Taxing times: here’s what to remember when filing a return

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With just over two weeks to go before the deadline there are some things you need to bear in mind.

Five million of the 11.57 million people expected to complete a return have yet to file

Those most likely to miss the impending tax return deadline are young (aged 18-20), female, live in London and work in administration. Those most likely to file on time are aged over 65, male, live in southwest England and work in agriculture.

The data from the tax office is based on last year’s returns, but with just over a fortnight until the January 31 deadline for 2015-16 tax returns, 5 million of the 11.57 million people expected to complete a return have yet to file. This year there are some special pitfalls to avoid:

1 Give yourself time
If you need to register to submit your tax return online, you will need to allow about ten working days. You will also need to amass the relevant paperwork, including your P60, P45 and P11D forms if you are employed, and accounts with expenses records if you are self-employed. You will also need details of all earnings, including how much interest you earned on savings, benefits you received and income from property or shares. You will need details of outgoings, such as pension payments, donations to charitable causes and student loan payments.

2 Accuracy is important
“The thing to remember this year in particular is that HMRC’s computer system, Connect, has access to a lot of information about you, including income from eBay and Airbnb,” says Jackie Hall, a tax partner at RSM, the consulting company.

HMRC has been finessing its Connect system for years and it now draws on a variety of databases, including from banks, building societies, the Land Registry and Paypal, to cross-reference information about you and flag up inconsistencies on your tax return.

The tax office database also includes details of foreign income and offshore accounts. According to Jonathan Amponsah, the founder of The Tax Guys accountancy firm, changes to the law mean that not declaring these earnings will land you with a “strict liability criminal offence” for offshore tax evasion.

Be aware also of inaccuracy penalties. Mr Amponsah says he knows of penalties of between 30 and 70 per cent of the tax due being imposed when people have forgotten to mention student loans or paid back their child benefit, if they earn more than £50,000.

3 Claim allowances
The tax office says that of the 4.2 million couples eligible for Marriage Allowance, worth £220 a year, only 1.3 million have claimed, meaning that 2.9 million couples are missing out. “It’s free money and people are not claiming it,” Ms Hall says.

4 Gift Aid
Be sure to claim higher-rate relief on charity donations. This is one of the most commonly forgotten entries on a tax return according to Richard Morley, a tax partner at BDO. “There is also a slight quirk with Gift Aid in that you can claim for donations made up to January 31, 2017 on your 2015-2016 return and so get the relief early,” he says.

5 Don’t be caught out
Budget and autumn statement announcements — such as the £1,000 tax-free trading and property income relief and £1,000 savings allowance — have generated a lot of headlines, but didn’t come into force until after April 6, 2016. So remember to declare earnings made from selling items on eBay or from renting out a room on Airbnb during the 2015-16 financial year.

6 National insurance changes
Mr Amponsah says the self-employed will need to pay class 2 national insurance contributions on their tax return for the first time, in addition to the usual class 4 contributions and income tax. So don’t just follow last year’s return.

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