Introduction
LITRG provides some final tax and tax credits tips and reminders for the end of the 2011 calendar year .
1. Recent developments
a. View your PAYE coding notice online
HM Revenue & Customs (HMRC) has launched a new facility to enable self-assessment customers to view their PAYE Coding Notices online. Before you can use this service, you must have registered for HMRC Online Services and enrolled for Self Assessment Online.
Initially you will only be able to view coding notices issued on or after 11 October 2011, or the date you registered for the self-assessment online service, if later. If you are already using the self-assessment online service, coding notices issued on or after 11 October should be available to view online. HMRC say that in due course, you will be able to view PAYE Coding Notices - issued on or after 11 October 2011 - for the current, previous and next tax year.
More details are available from HMRC.
b. PAYE taxpayers – have you received a ‘P800’ tax calculation?
HMRC’s automated process for issuing tax calculations to PAYE taxpayers who they think have not paid the correct tax in the year is now settling into its second year. Refunds for 2010/11 should have already been issued and the first ‘underpayment’ calculations (where HMRC think you have not paid enough tax) should be hitting doormats from the end of this week through to the end of the year.
Always check the calculation and ensure you are happy with it or query it with HMRC if you are in any doubt. Follow our guidance to check yours, and to ensure you know your rights to challenge the calculation, where appropriate.
2. Are you a student working in the winter holidays?
If you are a student working only in holiday time and think you will earn less than your personal allowance over the whole tax year (£7,475 for 2011/12), you can ask your employer if you can complete a form P38(S) which allows you to be paid without tax being taken off your wages. Remember, though, that National Insurance Contributions may still be deducted depending on your weekly or monthly earnings.
If you think you might be able to use the P38(S) process, read our full guidance on working in the holidays.
If however you are likely to earn more than £7,475 in this tax year or you have worked during term time, our guidance will explain what you have to do to make sure that your tax deductions are correct. International students can also read our ‘coming to the UK to study’ guide for information on tax matters.
3. Self Assessment tax returns
a. The final countdown to the tax return and tax payment deadline
The final deadline for submitting your 2010/11 tax return is 31 January 2012 if you file online.
Our November article gives more information for those who file on paper but have already missed the 31 October deadline and provides guidance for those who missed it but might have a reasonable excuse for it being late. It also sets out the new penalty regime for late returns.
Importantly, penalty rule changes this year mean that it is no longer possible to escape a fixed £100 fine if you file late, even if pay all your tax on time or have nothing to pay.
Any final self-assessment liability for 2010/11 is also due for payment on 31 January 2012, together with the first payment on account for 2011/12. Hopefully you have been budgeting for this as you go along, but if not, start thinking about it now.
If you are worried you will not be able to pay, contact HMRC as soon as possible to ask if you can have extra time to pay.
b. Using your coding notice to collect your tax
If you are filing your 2010/11 self-assessment (‘SA’) tax return online and want to have your SA liability collected through your coding notice (where it is £2,000 or less), you need to have submitted your tax return by 30 December 2011. Otherwise you will need to pay any tax due in full by 31 January 2012.
HMRC do now have power to collect up to £3,000 via PAYE. This will be reflected in self-assessment tax returns from 2011/12 onwards. If you owe between £2,000 and £3,000 for 2010/11, we understand that HMRC might be able to apply the higher limit if you would prefer your tax to be collected via PAYE. But you would need to contact them to ask if they can do this.
4. Tax credits
a. Did you provide an estimate of your 2010/11 income when completing your tax credit renewal forms?
If you provided an estimate of 2010/11 income when you renewed your tax credits then you need to give HMRC the actual figure by 31 January 2012. You might by now have received a letter from HMRC reminding you about this.
If final figures are not sent in by 31 January, HMRC will finalise your 2010/11 claim using your earlier estimate. This may be wrong and could lead to an incorrect 2010/11 award and 2011/12 claim.
b. Did you miss the 31 July renewal deadline and have a good reason for doing so?
Our November article explained what to do if you missed the 31 July deadline. When tax credits are stopped for missing the deadline, HMRC send a notice called a statement of account. If you renew within 60 days of the date on this notice, your claim can be reinstated from 6 April. Outside of that 60 day period, you can only renew if you had ‘good cause’ for missing the deadline.
If you think you had a good reason for missing the deadline, you should contact HMRC by 31 January 2012 and ask them to consider your reasons for missing the deadline. If they accept your reason, your claim will be reinstated from April 6. If there is no good cause, then you will need to make a new claim which can be backdated up to 93 days. HMRC will also ask you to repay any money received between April and the date your tax credits stopped.
5. Benefits
a. Christmas bonus
A £10 Christmas bonus is paid at this time of year to state pensioners and recipients of certain other welfare benefits. Remember that this payment is tax-free, so if you have to fill in a tax return, don’t include it with taxable state benefits.
b. Winter fuel and cold weather payments
The winter fuel and cold weather payments are also tax-free, so again, make sure you don’t include them on your tax return. However you need to bear in mind that winter fuel payments have been reduced this year so there are no enhancements to the basic rate.
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