When the dust settles once Christmas Day is over, lots of people have time on their hands and many use it to deal with tax issues which have been pushed to the side all year. What should be their priorities?
I write this in those last few days before Christmas when everyone is running around doing last minute shopping, entertaining, cooking, clearing work to-do lists and all the rest. It’s a manic time and not one when a lot of tax work is sorted. But that’s not to say we should forget tax. For loads of folk there are things need done in the next few weeks, and the holidays might provide a couple of days of calm when they can be started.
What I am going to set down is a wee checklist of things you might need to do, and which can usefully be started before we all get back on the treadmill in January.
1. Tax Return online filing. If you were sent a Tax Return for 2010/11 (year to 5 April 2011) it must be filed online by 31 January 2012. If you haven’t got the special codes to file online you need to register asap for them. They are posted to you (how old-fashioned) and so the sooner you ask for them the better.
2. Gather Tax Return info. Whether you have the computer codes or not, if your Tax Return has not been submitted you need to pull together your information. An hour or two over the holidays might make a lot of progress. Hunt out your P60 from work, or your 31 March 2011 payslip. Get details of savings income. Update passbooks – perhaps when in town at the sales? Request any information which you need but can’t find.
3. Tax bills – have you the money? Many people who file a Tax Return have tax to pay by 31 January 2012. Do you know how much it is? Have you the funds to pay it? Do you need to encash some premium bonds or give notice at the building society account? If can’t afford it contact HMRC in January, not after the money is late – you will get a more sympathetic ear.
4. Tax code for 2011/12 – take the time to hunt out your tax code for the present 2011/12 year. See if it is right. It’s better to sort this before the tax year ends. The standard code is 747L. Second jobs are often taxed at BR (20% tax) or D0 (40% tax). Those who file a tax return can call 0845 900 0444. The helpline is closed Christmas Day, Boxing Day and New Year’s Day. Everyone else phones 0845 300 0627. During the week these helplines are open to 8pm. Always write down the date and time of your call and the name of the person you speak to.
5. Tax code for 2012/13. In January 2012 HMRC sends people with unusual codes their code for the year starting in April. This gives you a chance to contact them if changes are needed – well ahead of the start of the tax year. So have a think about what you expect in next year’s code, and be ready to challenge anything you don’t understand. Company car drivers – make sure the code reflects the car you will have from 6 April 2011 – avoids nasty tax bills later.
6. Miracles - apart from Miracle on 34th Street, don’t expect them. Don’t expect the tax people to sort your problem instantly. Just this week I was told by the helpline that if a tricky matter has to be referred to the ‘back office’ it is working on a 3 week backlog!
7. New Year’s Resolutions – if you file a Tax Return each year, make a resolution that you will have the Return submitted before the summer holidays. That way you get your refund earlier, or know well in advance what tax is due in January 2013.
8. New year sales – when in town looking for bargains spend a tenner on getting your tax papers organised. Get yourself a hole punch, a lever arch file and a pack of 10-part dividers. Use one divider for each tax year and file every tax and financial document you have. Then as papers come in put them into the right tax year section and you will never be disorganised again!
Adrian Huston, a former tax inspector, is a director of Belfast tax and accountancy firm Huston & Co – www.huston.co.uk or 028 9080 6080.