Self-assessment Tax Return Deadlines

Submit Paper Tax Return by Oct 31st!

It’s tax return time again and HMRC has been issuing reminders for those of you who wish to submit your 2014-2015 self assessment return in paper format.

Deadline for self-assessment tax returns

The return must be filed (not just put in the post) with HMRC by midnight October 31st 2015 or you will be fined £100.  If you don’t think you can fill your return in and get to the tax man by that date then file online instead to avoid the penalty.

Online returns must be received by midnight on January 31st 2016 to avoid penalties.  If you want want HMRC to automatically collect the tax you owe then the deadline is December 30th 2015.

Whatever happens you need to pay the tax you owe by January 31st 2016 and if you are late then expect both penalties and interest charges to apply.  HMRC has provided a handy online calculator to work out what the penalties will be.

Lewis Smith & Co. has a team of experts on hand to help you complete and file your self assessment return if needed.

All you have to do is call us on 01384 235549 or email info@lewissmith.com.

 

Lewis Smith & Co. – Accountants for Dudley businesses for over 30 years

Are you a buy to let landlord?

Tax relief clamp-down

Buy to let - what should you doBack in July we highlighted that the Chancellor’s summer budget had targeted buy-to-let landlords with changes to tax relief.

Let’s look at the implications in more detail.

What actually happened is that George Osbourne slashed the mortgage interest payment tax relief that landlords in the higher tax brackets receive.

By 2020 relief will be reduced from 40% and 45% down to 20%.  For top rate rate tax payers that means interest payments of £100 will cost £80 after tax relief from 2020, up from the current level of £55.

At the same time property investors will lose another useful tax break. Instead of an automatic right to claim 10% of the rent against wear-and-tear costs you will only be able to deduct costs that are actually incurred.

The intention is to “create a level playing field” for first-time buyers who are competing with property investors to hit a foot on the housing ladder.  The downside is that the profitability of “buy to let” will be eroded and the results for the housing market may be unpredictable.  Some commentators have suggested that rents will rise as landlords seek to cover costs and some suggest that only increases in new builds will help first-time buyers.

Perhaps the key question is “what can we do about it?”  

In the short term one answer is to minimise costs but making sure that you are claiming all of the allowances that are still available.

If haven’t yet bought a property then fees associated with arranging your mortgage are still tax deductible.

Post-purchase then many of the costs associated with managing and marketing the property can also be off-set against tax.  Consider letting and property management fees, self-renting costs like credit checks and advertising, and maintenance and repairs.

An area that many new landlords overlook is the basic business costs of managing property.  Travel, phone bills and other sundries are allowable expenses.  It is important to keep activity records and receipts, however, just in case you need to prove the validity of your claims to HMRC.

A more dramatic approach to reducing your exposure to the changes in tax relief would be to consider transferring the property or properties into a company structure. This provides some tax benefits to landlords (particularly because tax is only paid when is a profit is made) although there are some large issues to consider related to capital gains tax and the costs of incorporation.

It’s an area where Lewis Smith & Co. could provide some expert advice so that you can see the detailed pros and cons based on your specific circumstances.

If you need some help working out the next steps then why not set up a meeting with one of our partners. Call 01384 235549 or email info@lewissmith.com today and let’s talk.

 

Lewis Smith & Co. – Trusted accountants for businesses in Stourbridge

 

Picture courtesy of Paul Mison – Flickr

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