Yes, you read that right. There’s a way to get the HMRC to pay YOU interest. Chris Cooper explains how to make the most out of your tax return.
So, you’ve submitted your tax return and paid it bang on time. Phew! You made it. You deserve a cup of tea and a biscuit. But once you’ve had those…go right back on the HMRC website and get preparing your next return. Why? Because there are some pretty convincing and surprising benefits to getting your tax return in early.
The first and most obvious reason to submit early is that it helps you to budget and plan the repayments. Once submitted, you’ll have a clear idea of how much you owe in tax. Then you can start to set aside some money each month, building up funds until payment is due in January (and July). It’s worth noting that you’ll have to wait until all of your dividend tickets are received before you can submit your return, and some of these won’t be ready until June. But it still pays to prepare your return early and submit it when you have all of the information required.
Receive interest for early payment
You might be in the fortunate position that you’re able to pay your tax bill right away. This could see you quids in, because if you pay off your tax return early, HMRC will actually pay you back any interest that is accrued between payment and due date. That’s correct – it’s essentially rewarding you for early payment. So, if your money usually sits in a zero-interest bank account, then accruing interest with HMRC can only be a good thing. With interest rates as low as they are right now, it won’t be much, but every little helps.
Save money through allowed tax deductions
Another way to make the most of your tax return is by making sure you capture all of the items that are tax deductible. Tax deductible products and services purchased solely with a business purpose. It’s really important that you keep all of your receipts, else you won’t be able to claim tax back. Keep track of your vehicle mileage, mobile phone use and home use, if you work from home some or all of the time. You can find more information on what you can expense in our blog here and there are some good tips on the HMRC website to help you calculate your home use allowance.
Making the most of tax allowances
Everyone has a personal tax allowance, even as an employee. You can check this on the HMRC website. However, if you’re married or in a civil partnership you may also be able to take advantage of a combined tax allowance. If your partner has an income lower than the personal allowance of £12,500, they can transfer or port up to £1,260 of their personal tax allowance to you, which could save you to £252 in the tax year. It may be that their employment situation has changed recently to make this the case. If that’s the situation, then they would need to contact HMRC to change their tax code to reflect this change in circumstances and allow the transfer to take place.
HMRC have an app that allows you to see all of your tax details. It’s worth downloading so that you can always ensure you’re on top of your tax.
If you have any questions relating to your tax allowances, we’re always here to help. So while you’re having your tea and biscuit, why not give us a bell?