Top tips for agents with last-minute tax returns

A summary of our top tips for dealing with last-minute tax returns. 

This is freeview 'At a glance' guide for agents completing Self Assessment returns for clients.

Employment pages

If the taxpayer does not have a PAYE reference for their employer

• The current guidance is to use '000/N' to enable the return to be filed.

Pensions

• Beware the annual allowance taper for high earners and those with large pension contributions and pay special attention to NHS doctors, dentists and other high earners who may also be hitting their Lifetime Allowance limits, see Doctors and Dentists: Tax Overview. See our Pensions guide for more details. Note that under proposals announced at Spring Budget 2023 the lifetime allowance is to be abolished from April 2023.

• Ensure that occupational pension contributions are correctly classified as either 'relief at source' or 'net pay arrangement' contributions as these have different reporting and tax consequences. 

Self-employment pages

Overlap relief

• If self-employed or in a partnership with a year-end that is not treated as coterminous with the end of the tax year, keep a record of any overlap relief created by new businesses. With the upcoming changes to Basis periods you will need this information to hand when you prepare the 2023-24 returns for those clients.

Use of home adjustments

If you or your clients are self-employed and work from home:

• You/they can claim all the costs that are incurred for business purposes.
• You may also claim a proportion of all the other costs of running your home, such as light and heat, insurance, council tax, repairs, cleaning and mortgage interest.
• There is no set method of apportioning these other costs, it depends on what work is carried on at home.
• Taxpayers may claim a monthly fixed rate allowance for home working, based on hours worked at home, instead of making a claim for their actual expenditure. 

See Use of home as office calculator.

Private use adjustments

• The self-employed must make adjustments for the private use of vehicles, property and other assets where relevant.
  • If vehicles are used partly for private purposes you need to make a tax adjustment to disallow a proportion of the running costs that relate to that private use.
  • If you disallow a proportion of running costs, you must adjust claims for capital allowances too.
  • Assets that have mixed-use must be pooled separately from other assets. 

Covid support payments: SEISS

• Ensure that you analyse these out into the tax years in which you received the payment.
• Do not include them in your accounts turnover: put them into the Correct box on the SA return.

Trading and property allowance

• If income from trading, property, or miscellaneous income is below £1,000 check if the trading and property allowances apply. 
• The allowance is not available to partners in a partnership.
• Relief is excluded if relevant income includes a payment received from the individual's employer.
• If so, you may not need to complete the self-employment pages and/or property pages of the return as appropriate.

Misc

Enterprise Investment Scheme (EIS)/Seed Enterprise Investment Scheme (SEIS) CGT exemption and low incomes

For an investment in EIS/SEIS shares to be exempt from CGT when sold there must have been a valid claim to Income Tax relief on acquisition.

• If income is less than the personal allowance this can only be achieved by Disclaiming the personal allowance which would otherwise automatically operate to reduce taxable income to nil and prevent the claim for Income Tax relief.
• Failure to disclaim the personal allowance in these circumstances will result in HMRC denying the CGT exemption when the shares are sold.
• Disclaiming can only be done via a paper return.

High-Income Benefit Charge

• Complete this section if:
  • Income is over £50,000.
  • Child benefit has been received by the taxpayer or their spouse or partner.

See High-Income Child Benefit Charge (HICBC)

Capital Gains Tax (CGT)

• If your client sold a residential property during 2022-23 and CGT was due they should have filed an online property disposal return and paid the tax due at that time. See CGT: Reporting when & how?
• For disposals after 5 April 2020, lettings relief is restricted to periods where the tenant was in shared occupancy with the owner. This applies retrospectively: periods which may have been exempt in a pre-April 2020 disposal will not now be exempt unless the shared occupancy condition is met. See PRR: Private Residence Relief.

Gift Aid

• If you have made donations under Gift Aid and you do not pay sufficient Income Tax to cover tax on the grossed up donation, you will have an Income Tax liability.
• You can only claim to carry back Gift Aid relief from a future tax year on your return before the return deadline. If you realise in 2023-24 that you will not obtain Gift Aid relief, but you would obtain relief in 2022-23 you must make the carry back claim for 2023-24 on your 2022-23 return filed on or before 31 January 2024.

Foreign pages

Complete the residency pages and deemed domicile

• Once your client is UK resident you may think that you do not need to complete the residency pages for them anymore. If they are non-UK domiciled and long-term UK residency may ultimately cause them to be deemed domiciled for all taxes then completing the pages will give you a clear record when the time comes to consider deemed domicile.
• Even if you do not complete the pages consider keeping a record of your non-domiciled clients' residency positions and time spent in and out of the UK.

Statutory Residence Test and tie-breakers

• If you find that the outcome of the Statutory Residence Test is that you must apply tie-breakers, do not overlook the provisions of the relevant UK/other country double tax treaties.
• Tax treaty tie-breakers often trump domestic tax law.

Finalising the return

Use of estimates: don't forget to tick the box

• If you have no option but to use estimates, provide an explanation as to why you have done so in order to avoid later penalties or discovery assessments.
• There is a high risk of penalties for deliberate error if you fail to provide actual figures, you make a delay in providing figures, or if it transpires that you simply ticked estimates because you were too disorganised to file a tax return on time. 
• To avoid penalties, if you use an estimate you need to ensure that you have a reasonable excuse for not providing the correct figures in time.

Save your submission receipts

• You may need to be able to prove exactly when a tax return was filed if, for example, you think HMRC are out of time to open an enquiry.
• Make sure you save each and every individual submission receipt and keep a backup just in case.