A tax return not only lets HMRC know about your taxable income for a year but also gives you an opportunity to claim tax allowances and expenses which can reduce the amount of tax which you have to pay.
For those running a business it’s essential that comprehensive income and expenditure records are kept for business accounts to be prepared to support entries on their tax return. If you’re making a return for another reason, you still need to keep all the relevant financial records like forms P60 from your employer or pension provider, dividend warrants and statements of investment income etc.
HMRC will impose an automatic penalty for returns which are filed late. However, they say they are more interested in encouraging taxpayers to file their return on time than raising revenue via penalties. Remember that if your tax return calculation shows that you have tax to pay that must also be paid by 31 January – interest and penalties can also be charged on the late payment of tax.
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