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Tax has been in the news a lot in recent weeks, particularly debating the 50p rate. But here, LITRG concentrates on current issues for those on lower incomes.
 

Introduction

In the tax world, a month never passes without there being something to consider, depending on your situation – whether you are an employee paying tax under PAYE, filing self-assessment tax returns, a tax credits claimant, or even all three!

LITRG reminds you below of some points to consider in October.

Filing your 2010/11 self-assessment tax return on paper? Act quickly

The 31 October paper tax return deadline is fast approaching for most self-assessment tax returns for the year ended 5 April 2011 (the exception being some returns issued late, for which recipients should have two months from the date of issue to file on paper or three months to file online).

Make sure you get yours in on time, as there are new penalties for late returns, which kick in for paper filers sooner than if you file online.

… or filing online?

If you wish to make the move to online filing, you still have until 31 January 2012 to get your return in, but even so it is worth making a start on gathering together the information you need. If using HMRC’s online filing facility, you do not have to complete the whole return at once – you can enter the information you do have available and save progress to finish it off later.

If this is the first year you are filing online, make sure you register early (see HMRC’s website and follow ‘do it online’ from the home page). Also, check that you can use HMRC’s online software – if not, you will need to buy software from a third party.

Keep a record

You should always keep records accompanying the entries on your tax return (for example: invoices, P60s, bank statements and other supporting information) and a note of how you calculated the figures. Also, keep a copy of the finished return before you submit it. Paper filers are advised to send their returns via registered post or at the very least ask for proof of postage from the Post Office. That way, should HMRC say they never received your return, you have a back-up copy and some evidence to help you appeal against a late-filing penalty.

You could hand-deliver your paper tax return if you do manage to locate one of HMRC’s remaining Enquiry Centres which is open at a time convenient to you. But HMRC will not give you a receipt for it so keep a photocopy of the form and write on it where you took it to and the date and time. If you speak to an HMRC staff member at the time, perhaps also take a note of their full name.

Tax Credits – confirm your estimated income

Each year, HMRC send renewal forms to tax credit claimants. The deadline for renewing 2010/11 claims was 31 July 2011. Some claimants, for example those who are self-employed, may not have known their 2010/11 income by that date and may have provided HMRC with an estimate.

As above, you may now be finalising those figures when you are completing your self-assessment tax return. If so, you will also need to tell the Tax Credit Office your actual income for 2010/11, either by confirming the estimate you gave was correct or by giving them the actual figure. You must do this by 31 January 2012 otherwise HMRC will finalise your 2010/11 claim using the estimate, which may turn out to be incorrect and which could also lead to your 2011/12 claim being wrong.

Have your tax credit payments stopped?

Each year, most tax credit claimants are required to renew by completing ‘renewal’ forms or telephoning the helpline and giving or confirming details of their income and circumstances over the year. This process finalises the claim for the year just ended and acts as a claim for the new tax year. The deadline for 2010/11 renewals was 31 July 2011. If HMRC did not receive your renewal papers or you did not renew by phone by that date, it is likely that HMRC will have ended your claim and sent you a statement of account explaining why the payments have stopped and detailing any overpayment.

If you have missed the 31 July deadline and have received a statement of account from HMRC telling you that your payments have stopped, you normally have 30 days from the date on that letter to contact them so they can process your renewal and put your claim for 2011/12 into payment from 6 April 2011. However, HMRC have confirmed that they will give an extra concession again this year by extending the 30 day legislative time limit to 60 days. LITRG recommends that anyone who has missed the deadline try and contact HMRC within the 30-day time limit to ensure their claim is reinstated under the legislation.

Even if you don’t want to continue claiming tax credits, if you have received forms from HMRC, you must still contact HMRC to finalise your claim for 2010/11 within the same time limits.

The advice given above about keeping independent evidence of postage is even more important with tax credits, as tax credits correspondence often goes astray when it reaches HMRC. Also, HMRC are notoriously reluctant to give the claimant the benefit of the doubt when that happens.

It is important to take immediate action if your payments stop by contacting the tax credit helpline on 0845 300 3900 (textphone 0845 300 3909).

Are you being paid enough? Check your National Minimum Wage entitlement

Low-income workers should check their pay against the new National Minimum Wage rates from 1 October 2011: 

• £6.08per hour for low-paid workers aged 21 and over (increased from £5.93);
• £4.98 per hour for 18- to 20-year-olds (increased from £4.92); and
• £3.68 per hour for those under 18 who are no longer of compulsory school age – broadly 16- to 17-year-olds, but exact rules differ for England and Wales, Northern Ireland and Scotland (increased from £3.64).
• The Government has also increased the apprentice minimum wage to £2.60 (increased from £2.50) per hour; this rate will be introduced for those apprentices who are either:
• under 19; or
• aged 19 and over but in the first year of their apprenticeship.

The Directgov website provides more information on entitlement to the National Minimum Wage and how to work out whether you are being paid enough.