October, 2011

Your P11d form – An Introduction

If you are employed and you receive expenses or benefits as part of your salary package, your employer will normally have to submit a P11d form to HM Revenue and Customs every year.

You will normally also receive a copy of this form.

Our guide explains what a P11d form is and what information is contained in it.

What is a P11D form?

If you receive any benefits or expenses from your company then your employer will have to tell HMRC about them as you are obliged to pay tax on these perks.

A P11d form contains fourteen categories of expense/benefit and these include:

  • Company cars and fuel
  • Interest free/low interest loans
  • Private medical insurance
  • Expense payments including travelling or subsistence
  • Living accommodation provided to you and your family
  • Qualifying relocation payments made
  • Payments your employer makes on your behalf
  • Assets that your employer places at your disposal
  • Vouchers (for example childcare or nursery vouchers)

Your employer only has to declare these benefits on a P11d form if you have earned £8,500 or more in the previous tax year (including the value of any of these benefits).  If you have benefited from company perks and earn under £8,500, your employer must complete a different form: the P9D.

Your employer is obliged by law to work out the cash equivalent of any benefits or expenses you have received and to declare them on a P11D form to HMRC.  They will normally also provide you with a copy which you can use to prove your earnings or to help you with your Self Assessment tax return (if you complete one).

While employers are not legally obliged to give you a copy of your P11d form, they do have to tell you what details they included on the form (even if you have subsequently left their employment).

The deadline for returning P11d forms to HMRC is the 6th July following the end of the tax year.  So, companies had to report benefits in kind paid to employees in the tax year 2010/11 by 6th July 2011.  If employers do miss the deadline or fail to provide P11d forms they can be penalised.

4 Things You Should Know About Your Self Assessment Tax Return 2011

If you’re self employed or you have income from a variety of sources then you may well have to complete a Self Assessment tax return every year.

Our guide looks at four important things you should know about your Self Assessment tax return 2011.

Different methods of submission

There are two ways that you can complete your self assessment tax return.  You can either send a paper based tax return or you can fill it online.

Increasing numbers of people are using HM Revenue and Customs’ (HMRC) online service as there are several benefits to completing your 2011 tax return online:

  • You have longer to file your return (the deadline is 31 January rather than 31 October)
  • The online system automatically calculates any tax payable
  • Online returns are processed more quickly
  • You will get an acknowledgement that HMRC have received your tax return (you do not receive such an acknowledgement if you submit a paper based tax return)

To submit your tax return online you have to register for the service using the HMRC website.

Three common errors to avoid

Whichever type of tax return you decide to submit, there are some common mistakes that you should avoid:

  • Failing to sign and date your paper based return
  • Using a previous year’s paper based tax return and simply changing the dates
  • Not filling in all additional and supplementary pages (see below)

Make sure you complete all the necessary pages

When completing your tax return, it is important that you make sure to complete all the relevant pages.  Your tax return contains a number of ‘core’ pages and a number of supplementary pages.  Supplementary pages include:

  • Income from property
  • Income from pensions
  • Capital gains

If you plan to submit your tax return online, you should select the supplementary pages that you need when you head onto the HMRC website to complete your return.  For paper based returns, you can download most of the supplementary pages that you may need from the HMRC website.

When completing your tax return, make sure that you have all the relevant records and paperwork to support your return.  You have to provide exact figures to HMRC (approximations are not good enough).

Don’t send your tax return late

If you are completing a paper based tax return, the deadline for it to reach HMRC is midnight on the 31st October after the end of the tax year.  If you received your notice to file a return late, you have three months after the date of issue of the notice to complete your tax return.

If you are using the HMRC website to submit your tax return electronically, you get an extra three months.  You have to submit your tax return by midnight on the 31st January following the end of the tax year.

There is an automatic £100 penalty if you miss this deadline and there may be further penalties depending on how late your tax return is submitted.

Will I get a tax refund in 2011?

Have you paid too much income tax?

If so, you could be eligible for a tax refund.  Well publicised problems at HM Revenue and Customs (HMRC) have seen thousands of people benefit from tax refunds over the last few months and there are lots of other reasons why you may have paid too much tax.

However, the question ‘will I get a tax refund in 2011?’ depends entirely on your own specific circumstances.  Our guide looks at various common scenarios where you may have paid too much tax and explains how you can claim a tax refund if you think you’ve overpaid.

Why might you get a tax refund?

You get an income tax refund if you have paid too much tax.  You normally receive the rebate by bank transfer, in your wages or via a cheque in the post, depending on your circumstances.

You may have paid too much income tax if:

  • You only worked for part of the tax year
  • You had more than one job at the same time
  • Your employer used the wrong tax code or you had an emergency tax code for part of the tax year
  • You made a mistake on your Self Assessment tax return
  • Income you receive from other sources reduced and you didn’t let HMRC know
  • You didn’t let HMRC know about any changes to your circumstances straight away – perhaps your work benefits changed or you were made redundant
  • HMRC made a mistake when calculating your tax code or your tax bill

How to claim a tax refund

If you’re an employee, you can claim a tax refund in 2011 by telling HMRC why you think that you have paid too much tax.  You may have to send some information to them to support your claim and, if you are due a tax refund, this will be included with your wages.  This is normally done through your tax code being amended.

If you’re self employed, then you have normally got 12 months from the tax return deadline to correct your tax return.  For example, any amendments for the tax year 2010/11 have to be made by 31 January 2013.

If you’re self employed and you think a tax refund is due you can tell HMRC how you’d like to receive it.  If it is less than £10 or your tax payment is due shortly then you can have it deducted from the tax that is due on your next Self Assessment statement.  If a tax payment is not due shortly you can have a repayment direct to your bank or building society account or you can request the tax refund to come by cheque.

Once you receive your tax refund, you may still think that the amount is wrong.  In this situation you should get in touch with HMRC as quickly as possible to try and sort out any further mistake.

Don’t Miss The 2011 Tax Return Deadline

If you want to submit a paper based tax return then the 2011 deadline is approaching fast.  And, with new penalties introduced by HM Revenue and Customs (HMRC) in April 2011, it’s even more important that you submit your tax return on time.

Our guide looks at the fast approaching 2011 tax return deadline.

Completing a tax return

If you need to complete a tax return – perhaps you are self employed or you have various sources of income – then HMRC should have contacted you earlier this year.  They will also have sent a letter to you detailing when your tax return had to be completed by.

If you have previously sent your return on paper, you’ll receive a paper tax return.

If you haven’t received a return and think you should have, it’s vital that you contact HMRC as soon as possible.  Similarly, if you have been asked to complete a tax return and you don’t think you need to, you should also get in touch with them.

2011 tax return deadlines

If you want to send a paper based tax return then it must be received at HMRC by midnight on 31 October 2011.

However, if the letter that your received telling you to send a tax return arrived after 31st July 2011 then you will have three months from the date that you received that letter.

Missing the paper based tax return deadline

If you miss the deadline for sending in your paper based tax return, don’t panic.  The deadline for submitting a tax return online is 31st January 2012 and so you still have three months in which to send in your tax return.

However, if you miss the 31st October deadline then you will have no choice but to submit your tax return electronically.

Penalties if you miss the tax return deadline

If you miss the tax return deadline, you may have to pay a penalty.  It is therefore important to send your tax return to HMRC as soon as you can.

If your tax return is even a day late you will face a fixed penalty of £100.  If it is up to three months late then you’ll be charged £10 for every day that it is late up to a maximum of £900.  This is in addition to the initial £100 fixed penalty.

If your tax return is up to six months late then you can expect to pay a penalty of £300 or 5% of the tax due, whichever is the higher in addition to the penalties above.

Getting your return in on time

If you are planning to submit a paper based tax return then it is vital that you complete the form and send it to HMRC in the next couple of weeks.  31st October 2011 is a Monday and so you are likely to have to post your tax return sometime in the previous week to ensure that it reaches HMRC on time.

How Much Can I Earn Before Paying Tax in 2011?

Most people in the UK are entitled to earn some income every year before they have to pay tax.  This is called your Personal Allowance.  Depending on your circumstances you may also be able to claim some other tax allowances.

Our guide looks at how much you can earn before paying tax in 2011.  We also look at how much you can earn before you pay any National Insurance contributions.

How much can I earn before paying tax 2011?

The amount of your tax free Personal Allowance depends on your age and your total income in the last tax year.

The basic personal allowance for people aged under 65 and who earn under £100,000 in the 2011/12 tax year is £7,475.  This means you can earn £7,475 before you pay tax.

If you are aged 65 to 74 and you earn under £24,000 your Personal Allowance is £9,940.

If you are aged 75 or over and you earn under £24,000 your Personal Allowance is £10,090.

If your income is over the limit (either £100,000 or £24,000 depending on your age) your Personal Allowance is reduced by half of the amount – £1 for every £2 – you have over that limit.

Other allowances that might increase the amount you can earn before paying tax in 2011

If you’re certified blind and are on a local authority register of blind persons you can claim Blind Person’s Allowance.  Blind Person’s Allowance for the tax year 2011/12 is £1,980.  This means that if you also qualify for the full Personal Allowance, you can earn £9,455 in the 2011/12 tax year before you pay tax.

If you are married or in a civil partnership and living together, you are a taxpayer and at least one spouse or partner was born before 6 April 1935 then you can claim Married Couple’s Allowance. In the 2011/12 tax year the maximum amount of Married Couple’s Allowance is £7,295 and the minimum amount is £2,800.

You receive ten per cent of the allowance amount – which means your annual tax saving is at least £280 and could be up to £729.50. The actual amount depends on your income.

How much can I earn before paying National Insurance contributions in 2011?

If you’re employed you pay Class 1 National Insurance contributions (NICs).  In the 2011/12 tax year you won’t pay any NICs if you earn less than £139 per week.

If your average earnings are over £139 per week you won’t necessarily pay NICs every week.  You only pay NICs in the weeks where your earnings exceed £139.

If you’re self-employed you pay Class 2 and Class 4 National Insurance contributions.  IN the 2011/12 tax year you won’t pay any Class 4 NICs if your profits are under £7,225.  In addition, you may not pay any Class 2 NICs (normally a flat rate of £2.50 per week) if your profits are expected to be under £5,315.