If you have to file a 2013 tax return and have not already done so, now is the time to think about preparing your return and paying your tax.

Filing deadlines

If you are submitting a hard copy tax return then it must be with HMRC by midnight on 31 October 2013. For online filing of returns the deadline for the 2013 tax return is midnight on 31 January 2014.

If you are filing your return online yourself, you must be registered at www.hmrc.gov.uk for online services. When you register, you will receive, by post, your User ID and an activation PIN. Once you have activated your account you will be able to prepare and submit your return online.

Preparing your return

Whether you are filing your return yourself or compiling information for your accountant, below are some of the more common information that you (or your accountant) will need to complete your 2013 return, which covers the tax year ended 5 April 2013 (6 April 2012 – 5 April 2013):

Business income

If you are a sole trader or in a partnership you will need the accounts which ended during the tax year 2012/13, for instance accounts for the year ended 31 December 2012 or 31 March 2013.

If your business started recently or ceased during the tax year the position will be more complex and your accountant will advise you further.

If you trade through your own limited company, or are someone’s employee, then you will need your P60 and P11D for 2012/13, showing your earnings and any benefits/expenses. Dividends paid to you by your company in the year ended 5 April 2013 will also be included in your 2013 return.

Unearned income

Unearned income received between 6 April 2012 and 5 April 2013 will be shown on your 2013 return, whether from UK or overseas sources – e.g. interest, dividends, rental income (less associated expenses) and pension income, so you will need statements, tax certificates and dividend vouchers. Where an investment is held jointly, only your share of the income is shown on your return – the holder of the other share should declare his/her share on his/her tax return.

If you are non-UK domiciled, you can choose each year whether to be taxed on your worldwide income or on the remittance basis (i.e. only on that overseas income which you have brought to the UK). Choosing the remittance basis may result in loss of entitlement to the UK personal allowance and may, in certain circumstances, require you to pay a £30k or £50k “remittance basis charge”. This is a complex area and your accountant will be able to provide more details.

 

Capital gains

Details of the sale of capital assets – e.g. property, investments – during the tax year will be needed for your return i.e.: the cost and sale proceeds, and any associated expenses.

The sale of your home will generally be exempt from capital gains tax as long as the property was your main residence throughout the time you owned it, so any gain (or loss) will not be included on your return.

Other matters

Tax relief is given for charitable payments made in the tax year under gift aid or covenants and for pension contributions paid by you; investments qualifying under the Enterprise Investment Scheme will also reduce your tax liability.

Paying your tax

As well as being the deadline for the submission of your 2013 return, 31 January 2014 is also the deadline for payment of your tax liability for 2012/13 – if you have already made payments on account towards the year, you may have to pay a balancing payment; if your payments on account exceed your actual liability the overpayment will either be refunded to you or set against future payments. If you are required to make payments on account towards your 2013/2014 liability, the first of these will also be due on 31 January 2014.

It is worth considering now whether the funds you need to pay your tax will be readily available, in case it is necessary to give notice on an account or otherwise make funds available.

Interest and penalties

If your return is submitted after 31 January 2014, you will be charged a £100 penalty; where a partnership return is submitted late, the penalty is £100 per partner. Penalties increase steeply if the return is more than 3 months late.

Interest will also be charged from 1 February 2014 on any unpaid tax (the current rate is 3%, but could change). If any part of your balancing payment remains unpaid as at 28 February 2014, a surcharge of 5% of the unpaid tax will be added to your liability, with a further 5% surcharge added on 31 July 2014 on any tax remaining unpaid at that date.

Keeping your records

You should keep your 2012/13 records for a year after the online tax return deadline of 31 January 2014, in case HMRC enquires into your return. The same date applies even if you have sent in a paper tax return.

HMRC enquiries

If you submit your return before the deadline, HMRC have 12 months from the day after your return was submitted to raise an enquiry into it. However, if your return is submitted after the deadline, HMRC’s period for raising an enquiry is extended.

 

This article is based on current legislation and practice and is for guidance only. Specific professional advice should be taken before acting on matters mentioned here. Umesh Modi BA ACA, is a Chartered Accountant and Tax Advisor, and a partner at Silver Levene LLP. He can be contacted on 020 7383 3200 or umesh.modi@silverlevene.co.uk