when you pass away. That’s why getting your tax affairs in order prior to death is so helpful for those you leave behind. Here’s what you need to know.

If you’ve always thought that your tax affairs end once you die, then think again. The truth is that the requirement for tax filings doesn’t end with the death of the taxpayer.

There are tax considerations:

  • Up to the date of death
  • For the period of administration, the time between death and the final winding up of the deceased’s estate
  • And the documentation potentially applicable to inheritance tax.
  • What this means is that you could leave complicated tax liabilities behind for your loved ones, family and the executor of your will to sort out.

So, how do you ensure you leave your tax affairs as tidy and manageable as possible?

Understanding end-of-life tax responsibilities for your personal representative

When a taxpayer dies, their personal representative is responsible for completing any outstanding tax returns. There will be one for the current tax year up to the date of death, and possibly one (not normally more, but there can be) for previous tax years.

HM Revenue & Customs (HMRC) has a very clear process for what happens once a taxpayer comes to the end of their life:

  • When HMRC is notified of the taxpayer’s death, any outstanding returns will normally be cancelled and then re-issued, together with one for the current year to the date of death. These returns will be sent to your personal representative.
  • If HMRC has issued a notice to submit a tax return. it must be completed unless they agree to cancel it. But in cases where HMRC already has all the information from their own sources – if, for example, your only income is from employment – they will not normally require a separate tax return to be filed.
  • Any re-issued returns must normally be submitted within 3 months and 7 days to HMRC. The return for the current year is due by the following 31 January. Electronic returns cannot be submitted – they must be in paper form.
Providing the required financial information to HMRC

Following your death, it will be your personal representative (usually the executor of your will) who has to deal with your financial and tax affairs on your behalf

Where a return is required, it will be your personal representative’s responsibility to collate the information that’s required and get your tax return completed and filed with HMRC.

So, how does this work in practice?:

  • HMRC will be able to provide details of income from any employment, state and other pensions, as well as any taxable welfare benefits.
  • Banks and building societies should be able to provide values for any interest payments. Dividends on listed shares should be evidenced by dividend vouchers, although the amount paid per share is also publicly available. Dividends on unlisted shares can be confirmed with the company’s accountant if vouchers are not readily available.
  • Any capital assets owned at the date of death go into the deceased person’s estate at the then-market value but are not deemed to have been disposed of by the deceased. Accordingly, these are not required to be reported for capital gains tax purposes. Any assets disposed of prior to death should of course be included in the final tax return.
  • Any tax refund due will be paid to the estate, and the estate is responsible for any tax payable by the deceased.
  • In addition to tax returns up to the date of death, it may also be necessary to complete a return covering any income and capital gains arising during the period of administration – this is the time between the date of death and distribution of assets to the beneficiaries. Where income from interest would result in a tax liability of £100 or less, no return will be required, and the tax-free status of income derived though individual savings accounts (ISAs) is maintained.
  • Where a tax return is required for this period, it will be a Trust and Estate Tax Return, not a normal personal tax return. Often though, HMRC will accept the necessary information less formally, in a written summary.
  • Where any residential property is disposed of from the estate, any capital gains must be reported within 60 days, and tax paid at the same time.
  • The final area of tax following death is in respect of inheritance tax (IHT). That is an area where you should always seek professional advice.
Talk to us about getting your tax affairs in order

Tax administration following death can be confusing, and something your surviving family members will likely find emotionally difficult. We’re always there to help in these circumstances.

Where the size of your estate is likely to exceed the inheritance tax threshold of £325,000 (excluding the residence nil rate band) please talk to us to explore if there is any planning that can be undertaken to reduce your potential IHT exposure.

As your adviser, we can also help you make sure your financial and tax affairs are always in order, and that you have funds put aside to cover your end-of-life tax liabilities.

Get in touch to get your tax affairs in order and let’s find out how we can help from The Stan Lee.

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5 vital things to set up before you pass away

5 vital things to set up before you pass away

Thinking about end-of-life planning might sound morbid. But by planning ahead, you remove the worry and hassle for your loved ones and secure your long-term legacy.

No-one wants to spend too much time thinking about their own mortality. But the reality is that forward planning removes a lot of the uncertainty for your loved ones in the event of your death. The following guidance may also be useful to help you guide others.

Passing on without any clear legal instructions regarding your finances, assets and estate can leave your nearest and dearest in a very difficult position. It’s far better to make plans well in advance and to have these documents safely stored away, should they be needed.

Here’s our five-point checklist of things to consider as part of your end-of-life planning.

Having a clear outline of your end-of-life wishes and planning

Yes, it may seem morbid to think about your own death. But with your affairs in order, and all the required legal documents in place, you can be confident that your end-of-life wishes will be carried out correctly and that your loved ones and dependents will be provided for.

Here are five vital elements to include in your end-of-life planning:

  1. Make sure you have a last will and testament – it’s crucial to create a last will and testament. This legal document will state your wishes regarding the distribution of your finances and assets and will also appoint an executor. This executor will ensure your wishes are carried out accurately and efficiently and will manage your estate plan to deliver on your instructions re charitable donation, gifts and your legacy.
  2. Set up power of attorney and health directives – you can choose to grant a trusted individual (or individuals) with the power of attorney (PoA). This PoA allows them to handle your financial matters and make decisions on your behalf. It’s also a good idea to establish health directives, such as a living will or medical power of attorney, to ensure your medical preferences are followed.
  3. Create a funeral plan to cover these costs – funerals can be expensive and a financial burden for those you leave behind. You can ease this burden by arranging a funeral plan in advance, and setting up an insurance policy that sets funds aside to cover the costs. Preparing for funeral costs in advance alleviates the financial strain on your family and allows them to grieve without worrying about payment of the funeral.
  4. Get your taxes in order – it’s important to organize your tax records and consult with a tax professional to make sure your tax affairs are in order. Setting aside funds to cover any potential tax liabilities is also sensible. This will prevent complications for your loved ones during the settlement of your estate and tax liabilities.
  5. Think about digital legacy planning – in a world where so much of our life is lived online, it’s vital to have a digital legacy plan. This comprehensive plan will provide information and guidance regarding your digital assets, including compiling a list of online passwords and account information. It’s a good idea to name a digital executor in your will to manage and transfer your digital presence. This will help with social media accounts, but also software subscriptions or online accounts you hold.

Talk to us about getting your end-of-life planning in order

When it comes to end-of-life planning, there’s no time like the present. The future can often be uncertain, so it’s good practice to have your will, estate plan, powers of attorney and digital legacy plan set up and safely stored away, should they be required.

As your accountant and tax adviser, we can help you review your financial and tax planning considerations and can put you in touch with the relevant legal advisers to create a comprehensive end-of-life plan.

Get in touch to talk about end-of-life planning and visit us how we can help from The Stan Lee.

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Should you move your rental properties into a limited company?

Should you move your rental properties into a limited company?

Your portfolio of rental properties could be easier to manage through a limited company. Here are five reasons why getting incorporated makes good business sense.

When you first start out building a property portfolio, you may decide to purchase each property in your own name. While this keeps things simple, there are some distinct advantages to creating a limited company to own and manage your properties.

We’ve highlighted five reasons why you should consider setting up a limited company.

5 reasons to run your properties through a limited company

Creating a limited company and becoming a company director may sound like a big move. But, in reality, running a limited company can make managing your property portfolio a whole lot easier, as well as reducing liability and improving your tax position.

A limited company structure offers:

  1. Limited liability – by moving your rental properties into a limited company, you can limit your personal liability if something goes wrong with the property. This means that if the company runs into financial difficulties, your personal assets will not be at risk.
  2. Tax efficiency – using a limited company can be more tax-efficient than owning rental properties personally. Individual landlords are taxed on their rental income at their own personal rate of income tax, which could be up to 45%. Companies are taxed on their profits via corporation tax, at a lower rate of between 19-25%. On top of this, there may be additional tax benefits from being able to claim expenses and allowances against your company’s profits.
  3. Better access to finance – a limited company can have better access to finance and borrowing than an individual landlord. Lenders may view a company as a more stable and professional entity, which makes it easier to secure loans for additional properties, expansions or renovations. This can be helpful when growing your portfolio.
  4. Improved management – managing multiple rental properties can be a complex and time-consuming task. By moving your properties into a limited company, you can streamline the management and could even potentially hire a professional property manager to oversee the day-to-day running of your portfolio.
  5. Estate planning – transferring rental properties to a limited company can be a useful estate planning tool. When your properties are held within a limited company, this can allow for easier transfer of ownership to heirs or beneficiaries in the event of your death. It can also provide greater flexibility for structuring your estate and managing any inheritance tax liabilities.

Talk to us about creating a limited company structure

If you’re planning to expand your rental property portfolio, or want to maximise the efficiency of your existing portfolio, moving ownership to a limited company makes a lot of sense.

As your adviser, we can run you through the process of getting incorporated as a limited company and can connect you with experienced legal advisers, if necessary. We can also help with your tax planning to deliver the most tax-efficient outcome from your rental income.

Get in touch to talk about setting up a limited company and let’s find out how we can help on your property investment from here at The Stan Lee.

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When should I register my company for VAT?

When should I register my company for VAT?

Wondering if your business should be registered for VAT? We’ve got the lowdown on when (and how) to get VAT registered, and the key reasons for doing so.

Sorting out your tax registrations is one of the first things to tick off your to-do list as a new business owner. But knowing when (and how) to register for things like value-added tax (VAT) can be a confusing process for new entrepreneurs.

Here’s a straightforward breakdown of the VAT registration process.

Why does my business need to collect and pay VAT?

Value-added tax (VAT) is a consumption tax. It’s imposed on the value added at each stage of production and distribution of goods and services. By registering for VAT you become liable to collect the VAT charged on your invoices, and to then pay this tax to HMRC on a quarterly basis. You’ll also be able to claim back some of the VAT you’ve spent on eligible expenses.

What’s the threshold for VAT registration?

It’s not mandatory for every limited company or sole trader to register for VAT. Generally speaking, you will only register for VAT once your turnover reaches HMRC’s threshold, or if there’s a tax advantage of being VAT registered to claim certain operational expenses.

You must register for VAT if:

  • your total VAT taxable turnover for the last 12 months was over £85,000 (HMRC’s current VAT threshold).
  • you expect your turnover to go over £85,000 in the next 30 days.
Who else must register for VAT?

Regardless of whether you meet the threshold test, you must also register for VAT if all of the following condition are true for your business:

  • you’re based outside the UK
  • your business is based outside the UK
  • you supply any goods or services to the UK (or expect to in the next 30 days).
How to start the VAT registration process

To register for VAT with HMRC, you have two basic options:

  1. Register your business online, via your Government Gateway account. This will create a VAT online account to manage your VAT payments and claims etc.
  2. Ask your accountant to register you on your behalf. If we’re your tax agent, we can register your business for VAT and help you manage your VAT affairs.
Talk to us about getting registered for VAT

If you’re a new business that’s starting out, or an existing business that’s getting close to the £85k VAT threshold, please do contact us to talk through getting registered.

We’ll help you work out your turnover for the preceding 12 months and can advise you about the most tax-efficient reasons for making your business VAT-registered.

Get in touch to talk about VAT registration and let’s find out how we can help you from the The Stan Lee.

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Back to Tax Basics: What taxes will I need to pay as a director?

Back to Tax Basics: What taxes will I need to pay as a director?

Are you aware of the personal taxes you’re liable for as a company director? We’ve got the lowdown on self-assessment and capital gains tax – and can help you plan your wealth management as a director.

When you set up a new company, there are certain business taxes you’ll be liable for as a business. But have you also planned for the personal taxes you must pay as a director?

As a company director, it’s not just the company’s corporation tax that you have to pay. You also need to pay the requisite taxes on your own income. This might be dividends payments from the company’s year-end profits, or even the income you receive from any property, shares or investments you own.

Knowing which personal taxes to plan for

A fundamental distinction to understand is the difference between company assets/profits and your own personal money.

Money that’s been generated by your company will sit in your business bank account and can be seen as the cash assets of your business. But, as a director, this is not your money. It’s the company’s money. This cash only becomes yours once it’s been paid to you, either as a dividend, a loan or via a salary paid through the company’s payroll.

HM Revenue & Customs (HMRC) will charge the company corporation tax on the company’s earnings. But HMRC will also need to charge you income tax on the cash you’ve been paid as a director – and this means planning for these tax costs as part of your wealth management strategy.

As a director, you’ll need to plan for:

  • Self-assessment income tax – self-assessment is the way that directors and self-employed people pay their income tax and National Insurance contributions (NICs). In addition to any tax and NIC collected monthly via PAYE as part of your normal payroll, with self-assessment, you must complete an annual personal tax return and submit this to HMRC. You then have to pay two ‘on account’ payments of tax and NICs.
  • Paying your self-assessment tax – paying your self-assessment tax bill is generally done by making two payments on account – one by the 31 January in the relevant tax year and one by the 31 July following the end of the tax year. If needed, a final ‘top up’ payment may be required at the end of January, following the end of the tax year. Through this system, not only does the company pay tax on its profits, but you also pay income tax when you take any of the remaining after-tax profits out of the business as dividends.
  • PAYE income tax – if you pay yourself a salary through the company’s payroll, this income will be taxed at source via the pay-as-you-earn (PAYE) system. The PAYE system will deduct your income tax and National Insurance (NI) contributions via your in-house payroll and this will then be paid directly to HMRC. This income will need to be accounted for in your self-assessment tax return, but you’ve already paid the income tax that is due on this salaried income.
  • Capital gains tax – capital gains tax (CGT) is a tax you pay on ‘gains’ you’ve made during the tax year. CGT is paid on the profit you make when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. So, for example, if you sold your business at a profit, you’d be liable for any gain (increase in value) that you’d made on selling the company. The rate of CGT that you pay will depend on your own income tax band and the nature of the gain that you’ve made. Reliefs are available, including the Business Asset Disposal Relief.

Learn more about the basics of directors’ personal tax

If you’d like to have a chat about your self-assessment or capital gains liabilities, please do contact us. The earlier you plan for these taxes, the more you can mitigate their impact.

Get in touch if you have any questions about your tax and let’s find out how we can help you from the The Stan Lee.

Back to Tax Basics: What taxes will I need to pay as a director? Read More »

What business taxes will your company need to pay?

What business taxes will your company need to pay?

Are you in the dark when it comes to business taxes? We’ve got the lowdown on the key taxes your new business will need to pay – so you’re on top of your tax liabilities.

Once you’ve registered your business as a limited company, you become liable for paying taxes on the profits you make. But what business taxes are there? And how do you know which of these taxes to pay?

To answer this, we’ve created a short ‘Back to Tax Basics’ email series, to give you the full lowdown on your tax responsibilities as a company director.

Understanding the main business taxes

Despite HMRC’s motto of ‘tax doesn’t have to be taxing’, the UK tax code can be a complex thing to get your head around.

If you’re not a trained accountant and have limited experience in financial management, understanding the rules around business taxes can be confusing. So, to start with, let’s look at the main business taxes you’re likely to register for.

Key business taxes include:

  • Corporation tax (CT) – corporation tax is a tax that’s levied on your profits as a limited company. At the end of your accounting period, you must submit a corporation tax return, and pay the CT that’s due. The rate from 1st April 2023 will be up to 25%, although companies with profits not exceeding £50,000 will pay 19%, with the full 25% rate applying to companies earning over £250,000.
  • Value-added tax (VAT) – VAT is a consumption tax that’s levied on goods that have had value added at each stage of the supply chain. When you buy these goods, you’ll pay VAT. And when you sell these goods, you will collect VAT. At the end of each quarter, the VAT funds that you’ve collected must be paid to HMRC. You can also claim back the VAT you’ve spent on certain qualifying goods and services too. The standard rate of VAT is 20%, the reduced rate is 5% and certain goods can also be zero-rated.
  • Pay-as-you-earn (PAYE) – PAYE is a way to collect income tax and National Insurance Contributions (NICs) from your employees. If you have employees and run a payroll, then you’ll need to collect the required amounts of income tax and NICs from your employees’ wages as part of your payroll process. Then you must report on these deductions and pay the tax and NICs to HMRC, either monthly or quarterly after the pay period, depending on the amount involved. In addition to the income tax and NICs you deduct from your employees, the company may also have to pay Employer’s NICs as a business expense.

Learn more about the basics of business tax

So, there you have it. That’s the basics of the key business taxes you’ll need to think about as a new business owner. In the next part of this series, we’ll look at the taxes you’ll be liable for as a director, and how these personal taxes tie in with the profits you take out of your business.

Get in touch if you have any questions about tax and let’s find out how we can help from The Stan Lee.

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HMRC’s VAT registration helpline closed

HMRC’s VAT registration helpline closed

HMRC’s VAT Registration Helpline has closed. So, how do you get an answer to your VAT application query? We’ve summarised the main ways to contact HMRC’s VAT specialists.

We were dismayed to see that HM Revenue & Customs (HMRC) shut down their VAT Registration Hotline as of 22 May 2023. This leaves businesses that have a VAT registration query without a direct HMRC team to communicate with.

Don’t worry, though, there are ways for you to get your VAT queries to HMRC, as we’ll see.

Why close the VAT Registration Helpline?

HMRC has a severe backlog of work at present. Applications are taking a long time to process, queries are not being answered and taxpayers are getting understandably frustrated.

Closing down the VAT Registration Helpline is part of HMRC’s ongoing mission to redress these delays. According to a recent email seen by AccountingWEB, closing down the helpline is intended as a way to free up HMRC staff and process more applications.

HMRC is quoted as saying:

“We recognise that performance across our core service lines still needs some improvement. We’re confident that this approach will help improve our customer service levels by allowing our colleagues to prioritise processing of these applications.”

How can you chase up a VAT registration?

With the VAT Registration Helpline now unavailable to you, how do you chase up a registration or get an answer to your VAT-related queries?

HMRC has suggested using their ‘Where’s my reply’ online tool to check on the status of your application. This online tool allows you to chase up an ongoing VAT application, as well as applications for corporation tax, employers PAYE and other taxes and government subsidies.

The length of time you wait for a response to your query will vary, but HMRC is suggesting that responses could take up to 40 working days. Not exactly an instant response!

How can you ask general VAT questions?

HMRC does have a facility for general VAT-related queries, but to get the best from these options, it’s sensible to have a VAT online account that’s already set up for your business.

To contact HMRC re a VAT query:

  • Log in to your VAT online account. Your online account lets you:
    • view your payments and outstanding liabilities
    • submit your VAT return and view previous returns
    • get a duplicate VAT registration certificate
  • Talk to HMRC’s Digital Assistant. HMRC has a digital chatbot that can answer basic questions and FAQs relating to your VAT affairs.
  • Call HMRC on the phone. Call the HMRC team on 0300 200 3700 (or +44 2920 501 261 if you’re outside the UK). HMRC advises that you should only phone them if the query is urgent. You’ll need to have your postcode, Fulfilment House Due Diligence Scheme (FHDDS) number and VAT registration number if you need to call. HMRC’s phone line opening hours are:
    • Monday to Friday: 8am to 6pm
    • Closed weekends and bank holidays
  • Use the HMRC app. HMRC’s official mobile app allows you to look up general information and basic FAQs etc, but won’t be able to answer specific questions.

Talk to us about your VAT queries

As your tax agent at The Stan Lee, we can answer most of your general VAT queries for you. We can also act on your behalf and contact HMRC to request more specific information.

If you’ve got a VAT-related question or an application query, just drop us a line and we’ll do our best to get you an answer as quickly as possible.

Get in touch to ask your VAT questions.

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3 Cloud Accounting Tips To Save Your Business Time And Money

3 Cloud Accounting Tips To Save Your Business Time And Money

Keeping on top of your accounts is a big part of running a successful and profitable business. But you don’t want to spend ALL your time dealing with accounting tasks, especially when that time could be spent building customer relationships, or developing new products etc.

So, how do you keep your finances in check, while also spending less time and money on your accounts?

  1. Bringing your accounting into the digital age

Switching to cloud accounting can be a revolutionary step for many business owners, especially when you look at the ways you can streamline and automate the basic accounting tasks. By using accounting platforms like Xero, QuickBooks, MYOB or Sage, you get all the basics of small business financial management, but with the benefits of smart automation.

With most modern cloud accounting software, you can:

  • Automate the scanning and digitisation of your expenses and receipts
  • Automatically reconcile your bank transactions with your invoices and bills
  • Connect your accounts to other time-saving apps for mileage claims or staff expenses.
  1. Getting paid faster and with less admin

With a cloud accounting platform driving your business, you also make it easier to send out e-invoices and get paid faster and more effectively. Improving your payment times and cash collection can make a huge difference to your cashflow position, and also sets the right expectations with your customers – making it clear that you require to be made on time.

Using the invoicing function in your business software, you can:

  • Quickly send out electronic invoices as soon as a job is completed
  • Set up automated invoices to be sent out at pre-agreed points in a project
  • Include payment buttons on your invoice, so customers can pay via PayPal or card
  • Remove the barriers to payment and speed up payment times.
  1. Getting a better overview of your important numbers

Using cloud accounting isn’t just about automating the time-consuming financial admin tasks. By recording and tracking all the financial and non-financial data flowing through your system, your accounting platform can actually provide you with a goldmine of useful real-time information.

With cloud accounting providing your reporting, you can

  • Access totally up-to-date real-time information, to improve your decision-making
  • Track your performance against targets to see how well the business is performing
  • Monitor spending and budgets to keep your cashflow under control
  • Understand your return on investment when it comes to sales and marketing activity 
  • See how promotion has driven sales but reduced your profit, due to discounting.

Talk to us about setting up a more productive kind of accounting

If you want complete control of your finances and business decision-making, updating your accounting software and processes will be key to achieving that goal.

We can help you decide which accounting software is most suited to your business, and how to maximise the benefits you get from automation and real-time data.

Get in touch to talk through updating your accounting and you can request us here fee quote.

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How to Use Digital Bookkeeping with Us at The Stan Lee?

How to Use Digital Bookkeeping with Us at The Stan Lee?

Digital Bookkeeping

In the emerging technology, digital bookkeeping is a must for all of us as accountants and every entrepreneur too here in the UK. As accountants, our challenges are to adopt with the digital accounting and help the clients as well. In this blog, you will read how we can support on your digital bookkeeping needs for your business venture.   

 

What is Digital Bookkeeping?

Digital bookkeeping is an electronic format (instead of using the traditional method of papers) where all accounting transactions including outgoings, incomings, VAT, cash flow and more are conducted in an electronic environment.

Why You Need to Consider Digital Bookkeeping?

From April 2022, all VAT registered businesses are subject to the Making Tax Digital (MTD) compliance regardless of their turnover, unless exempted. However, you have a range of benefits as follows in using digital bookkeeping:

  • Smooth and efficient document processing that you have access at anytime from anywhere
  • You have get rid of the paper mountain and no need to prepare folders for the quarter ending
  • Less space required for filling cabinet and can utilise that space for other purpose
  • More accurate bookkeeping rather than manual and always clear overview
How We can Help on Your Digital Bookkeeping?

We use most common accountancy software including; IRIS, Sage and Xero for your accountancy, taxation and business support needs. Here is the brief note how you can maintain your digital bookkeeping with us using Xero software. Please note that we are Xero certified advisors.

In our example, Xero is the main software for digital bookkeeping purpose whether you are VAT registered business or not. Once having Xero software, it means that you are benefited from:

  • Automatic “bank feed” connection and no hassle for manual entry
  • Create your invoice in few clicks and then ready to send digitally to your clients
  • Entry bills to pay and reconcile with the bank
  • Maintain expense claims including mileage records and then reimbursed by authorised person
  • Integrate with POS (point of sale) and no hassle for manual sales record
  • Facility to add payment service software including stripe, PayPal and so on
  • Multiple currency and hence no hassle for currency rate and adjustment for gains or loss
  • Connecting with other a range of app including Hubdoc

Hubdoc is a software that extracts key information from your receipts, invoices and bills. No more hassle for data entry and no more filing, simply take the photo of receipts using mobile app or upload documents from your computer. You may not have additional costs for using Hubdoc with Xero.

You may have trouble in maintaining your petty cash and to resolve this, why not consider Pleo. Please note that we are Pleo partner and you may be eligible for discounts as our clients. You will be benefited from: spending solution (seamless expense management), smart company cards for employees and reimbursements with invoices once using Pleo software.

 Here to Help on Your Digital Bookkeeping?

At The Stan Lee, we can confidently help on your Digital Bookkeeping affairs with competitive and reasonable fees. For further information, please get in touch with one of the friendly team and let’s find out how we can help on your digital bookkeeping needs.

We set up the digital bookkeeping for our client at no additional fees

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Self Assessment Tax Return – Deadlines and Penalties

Self Assessment Tax Return – Deadlines and Penalties

You must do your self assessment tax return here in the United Kingdom if you have any undeclared taxable income including; dividend, property rental income,  investment income and other taxable income. As per the record of tax return 2021/22, more than 300k taxpayers missed their self assessment deadline of 31 January 2023 and 11.7 million submitted their returns on time. You might subject to penalty charges if failure to comply with self assessment requirements. We will note here the key aspect of self assessment registration, submission, payment and inaccurate tax return.

Self Assessment Registration Deadlines

If you have new source of taxable income and you need to declare for income tax purposes, you must notify HMRC by 05 October in your business’s second tax year. For example, you need to notify HMRC by 05 October 2023 for tax year ended 05 April 2023. You could be fined by HMRC if you don’t do so. You can register for self assessment tax return with HMRC via online or post.

Tax Return Submission Deadline

There are two options to submit the tax return; paper based tax return and online tax return. The paper tax return must be submitted by 31 October and the online tax return by 31 January following the tax year ended.

For instance, the tax return for 05 April 2023 must be submitted by 31 January 2024 if doing by online and by 31 October 2023 if via post. If you are failure to submit the return on time, HMRC may charge penalty on your late filing depends on how long you are late. You may appeal on the penalty charges if you have reasonable excuse.    

Income Tax Payment Date

The income tax liability must be paid by 31 January following the tax year ended. For an example, the income tax for 05 April 2023 must be paid by 31 January 2024. However, you may be subject on payment account if your tax liability is more than £1,000 and you paid less than 80% of the previous year’s tax. Payment on account means you need to pay two payments in a year; one is on 31 January and another one is on 31 July.

HMRC will charge penalty and interest on your late payment if you missed the deadline. The penalty depends on how long the payment is overdue and the amount of income tax liability. However, you may pay only the interest, not the penalty on the late payment if you have a payment plan arrangement with HMRC for your tax liability.

Incorrect Tax Return

HMRC will charge penalty on your wrong tax return if you have lack of reasonable care, deliberate error or concealed and the penalty depends on the reasons of the error and the potential lost revenue. Penalty may be reduced to nil and it depends on your quality of disclosure.

Here to Help on Your Tax Return?

At The Stan Lee, we can confidently help on your self assessment tax matters with reasonable fees. For further information and about your income tax affairs, please get in touch with one of the friendly team and let’s find out how we can meet your tax return deadline and minimise your tax legitimately.

Disclaimer: The above information is just as a general information that might help you. However, we highly recommend having expert advice suited for your circumstances. The Stan Lee and its author are not liable if you rely on this and have any consequences.

Self Assessment Tax Return – Deadlines and Penalties Read More »

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The Stan Lee has the experience and expertise available to assist you as and when required. So what makes us different when compare to our competitors? The key difference is our team of highly qualified professionals go the extra mile for their clients.

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The Stan Lee is our trading name of two separate entities as follows:
  • Stan Lee Accountancy Ltd; an ACCA Accountancy firm (Reg No: 4607747 that offers accountancy, taxation, estate administration, ATOL and other business support services that are authorised by the ACCA.
  • Stan Lee Probate Limited; a CILEX-ACCA Probate firm, “Authorised and Regulated as a CILEX – ACCA Probate Entity, Authorisation number 3001291” that offers non-contentious Probate service only.

We are required by our professional bodies to have separate entity and therefore, there are two firms involved. Both firms are required to have Professional Indemnity Insurance (details of the PII available in our office upon request).

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