The Tax Man Cometh....
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The Tax Man Cometh....
First of all, military and aircrew. Tick. (This probably affects many on here)
I'm afraid it's that age old question about tax returns again. Having used the 'Search' facility and found some great hints and tips, the majority are several years old.
Does anyone know of any decent 'guides' for military folks for filling in the dreaded Self Assessment form?
Whilst the basics are easy enough to follow, it's the deductions and tax exempt allowances that always throw up a grey area eg subsistence claims, MMA etc
Being aircrew, I enrolled someone else to do it for me last year due to time pressures (some of my own doing!) but having looked through it again I'm pretty sure I ended up paying too much tax.
The reason for having to fill out the SA is due to letting my main residential property and being a 40% tax payer
ISTR a Powerpoint presentation that did the rounds a while back from the OC of a fast pointy Sqn somewhere in Scotland who claimed to have got a fairly hefty refund from HMRC after applying all the various exemptions and deductions. Anyone got a copy?
I am sure I'm not alone in scratching my head on this one so any advice, big or small is welcome.
Cheers in advance.
I'm afraid it's that age old question about tax returns again. Having used the 'Search' facility and found some great hints and tips, the majority are several years old.
Does anyone know of any decent 'guides' for military folks for filling in the dreaded Self Assessment form?
Whilst the basics are easy enough to follow, it's the deductions and tax exempt allowances that always throw up a grey area eg subsistence claims, MMA etc
Being aircrew, I enrolled someone else to do it for me last year due to time pressures (some of my own doing!) but having looked through it again I'm pretty sure I ended up paying too much tax.
The reason for having to fill out the SA is due to letting my main residential property and being a 40% tax payer
ISTR a Powerpoint presentation that did the rounds a while back from the OC of a fast pointy Sqn somewhere in Scotland who claimed to have got a fairly hefty refund from HMRC after applying all the various exemptions and deductions. Anyone got a copy?
I am sure I'm not alone in scratching my head on this one so any advice, big or small is welcome.
Cheers in advance.
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MMA
The HMRC rate and the JPA rate are not aligned. You can claim the difference on your Tax return supported if necessary by your JPA Doc.
Not sure of current rates, but it was JPA gives you 25p per mile and you are allowed 45p per mile. You can therefore claim the difference from HMRC.
You cannot do the same for HTD or GYH mileage.
The HMRC rate and the JPA rate are not aligned. You can claim the difference on your Tax return supported if necessary by your JPA Doc.
Not sure of current rates, but it was JPA gives you 25p per mile and you are allowed 45p per mile. You can therefore claim the difference from HMRC.
You cannot do the same for HTD or GYH mileage.
I have my own small business and an accountant to do the books. They also do my self assessment for an additional fee of around £120. Being as I had a sizable rebate last time, I believe it is money well spent.
If your own SA is not particularly straightforward, I recommend getting someone to do it for you.
On the other hand, if it is a simple form filling because you don't have additional income, do it yourself as it is not that hard (particularly if you kept copies of your previous SA - most of this year's will be similar to last).
If your own SA is not particularly straightforward, I recommend getting someone to do it for you.
On the other hand, if it is a simple form filling because you don't have additional income, do it yourself as it is not that hard (particularly if you kept copies of your previous SA - most of this year's will be similar to last).
Wizard
Is your wife a higher rate tax payer (presuming you're married of course)? If not a statutory declaration to put the house in her name will save you a fair amount of tax for starters.
BV
BV
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Thanks for the replies so far.
Mrs Wiz gave up work back end of last year so that will work for the 2013-2014 SA. Having to split everything in half for this one as she was working, albeit in lower tax bracket.
I agree that most of it is straightforward but always nice to know where the less obvious stuff can fit in as it can all add up.
For example, I spent quite a few nights away with work and stayed at 'Friends and family' accommodation which when reimbursed via JPA is taxed so in theory should be able to be counted as taxed expenditure.
Mrs Wiz gave up work back end of last year so that will work for the 2013-2014 SA. Having to split everything in half for this one as she was working, albeit in lower tax bracket.
I agree that most of it is straightforward but always nice to know where the less obvious stuff can fit in as it can all add up.
For example, I spent quite a few nights away with work and stayed at 'Friends and family' accommodation which when reimbursed via JPA is taxed so in theory should be able to be counted as taxed expenditure.
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If you've done any duty mileage that you've claimed back on JPA, you can claim back part of it as Tiger_mate explains. I've just done this on the SA form for the 12-13 tax year; it's not much but having been caught on the Child Benefit rule change, every little helps. It's not obvious where this this goes on the form but speaking to HMRC it can be done and goes in Section 4.
The other thing to note is that you can claim this back for up to 4 years in arrears, so if you have journeys going back to 2009 (as I did) you'll need to get it claimed before 31 Jan 14. Go and see the JPA Audit Clerk and ask for a JPA printout of all your claimed journeys, then you'll need to write a letter to HMRC saying the following:
Dear Sir/Madam,
I wish to claim overpayment relief under schedule 1AB of the Taxes Management Act 1970 for the business mileage that I did from 2009 onwards, as detailed below. For your information, my employer is the Royal Air Force and my NI number is ******. I have enclosed proof of the journeys made as printouts from the RAF ***** Claim/Audit Cell and I confirm that I have not claimed tax relief for the years detailed.
Tax Year 20** – **
X miles @ £0.25 per mile = £A
X miles @ £0.45 per mile = £B
Difference B - A = £C
C x 40% = £D
yours faithfully
Bloggs
Note that the HMRC rates for 2009-10 and 2010-11 are 40p per mile and for 2011-12 onwards are 45p per mile. Usual caveats apply with this, the person I spoke to at HMRC quick fired this info to me and as I only submitted it yesterday I have no proof it actually works!
The other thing to note is that you can claim this back for up to 4 years in arrears, so if you have journeys going back to 2009 (as I did) you'll need to get it claimed before 31 Jan 14. Go and see the JPA Audit Clerk and ask for a JPA printout of all your claimed journeys, then you'll need to write a letter to HMRC saying the following:
Dear Sir/Madam,
I wish to claim overpayment relief under schedule 1AB of the Taxes Management Act 1970 for the business mileage that I did from 2009 onwards, as detailed below. For your information, my employer is the Royal Air Force and my NI number is ******. I have enclosed proof of the journeys made as printouts from the RAF ***** Claim/Audit Cell and I confirm that I have not claimed tax relief for the years detailed.
Tax Year 20** – **
X miles @ £0.25 per mile = £A
X miles @ £0.45 per mile = £B
Difference B - A = £C
C x 40% = £D
yours faithfully
Bloggs
Note that the HMRC rates for 2009-10 and 2010-11 are 40p per mile and for 2011-12 onwards are 45p per mile. Usual caveats apply with this, the person I spoke to at HMRC quick fired this info to me and as I only submitted it yesterday I have no proof it actually works!
Last edited by skaterboi; 15th Jan 2014 at 07:40.
I literally spoke to the taxman yesterday about the Child Benefit piece, having not heard anything since registering last September. He gave me the option of paying the whole lot back in one go or monthly through a huge tax code adjustment. With regards to BV's comment of:
I was advised a few years ago that if I/we had a joint mortgage, it was fraudulent if trying to rent the house out but in the name of the 'mrs' only. My wife is a housewife and I thought that would be an obvious method to avoid paying 40% tax on the rent.
Is your wife a higher rate tax payer (presuming you're married of course)? If not a statutory declaration to put the house in her name will save you a fair amount of tax for starters.
skaterboi,
For back claiming mileage expenses, you don't have to write the letter to HMRC that you so kindly copied, or send off proof. As an alternative you can simply complete and return a Form P87.
http://www.hmrc.gov.uk/forms/p87.pdf
It's a 4 page form but if you're just claiming for mileage then you only fill in about 6 or 7 boxes on the whole thing, many of which are repeated figures.
Disadvantages vs your method - you need a separate form for each tax year in question (although you could put them all in the same envelope). You need to be claiming less than £2,500 in expenses.
Advantages - no need to send off proof (nevertheless, get some proof and keep it for 7 years in case the tax man comes to check).
As for the cut off dates for back claiming, yes it is 4 years, but from the end of the tax year in question, so for tax year 2009/2010 the cut off date is 5 April 2014, for more info see:
HM Revenue & Customs: How to get allowances and reliefs - employees or directors
Simples....
For back claiming mileage expenses, you don't have to write the letter to HMRC that you so kindly copied, or send off proof. As an alternative you can simply complete and return a Form P87.
http://www.hmrc.gov.uk/forms/p87.pdf
It's a 4 page form but if you're just claiming for mileage then you only fill in about 6 or 7 boxes on the whole thing, many of which are repeated figures.
Disadvantages vs your method - you need a separate form for each tax year in question (although you could put them all in the same envelope). You need to be claiming less than £2,500 in expenses.
Advantages - no need to send off proof (nevertheless, get some proof and keep it for 7 years in case the tax man comes to check).
As for the cut off dates for back claiming, yes it is 4 years, but from the end of the tax year in question, so for tax year 2009/2010 the cut off date is 5 April 2014, for more info see:
HM Revenue & Customs: How to get allowances and reliefs - employees or directors
Simples....
Last edited by Biggus; 15th Jan 2014 at 08:06.
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Biggus, fair enough, I just did what the rather shouty lady at HMRC told me to do! I wonder why she never mentioned that form? Still, as long as the money gets refunded I'm happy
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You can claim back the difference between HTD/GYH payments received and the HMRC rate, provided your assignment was for 2 years or less. Even if your assignment is subsequently extended, you can still claim. The key principle is that you expected, on the basis of the original assignment, that you would only be working at a particular location for 2 years: so you didn't up sticks and move house (say). Check your JPA assignment order before you claim.
I don't own this space under my name. I should have leased it while I still could
You can claim back the difference between HTD/GYH payments received and the HMRC rate, provided your assignment was for 2 years or less. Even if your assignment is subsequently extended, you can still claim. The key principle is that you expected, on the basis of the original assignment, that you would only be working at a particular location for 2 years: so you didn't up sticks and move house (say). Check your JPA assignment order before you claim.
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On the subject of rental income and best use of tax allowance...
It is not fraudulent if done correctly. You are correct that to try and offset income as 'Joint Tenants' (where the HMRC view it as 50/50) would be wrong. You need to sever the 'Joint Tenants' part of the property title with the Land Registry and change it to 'Tenants in Common'. This will then allow you to make a declaration as to who owns what percentage along the lines BV suggested a few posts up.
You don't need a solicitor (but may be easier - plus you could probably declare the expense on your SA form!). The forms/guides are on the Land Registry website. You then need to fill in another form with the HMRC which explicitly allows you to specify ratios of ownership, send off with aforementioned evidence, et voila.
If Starbucks et al (allegedly) can get away with 'creative' tax breaks, then this is small fry and perfectly legitimate to best use your culmulative tax allowances as a couple.
I wonder how many people who have been lurking under the rental tax radar have been vicously outed recently (or are about to be) due to the mandatory SA that comes with most Mil Aircrew's salaries and Child Tax credits....
I was advised a few years ago that if I/we had a joint mortgage, it was fraudulent if trying to rent the house out but in the name of the 'mrs' only. My wife is a housewife and I thought that would be an obvious method to avoid paying 40% tax on the rent.
You don't need a solicitor (but may be easier - plus you could probably declare the expense on your SA form!). The forms/guides are on the Land Registry website. You then need to fill in another form with the HMRC which explicitly allows you to specify ratios of ownership, send off with aforementioned evidence, et voila.
If Starbucks et al (allegedly) can get away with 'creative' tax breaks, then this is small fry and perfectly legitimate to best use your culmulative tax allowances as a couple.
I wonder how many people who have been lurking under the rental tax radar have been vicously outed recently (or are about to be) due to the mandatory SA that comes with most Mil Aircrew's salaries and Child Tax credits....
DS
We signed the declaration of trust (I referred to it as a statutory declaration earlier which is wrong) when we moved out of our house on posting and started renting it. I was fortunate enough that my Mum worked in a solicitors office and was able to easily draft the paperwork and stick the form under her boss' nose for a quick scribble at zero cost. With my wife being a stay at home Mum she is well under the lower tax threshold.
Thank God I knew a guy who was renting out a house and pointed out the tax pitfalls. The SA this year due to Child Benefit would have been eye-watering otherwise, after 6.5 years of being a landlord!
BV
Thank God I knew a guy who was renting out a house and pointed out the tax pitfalls. The SA this year due to Child Benefit would have been eye-watering otherwise, after 6.5 years of being a landlord!
BV
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It was!! 
Stable door springs to mind for me but you live and earn. First thing tomorrow I'll be on to the Land Registry.
Thanks to all those that have replied with their experiences. I hope others get some tips from them before they get a 4 figure balance owing.
It's gutting when the amount of annual tax on my salary is horrendous too without adding this little lot on top.
The cost of childcare x2 far outweighs the benefit of SWMBO working full time so only one salary and just above the cut off limit is a bit of a killer.
Ho hum.
Stable door springs to mind for me but you live and earn. First thing tomorrow I'll be on to the Land Registry.
Thanks to all those that have replied with their experiences. I hope others get some tips from them before they get a 4 figure balance owing.
It's gutting when the amount of annual tax on my salary is horrendous too without adding this little lot on top.
The cost of childcare x2 far outweighs the benefit of SWMBO working full time so only one salary and just above the cut off limit is a bit of a killer.
Ho hum.
The Tax Man Cometh....
I am decidedly not an expert on these matters and I suggest you contact someone who is for definitive answers, but the key thing in my mind is the name on the deed, not the name on the mortgage. My wife is the sole legal owner as a result of the declaration of trust. The letting agents were content with this when they tried to deduct tax from us as on overseas landlord (not actually necessary since I am still employed by HM forces on exchange in Canada). The Dec of T was all they needed.
Hope that helps.
BV
Hope that helps.
BV