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9 ways to make submitting your tax return less painful

Last time more than 700,000 of us submitted tax returns on the last day. Get a head start and claim extra tax breaks.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

There’s a good reason why over 700,000 people left their tax return until deadline day last year. It’s a toxic combination of being boring, time-consuming, frustrating, and expensive.

This year, with many people worrying about stretching finances, it’s likely to be even more stressful.

But your tax return isn’t just about paying tax. If you know all the ins and outs of filling out the form, there are plenty of ways to claim tax back too. There might be extra money you can claim for last tax year, and if you’re self-employed you can apply for more time if you think you might struggle to pay your bill on time.

This article isn’t personal advice. Pension and tax rules can change and benefits depend on your individual circumstances.

1. Claim extra pension relief

This is a major area of confusion, which means some people who pay a higher rate of tax have no idea whether they’re getting the right amount of tax relief or not. This could be costing people hundreds – or even thousands – of pounds.

If you work for yourself and have a personal pension, it’s pretty clear-cut you’ll normally get basic rate tax relief at 20% on personal contributions and need to reclaim any extra on your tax return.

However, if you have a workplace pension, you’ll need to do a bit of digging. If you have a trust-based workplace scheme, people who pay tax at a higher rate will normally automatically get tax relief at their higher rate on any personal contributions. The same could be true for contributions paid to workplace schemes using salary sacrifice. Remember if you’re adding money to your pension you can’t normally take it out until you’re 55 (57 from 2028).

For other kinds of pension, you’re probably getting basic rate tax relief at 20% on personal contributions, and you need to reclaim any further tax relief via your tax return. If you don’t know how your scheme is run, ask your HR department or scheme administrator.

When you’re claiming extra tax relief on a pension, make sure you’re entering the gross value of contributions. This isn’t just the total of all the money you paid in – it’s the total of everything you paid in, plus basic rate tax relief at 20%.

Top up an HL SIPP

Download Guide to pension tax relief

2. Claim as much as possible for working from home

If you’re a sole trader you have two options for claiming the cost of working from home (and using your own car for work). You can calculate what you spend on it for work purposes, or you can claim a flat rate. It involves a bit more legwork to calculate the actual cost. But once you’ve worked out what you spend, you can use the simplified expenses checker to see the best way to claim for you.

Government expense checker

3. Claim for all your allowable expenses

There’s a useful list on the government website for the self-employed, so scour it to check you’re claiming for everything you can. This can include everything from car breakdown cover to magazines or newspapers and clothing with your logo on it – depending on what you use for work.

Government approved expense list

4. Claim Gift Aid

Ticking a box to claim Gift Aid means the charity can reclaim basic rate (20%) tax on your donation from the taxman. But if you pay tax above the basic rate, you can reclaim the difference through your tax return.

You don’t just get tax relief on cash donations – you can also get it on gifts of land, property or shares you make to charity.

5. Make a charity donation now to reduce your tax bill for last year

If you have the cash spare, you can make a donation now, and use it to reduce the tax bill you’re working on now for 2019/20. Donations can be claimed in either the current year or the previous one. This is particularly useful if you paid tax at a higher rate last year and a lower rate this year – because you can get more tax relief on your donation.

6. Correct previous years

If you go through the process and realise you’ve made a mistake in previous tax years, you can claim a refund for overpayments for any time during the past four years. You’ll need to write to HMRC explaining that you’re making a claim for ‘overpayment relief’.

Claim a refund for old tax years

7. Act now if you can’t afford to pay

This has been no ordinary year for lots of self-employed people, who’ve had to deal with long gaps between government grants, and potentially significantly lower incomes than usual. Some have resorted to dipping into the money they put aside to pay their tax bill. They were able to put off their payment on account due in July 2020, so 31 January is when the crunch comes and the money is due.

You might be able to arrange to pay in instalments (subject to interest), but you need to do it sooner rather than later. If you leave it more than 60 days past the deadline, you can’t set up instalments.

HMRC's Covid-19 helpline

8. Make it less painful next time

When you’re calculating gains from investments – and possibly discovering that you’re going to have to pay capital gains tax or dividend tax – it’s a useful reminder that by holding them in an ISA, you wouldn’t have to pay UK income or capital gains tax. You can add up to £20,000 to ISAs this tax year.

Even better, details of investments held in an ISA don’t have to be included in the tax return, so you’d save yourself a load of horrible admin.

Find out more about the HL Stocks and Shares ISA

9. Claim for working from home – an extra for employed people

Lockdown kicked off in the 2019/20 tax year. So if you were told to work from home, and your employer didn’t provide an allowance to cover it, you can claim tax relief to cover those extra costs. This is easiest to do separately.

Check if you can claim

To claim for a couple of weeks of the 2019/20 tax year, and the whole of 2020/21, just enter the details of when you started working from home – the taxman will apply the relief. A basic rate taxpayer will get tax relief of £1.20 a week. You don’t have to have worked from home for the whole of 2020/21 in order to claim the whole years’ worth.

Work for yourself? We’re here to help

We’re looking at ways we can help people who work for themselves. If you’d like us to send you more help and information, why not register your interest.

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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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