Get online to pay your tax
You only have a couple of weeks left to file your tax return and settle your bill, says Ruth Jackson. Time to get online.
You only have a couple of weeks left to file your tax return and settle your bill. Before you skim past this page thinking that doesn't concern you, are you sure you don't have to file a self-assessment form? More than nine million people in the UK need to file a return, and if you're one of them, and you fail to do so, you will face sizeable fines.
Put simply, with a few exceptions, if you receive any income that hasn't been taxed before you get it, then you need to declare it and fill in a self-assessment form. This includes rental income, self-employed income and savings income if it exceeds the savings allowance £1,000 for basic-rate taxpayers, £500 for higher-rate and nothing for additional-rate payers.
Pensioners and employees whose income exceeds £100,000 a year also need to complete a tax return, and you have to fill it out if HMRC has sent you one, even if you have no tax to pay. If you used to need to fill in a return, but don't need to any longer, then contact HMRC and let them know.
If you have to complete a tax return for the 2016/17 tax year then you need to file online by midnight on 31 January, and pay any tax you owe by the same deadline. If you were hoping to file a paper return, you're out of luck: the deadline has passed already. The last day for filing was 31 October 2017, so you have to go online now.
Do not leave it until the last minute, particularly if you haven't filed online before. You have to register on HMRC's website, which involves being posted an activation code that can take up to ten days to arrive so get cracking! Miss the 31 January deadline and the fines begin to rack up. There is a £100 fine even if you file the next day. You also start paying interest on the tax bill you haven't paid if you are more than 30 days late.
However, even if you are in a rush to sort out your return, make sure you take advantage of all the options for bringing your final bill down. We take a look at some of these below.
Four ways to bring your tax bill down
If you are a higher-rate or additional-rate taxpayer, don't forget to include your pension contributions on your tax return. These benefit from tax relief at your highest income-tax level, but only basic-rate relief is given automatically. You need to claim the rest back through your return. Research by Prudential suggests that as many as a million of us are failing to claim this relief, leaving as much as £1bn unclaimed.
Also, make sure to keep a note of your charitable donations throughout the year. Higher-rate and additional-rate income taxpayers who have added Gift Aid to their donations can claim an extra rebate of 20% and 25% respectively.
Many museums, theatres and other attractions ask for charity donations on top of their entrance fee, which you can add to your Gift Aid claim. You can also take into account any money that a charity shop has raised by selling the items you donated. If you signed up to Gift Aid when you dropped off your unwanted goods, the shop should have contacted you to tell you how much they made.
You can also bring your tax bill down by including work expenses. For example, if you work from home, you can claim back some of your household bills. If you use your car for work, you may be able to claim some of the mileage allowance too, if your employer hasn't reimbursed you for the full amount already.
Finally, don't forget about all the money you are allowed to earn before tax is due. Make sure to make the most of your savings, dividends, personal and capital-gains allowances. Use all of these to their fullest and you could earn more than £28,000 a year free of tax.
Pocket money Britons put £70bn on the plastic
Almost 500,000 savers need to start thinking about moving their money this month as the massively popular three-year pension bonds from National Savings & Investments (NS&I) start to mature, says Ruth Emery in The Sunday Times. On 15 January 2015, NS&I launched its three-year 65+ Guaranteed Growth Bond, which paid 4% annually.
"Savers were so desperate to buy the high-interest bonds, they sold at a rate of about £500,000 a minute in the first two days," says Emery. Now these accounts are maturing and savers need to look for a new home for their money. Sadly, "a risk-free 4% interest rate is a thing of the past". Those with money to reinvest from their bonds will have to accept much lower rates now, or take an additional risk to boost their returns.
Emery suggests savers should consider leaving their money where it is NS&I will reinvest it into a three-year Guaranteed Growth Bond, paying 2.2%. If you decide to move, the best rate you can get at the moment is 2.25% for a three-year bond. Alternatively, "to achieve the same return as your pensioner bond, look elsewhere perhaps at funds that include exposure to corporate bonds or to stockmarkets, although bear in mind your capital will be at risk".
Credit-card debt is at its highest level since before the credit crunch, with more than £70bn currently owed on plastic. And now the Bank of England has discovered that we're all in debt to plastic for far longer than it had previously realised.
Analysis by the Bank and the Financial Conduct Authority has found that it is "common for people to remain in debt even after paying off one of their credit cards, as they shift debt from one lender to another", says Richard Partington in The Guardian. Nine out of every £10 of outstanding credit-card debt in November 2016 was owed by people who were also in debt two years earlier, according to the study.
A separate story in the Financial Times highlights how "consumers nursing a financial hangover after overspending at Christmas can take advantage of record-breaking deals on 0% credit cards", with a report that balance-transfer fees have fallen to their lowest levels in over a decade. Perhaps it's no surprise we owe so much.