Staying compliant in the tax year

As we move through the tax year, it’s crucial to be aware of some common tax pitfalls. With frozen tax thresholds, high savings rates, and increased earnings, more people may find themselves needing to file a tax return.

Some may have benefited from the higher savings rates recently, and you’ll be pleased to hear that you may be eligible to receive up to £1,000 of interest on taxable savings without paying tax. However, this allowance decreases depending on your income band. Higher rate taxpayers have a reduced allowance of £500, and additional rate taxpayers lose the allowance entirely. If you exceed your allowance and are employed or receive a private pension, HMRC should adjust your tax code to collect the tax automatically and they do this by estimating your interest for the current year based on the previous year’s interest. It’s essential to check your tax code for accuracy, as this is your responsibility. If you complete a Self Assessment tax return, you should report any interest earned on savings there. If your income from savings and investments exceeds £10,000, you must register for self-assessment.

For the 2023/24 tax year, the Capital Gains Tax (CGT) allowance is £6,000, reducing to £3,000 in 2024/25. This annual allowance is deducted from your capital gains for the year, with any excess gains taxed at the CGT rates. Given these allowances have been reducing in recent years, more capital disposals may necessitate self-assessment tax returns or 60-day CGT reports to be submitted to HMRC.

When you dispose of a UK residential property, you must report the property gain and pay the CGT due to HMRC online within 60 days of completion, unless no CGT is payable for certain reasons. Upon completing your annual Self-Assessment Return, you must include the disposal details and calculate your final CGT liability, accounting for any losses incurred after the completion date. If there is a difference between the final CGT due and what has already been paid, you will need to pay this balance alongside your income tax liability.

To summarise a few key points, please remember to check your tax code. Ensure it accurately reflects the income and benefits you receive, and also any allowances that you may be entitled to. Check whether you are required register for self-assessment. HMRC have an online tool that will help determine this and if applicable, you must register by 5 October 2024 for the 2023/24 tax year. Staying informed and vigilant about these tax changes and requirements can help you avoid unnecessary complications and ensure compliance with HMRC regulations.

This information is given by way of general guidance only, and no action should be taken based solely on the information contained herein. No liability is accepted by the firm for any actions taken without seeking appropriate professional advice.