Whether you complete taxes on your own, or pay someone to complete them for you, it can certainly be beneficial to prepare in advance. HMRC offers plenty of information about tax submission, including self-assessment processes. This information can be found online, and you can contact HMRC anytime you have questions. The following are some general tips about the information that you should gather prior to tax time.
If you plan on claiming any of the allowed deductions, be sure to save receipts. There are many different items and expenditures that are tax deductible, but it would not be wise to deduct them unless you have proof to back the deduction up. Once taxes and have been filed and deductions claimed, hold onto to any receipts or supporting proof for your claim for several years. That way, if HMRC were to contact you with questions about your return, you will have the documents that you need.
If you are self-employed, the task of tracking your income is going to be a bit more involved. You could go through the process of sorting everything just before tax season arrives, but most find it much easier to deal with this task throughout the year, at least quarterly. Consider saving receipts for everything that you know will qualify for a deduction, along with bank statements or other proofs of income earned. The self-assessment process can be completed through HMRC on the gov.uk website. Create an account in order to access all of the available online features.
There are other employment situations, such as being employed as a waiter or waitress. If you receive tips are part of your employment, this income may need to be reported. Similar to the self-employment situation, you might find it easier to keep track of pay on a consistent basis, rather than trying to crunch a year’s worth of numbers all at once. Other situations, such as being a student, receiving a pension, or qualifying for special allowances may also need to be considered and reported. The same could be said for certain benefits received from the government.
Tax preparation is something that needs to be taken into consideration throughout the year, and not only at tax time. Individuals who have few deductions and have their taxes automatically cut from their pay typically do not have to deal with extensive tracking and preparation. However, others, such as those who own a small business or are self-employed do need to work throughout the year to ensure that they are reporting their income correctly and are able to claim every deduction that they qualify for. Proper information tracking could make the difference between owing money, or receiving a refund from HMRC.