Top tips for the January tax return



At this time of year many business owners are gearing up to file their January tax return.

It can be tempting to put it off, but the deadline of January 31 is on the horizon.

If you’re procrastinating over your tax return, rest assured it doesn’t have to be a difficult task. With some preparation, it can be filed quickly.

Head of Taxation at Beatons, Andrew Diver, offers a few points to remember.

Being late costs

Your tax return must be submitted by January 31, 2023, otherwise you will receive a £100 penalty. Then, if the tax owed isn’t paid by February 28, 2023, a surcharge of 5% of the tax due applies.

Plus, the Bank of England base rate has increased so that means interest on late paid tax has too.

It is now charged at 5.5% p.a. compared to just 2.6% this time last year. So, being organised and on time, pays.

Don’t forget about the work from home deduction

A general £312 deduction for working from home was introduced as a covid measure in 2021/22 but its about to be stopped and this is the last year it can be claimed so don’t forget to use it.

HMRC allows you to claim the £312 expense deduction from your employment income if you were required to work just one day from home in the year to April 5, 2022.

Could you be due tax relief on your pension?

This can be regularly overlooked when filing a self-assessment return, but it can be worth thousands.

Anyone earning more than £50,270 might be eligible for extra tax relief on personal pension contributions paid through salaries via auto-enrolment, or their own personal arrangements with pension providers.

If you are unsure, check with your employer whether employee contributions deducted from your salary are paid over to the pension company gross or net of tax, as this will determine if you are entitled to additional higher rate tax relief.

A further note on pensions is that care is needed if you happen to have income of more than £210,000 as the amount which can be paid into a pension fund can reduce from the maximum of £40,000 down to as little as £4,000.

If you’re unsure, seek advice from an accountant.

Don’t forget about earnings from overseas

Don’t forget to include any overseas income as HMRC will have these details, shared from banks or other tax authorities, so do make sure you include them.

Omissions can be very costly with up to 200% penalties if you are also a 40% taxpayer - resulting in a whopping 120% payment required to HMRC.

Be sure to claim all expenses

Claiming as many legitimate expenses as possible will mean you pay less tax. Keep organised evidence of all expenses and be sure to check that you’re claiming everything you can. For maximum efficiency in this area, it can be beneficial to engage an accountant and Beatons would be happy to advise.

Tax relief on charitable donations

Make best use of charitable donations as they can result in tax relief. A payment under gift aid, if your income exceeds £50,270 can not only give the charity more money but can result in a reduction in your tax bill too.

Special rules can also allow contributions made not just in the year to April 5, 2022, but also up to January 31, 2023, to be used to reduce your tax liability. These are included in Box 8 of the SA100 form (page 4) and can give a further 25% tax relief on the amount donated.

Seek advice from your accountant if you’re unsure.

Extras to remember

Do not lose sight of those extras such as child benefit payments. These need to be repaid if your income is more than £50,000. If you don’t prepare a tax return but your income is now more than £50,000, you should notify HMRC.

Student loan repayments will be due if your income exceeds the threshold amounts. And while your employer might be collecting student loan repayments for you, if you’re filing a return for other income such as self-employment, rental or dividend income additional student loan repayments might be due through the self-assessment system.

For help and advice with filing your tax return or any other accountancy needs, please contact Beatons via or 01473 659777.