Although we are in the new 2012/13 tax year there are certain tax matters to complete for the previous tax year, 2011/12.
Introduction:
You may need to take action in one or more of the following areas:
Tax
- Have your PAYE tax deductions changed since 6 April?
- Tax returns for 2011/12 – have you received one?
- No tax return? You should still gather together 2011/12 tax papers
- Late payment penalties for 2010/11
- Tax on bank interest
- Do you sell and trade regularly online?
Tax credits
- Renew your claim or review whether you are now eligible to claim
- Tell HMRC if one of the exceptions to the 24 hour rule applies to you
The main points for consideration in these areas are outlined below. Links to further information are available from this article on the LITRG website.
Tax
1. Have your PAYE tax deductions changed since 6 April?
Check your PAYE Code and consider taking action if an underpayment is included
New PAYE codes for 2012/13 should have come into effect from 6 April. You should check your PAYE coding each year. You should also check your first payslip for this tax year to ensure the correct PAYE coding has been used by your employer or pension provider.
Impact on means-tested benefits
If you are on a low income and an underpayment is being collected through your code, it is quite possible that the extra tax you are paying will affect your entitlement to means-tested benefits. You should contact JobCentre Plus, The Pension Service and/or your local authority to advise them of your reduced income due to the tax you are paying and ask how it affects your entitlement.
If you are not already claiming means-tested benefits, having to pay more income tax could reduce your income so that you become entitled to them, so you should check your situation. For example, you can seek a benefits review from Citizens Advice. Note, however, that tax deductions do not make any difference to your tax credits entitlement.
2. Tax returns for 2012/13 – have you received one?
Most tax returns for 2012/13 should now have been issued. You can now start gathering together the information you might need to complete the return.
If you have received a notice to file a Self Assessment tax return but do not think you are required to complete a tax return then you should contact HMRC on 0845 900 0444. After discussing your employment status and income, HMRC will then decide if you still need to complete a tax return. If you do not need to complete a tax return, it is probably worth leaving the Self Assessment system so that you do not become liable to penalties for late filing of tax returns. Penalties are now charged on late returns even when there is no tax to pay.
The deadlines for filing your tax return are the same as in previous years. If you want to submit a paper return, the filing date is 31 October 2012 and if you file online, the deadline is 31 January 2013.
3. No tax return? You should still gather together 2011/12 tax papers
If you were employed at 5 April 2012, your employer(s) should give you your P60 for 2011/12 by 31 May (perhaps even an electronic P60). Pensioners should also get P60s from their pension providers.
Over the coming months, we know that HMRC will carry out certain automatic checks to see whether you have paid the right PAYE tax for 2011/12. HMRC will send you a ‘P800’ tax calculation if they think you owe tax or are due a refund.
If you are due a refund of less than £10, HMRC will not repay it to you automatically, you would have to submit a claim.
You might also need the same papers to help with your tax credits renewal (see below).
4. Late payment penalties for 2010/11
HMRC are sending letters to Self Assessment taxpayers chasing outstanding tax for the year 2010/11, which was due to be paid by 31 January 2012. New penalties for late payment are being charged at 5% of the unpaid tax at 1 March 2012. These penalties do not apply to any 2011/12 Payments on Account which were also due on 31 January 2012.
An additional penalty will be charged on 1 August 2012 of 5% of the remaining tax liability still outstanding at that date. If tax still remains unpaid by 31 January 2013 then there will be a third penalty of 5% of the tax remaining due at that date.
5. Tax on bank interest
You might have noticed in with your bank and building society statements recently an extra note telling you how much interest was paid on your account in the last tax year, whether or not you paid tax on it and, if so, how much.
Keep this information – you will need it to check if you are due a repayment and need to make a claim. Not all banks and building societies send out the tax summary, so you might need to ask for one – check you’ve got them for all your accounts.
6. Do you sell and trade regularly online?
HMRC’s campaign aimed at people who regularly trade online using e-marketplaces such as eBay closes on 14 June 2012. The purpose of the campaign is to identify regular traders who HMRC consider should be registered as self-employed traders. Many transactions on e-marketplaces will not be classed as trade sales, but if you think you are affected, more details on what is classed as trading and other considerations are discussed in TaxationWeb’s guide.
Tax credits
7. Renew your claim or review whether you are now eligible to claim
It is important to consider tax credits if you have not already thought about them since the new tax year began on 6 April.
Existing claimants need to renew their claim by 31 July, but the earlier this is done, the better. As well as acting as a new claim for 2012/13, the renewals process also finalises your award for last year (to 5 April 2012).
If you don’t currently claim tax credits, you should still consider your position. For example, you might now be entitled to them, particularly if your personal or financial circumstances have changed. Or even if they haven’t changed yet, you might consider claiming tax credits now in case your income drops during the coming year. This is called a ‘protective claim’.
8. Tell HMRC if one of the exceptions to the 24-hour rule applies to you
From 6 April 2012, most couples with children are required to work at least 24 hours a week between them, with one person working at least 16 hours a week in order to claim working tax credit (WTC). Prior to that date, couples with children qualified for WTC as long as one of them worked at least 16 hours.
However, there are some important exemptions to the requirement to work 24 hours. If you or your partner qualify for WTC in another way, because you are aged 60 or over or qualify for the disability element of WTC, then you will continue to qualify for WTC at 16 hours. Your WTC should not have stopped on 6 April 2012.
HMRC stopped the WTC payments of all other couples with children who did not work at least 24 hours between them (with one person working at least 16 hours) from 6 April 2012. This included people who may still qualify by working at least 16 hours if their partner is:
- incapacitated
- in prison
- in hospital
- entitled to carer’s allowance
If one of these exceptions applies to you, you must contact HMRC as soon as possible and ask them to reinstate WTC from 6 April 2012.
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