Why Are Tax Returns Important?

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Filing a tax return this year? Then why not let the experts at Linda Carr Accountants take care of your upcoming tax return. We help sole traders and individuals with their tax returns in Peterborough to ensure that they are completed correctly and on time. Read on to find out why a tax return is so important, and why you should take care to ensure that yours is filed correctly and on time.

What is a tax return?

First of all, what is a tax return? If you have only just started trading and this is your first time completing a return, you probably have lots of questions about the process. To put it simply, a tax return is what you complete to show HMRC how much income you should be assessed on for the appropriate tax year. It will also allow you to claim back any qualifying expenses and make claims that could reduce the overall tax liability. For Self-Assessment, the tax year runs from 6 April to the following 5 April.

Making sure you’re paying the right amount of tax

The main goal of a Self-Assessment tax return is making sure that you are paying the right amount of tax. You’ll need to show how much income you have earned during the previous tax year and include any appropriate deductions. This will help HMRC figure out how much tax you should be paying. Filing your return accurately is vital for keeping on the right side of the law, but also to make sure that you don’t pay too much tax either. Giving a clear and honest representation of your finances will ensure you pay what you owe, and nothing more.

Claiming back expenses

Filing a tax return will allow you to claim tax relief on expenses that you have incurred as a result of your profession. You’ll have to meet the following criteria to be able to make a claim, according to the current rules laid out by HMRC:

  • you must have used your own money for things that you needed to carry out your job
  • you must have only used these things for your work

Failing to file a return on time

Failing to file a tax return on time can be very costly, making it really important to make sure that yours is completed and submitted correctly every year. There is a graduated scale of penalties for those who don’t submit their return by January 31st. They are as follows:

  • One day late – £100
  • Three months late – daily £10 penalties for up to 90 days
  • Six months late – whichever is higher out of 5% of the tax liability or £300
  • 12 months late – whichever is higher out of an additional 5% of liability or £300

Along with that, you will have to pay interest on any late payments. Don’t assume that if you have no tax liability, you won’t have to file a return. Even if you have nothing to pay, you will still be liable for up to £1,600 in late filing penalties. So, it’s vital that you file yours on time.

Our tax return services

If all of the above sounds somewhat daunting, you will be glad to hear that we are here to help. We have plenty of experience when it comes to completing and filing tax returns and have helped a wide variety of clients in Peterborough. Whether you are completing a return for the first time and want to make sure that everything is done correctly, or you have simply had enough of doing it yourself every year, we will be able to do the hard work so that you don’t have to. Whilst we are completing your tax return, we will also conduct a free review.

Contact us today

If you want to find out more about us and our tax return services, then please reach out to a member of our team today. They will be delighted to answer your questions and help you in any way that they can.

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