The 31 January Self Assessment Tax Return deadline is fast approaching. That is why it is time to get organised. Missing it triggers penalties, plus interest on any unpaid taxes. This is a financial burden no one needs, especially in tough economic times.
For individuals and small businesses, preparation is key. This year brings changes, including cryptocurrency reporting and simplified filings for some high earners, making early action even more important.
Experts warn that with many small businesses facing challenges or even closure, avoiding preventable costs like late penalties is vital. Don’t let a missed deadline add to the strain. To help you get ahead of the curve, here are practical tips for preparing and filing your tax return early.

Assemble All Paperwork First

Filing your tax return is like putting together a puzzle. You need all the right pieces to finish it smoothly. Start by gathering these important documents:
 From your employer – Forms P60 and P11D
 From your bank – Interest certificates
 From pension providers – Pension income statements
 From charities – Proof of Gift Aid donations
Having everything ready in one place will save you the hassle of scrambling for details at the last minute and make the whole process much easier.

Double-Check the Tax Year

Your tax return should match the financial year that ended on 5 April 2024. Using outdated documents like an old P60 can lead to mistakes, so double-check your paperwork. If you are self-employed, be sure to report your business profits as that will determine your tax bill.
This year is a bit different due to the basis period reform. If your accounts don’t align with 31 March, 5 April, or nearby dates, you will need to report two sets of figures: income and expenses up to 5 April 2024, and for the accounting year that ended during this tax year.

Report Bank Interest Correctly

Make sure to include all bank interest earned during the tax year on your return—except for interest from ISAs, which is tax-free and doesn’t need to be reported.
 For joint accounts – Only report your share of the interest
 For business accounts – Include the interest unless your business is a limited company. If it is, the company should report the interest on its tax return instead

Understand the Marriage Allowance

If your income is below £12,570—the current personal allowance—you are a non-taxpayer. As a non-taxpayer, you can transfer up to 10% of your unused personal allowance to a spouse or partner who pays tax at the basic (20%) rate. This can save you both hundreds of pounds in tax.
Here is how it works:
 Non-taxpayer – You transfer the allowance
 Taxpayer – You receive the allowance
Be sure to apply this correctly to avoid delays or errors in processing.

Don’t Procrastinate

Waiting until the last minute to file your tax return might seem tempting, but it boosts the chance of mistakes. Also, HMRC’s online systems often get overwhelmed near the deadline, leading to frustrating delays.
Filing early has its perks:
 You can fix any errors or paperwork issues without the stress of a ticking clock
 You’ll have time to double-check what needs to be included
Save yourself the hassle and get it done early.

Filing your Self Assessment Tax Return might not be the most exciting task, but it’s important. Starting early helps you avoid last-minute stress, steer clear of penalties and gives you time to explore tax-saving options like the marriage allowance or business deductions.
A little effort now can save you money—and a lot of hassle—when the New Year rolls around.

FAQs

How to maximize tax return in the UK?

To maximize your tax return in the UK, ensure you are utilizing all eligible deductions, tax credits, and reliefs available to you. Keep detailed records of your expenses and consider making pension contributions or charitable donations.

What can I claim on my self-assessment in the UK?

On your self-assessment in the UK, you can claim expenses related to your self-employment, such as office supplies, travel costs, and professional fees. Additionally, you can claim pension contributions, charitable donations, and other allowable deductions.

Where can I get free tax advice in the UK?

You can seek free tax advice in the UK from organizations like Citizens Advice, TaxAid, or by contacting HMRC’s helpline for assistance with general tax queries.

Can I do my own tax return in the UK?

Yes, you can complete your own tax return in the UK through HMRC’s online self-assessment system or by using approved software. Ensure you have all necessary documentation and understand the process.

How to reduce your tax bill in the UK as self-employed?

To reduce your tax bill as a self-employed individual in the UK, keep meticulous records of your business expenses, utilize available tax reliefs, consider making pension contributions, and explore other tax-saving strategies relevant to your situation.

Is 120k a good salary in the UK?

Earning £120k is considered a high salary in the UK, placing you in the upper income brackets. It is above the national average and can provide a comfortable standard of living.

What is a wealthy salary UK?

A wealthy salary in the UK typically starts at around £100k or more, indicating a high income level that surpasses the earnings of the majority of the population.

What is 90,000 after tax in the UK?

After tax deductions, £90,000 would amount to approximately £69,720 in take-home pay, based on standard tax rates for the 2024/2025 tax year.

How many people earn over 150k in the UK?

Roughly 1-2% of the UK population earns over £150k, reflecting a relatively small percentage of individuals with high incomes in the country.

Can I claim a laptop on tax self-employed in the UK?

If the laptop is used solely for business purposes, you may be able to claim it as a tax-deductible expense on your self-assessment, helping you reduce your taxable income.

How much do I need to save for taxes if I am self-employed UK?

As a self-employed individual in the UK, it is advisable to save around 20-30% of your earnings for taxes to cover income tax and National Insurance contributions.

How do I declare taxes as self-employed UK?

To declare taxes as a self-employed individual in the UK, you need to complete a self-assessment tax return, reporting your income, expenses, and other relevant financial details to HMRC.

Does the UK do tax returns for foreigners?

Yes, foreigners living or working in the UK are required to comply with UK tax laws, including filing tax returns if they meet the criteria for doing so.

Do I have to notify HMRC of savings interest in the UK?

Yes, you are obligated to inform HMRC of any savings interest you earn in the UK, as it forms part of your taxable income and must be reported accurately.

Can I file my own company tax return UK?

Yes, you can file your own company tax return in the UK if you are comfortable with the process and have a good understanding of your company’s financial affairs. Alternatively, you can seek the assistance of an accountant or tax professional.

What information do I need for a tax return in the UK?

For a tax return in the UK, you will need documents such as your P60, P45, records of income and expenses, bank statements, receipts, and any other relevant financial information to accurately report your income to HMRC.

How to pay less income tax in the UK?

To pay less income tax in the UK, consider utilizing tax-efficient investments, maximizing pension contributions, taking advantage of available tax reliefs and allowances, and structuring your finances in a tax-efficient manner.

How much is a tax advisor in the UK?

The cost of a tax advisor in the UK can vary depending on the advisor’s experience, services offered, and location. On average, fees can range from £150 to £250 or more per hour for professional tax advice and assistance.

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As festive lights brighten British streets and families prepare for Christmas, HMRC is delivering an important reminder to millions of taxpayers: that the Self Assessment tax deadline is just one month away.
Although the holidays and family time are at the top of many people’s minds, HMRC is urging taxpayers to be ready to file their tax returns before the 31 January 2025 deadline. It wants to ensure people are not slapped with penalties after the merry celebrations of Christmas and New Year. HMRC Christmas tax reminder

Flexible Payment Options to Ease the Burden

HMRC is highlighting its “Time to Pay” system, which helps people who might find it hard to pay their tax bills all at once. If you owe under £30,000, you can use that online service to spread payments over up to 12 months without needing to contact HMRC.
However, if you owe more than £30,000, you can still set up a payment plan. But you will need to talk directly with HMRC. All payment plans must be arranged after completing your Self Assessment Tax Return.
So far, more than 15,000 taxpayers have used this flexible option in the Tax Year 2023/2024, showing how important such solutions are in today’s age.

A Simple Process for Tax Management

Setting up a payment plan through HMRC’s online system is quick and easy. Myrtle Lloyd, HMRC’s Director General for Customer Services, highlighted its simplicity and reassured taxpayers of HMRC’s support.

“We are here to help customers manage their taxes. If you are concerned about paying your Self Assessment bill, support is available,” Lloyd says.
Flexible payment options are not just about splitting the cost but also about reducing stress when finances are tight.

Why Planning Matters

The Christmas season often brings surprise expenses, making it easy to forget tax deadlines. However, waiting until the last minute to file your tax return can lead to late fees and extra stress. Filing early gives you peace of mind and access to flexible payment options.
Self Assessment taxpayers include many groups, such as freelancers, landlords and people with extra income. Each group has its own financial problems, which makes HMRC’s flexible payment plans pretty helpful.
HMRC also warns taxpayers to watch out for scams and fraud as the Self Assessment Tax Return deadline approaches.

Don’t Delay: File and Plan

With just weeks to go until 31 January, HMRC’s message is clear: file your return, assess your options and don’t hesitate to seek help if needed. Whether through flexible payment plans or direct support, tools are in place to make tax compliance less daunting during this festive season.

Christmas is all about giving and sorting out your taxes is a gift you can give yourself. HMRC’s flexible payment options might not be a holiday present, but they can provide the financial relief you need to start the New Year without stress.
Don’t let the festive rush delay your tax preparations. Filing your Self Assessment early and exploring flexible payment options can ease stress and help you start the New Year on the right foot. Take action now to avoid last-minute pressure.

FAQs

1. Do HMRC send out payment reminders?

Yes, HMRC issues payment reminders to taxpayers who have outstanding tax liabilities. These reminders are typically sent via post or through digital channels if you’re registered for online services. They serve to inform you of due dates and any penalties for late payment.

2. When can HMRC enquire into a tax return?HMRC can open an enquiry into a tax return within 12 months from the date the return was filed, provided it was submitted on or before the filing deadline. If the return is filed late, HMRC has up to the quarter day following the first anniversary of the actual filing date to initiate an enquiry. In cases of suspected fraud or deliberate misrepresentation, HMRC can investigate up to 20 years back.

3. What happens if you don’t file a tax return in the UK?
Failing to file a required tax return results in automatic penalties:
• One day late: £100 fixed penalty, regardless of tax owed.
• Three months late: Additional £10 per day, up to a maximum of £900.
• Six months late: Further £300 or 5% of the tax due, whichever is higher.
• Twelve months late: Another £300 or 5% of the tax due, whichever is greater.
Interest may also accrue on unpaid tax.

4. How long can HMRC go back for corporation tax?
For corporation tax, HMRC can investigate:
• Up to 4 years: In cases of innocent errors.
• Up to 6 years: If tax has been underpaid due to carelessness.
• Up to 20 years: In cases of deliberate tax evasion.

5. How long does it take HMRC to process a payment?
The processing time for payments to HMRC varies by method:
• Online or telephone banking (Faster Payments): Usually same day or next working day.
• CHAPS: Same working day if made within your bank’s processing times.
• BACS: Typically three working days.
• Direct Debit: Three working days from the date HMRC takes the payment.
• Cheque by post: Allow at least three working days for the payment to reach HMRC, plus additional time for processing.

6. What is an automated payment reminder?
An automated payment reminder is a system-generated notification sent to inform you of an upcoming or overdue payment. These reminders can be delivered via email, SMS, or through dedicated apps, helping ensure timely payments and avoid penalties.

7. How do I send a payment reminder?
To send a payment reminder:
• Manually: Draft and send an email or letter to the debtor, including details like the invoice number, amount due, due date, and any late fees.
• Using accounting software: Many platforms offer automated reminder features that can be scheduled to notify clients of upcoming or overdue payments.
• Via payment apps: Some payment applications allow you to send reminders directly through the platform.

8. How do I check my automatic payments?
To review your automatic payments:
• Bank statements: Examine your statements for recurring transactions.
• Online banking: Log in to your account to view and manage standing orders and Direct Debits.
• Payment apps: Access the app’s settings or payment history to see scheduled payments.
• Contact service providers: Reach out to companies directly to confirm any automatic payment arrangements.

9. Is there a payment reminder app?
Yes, several apps can help manage and remind you of payments, such as:
• Mint: Tracks bills and sends reminders.
• Prism: Consolidates all bills and sends due date alerts.
• Due: Offers customizable reminders for various payments.

10. What is the longest time to pay HMRC?
If you cannot pay your tax bill in full, HMRC may agree to a Time to Pay (TTP) arrangement, allowing you to spread payments over a period, typically up to 12 months. The duration depends on individual circumstances and agreement with HMRC. It’s crucial to contact HMRC as soon as possible to discuss options.

11. What is the maximum money transfer without tax in the UK?
The UK doesn’t impose taxes on the act of transferring money itself. However, taxes may apply based on the nature of the funds:
• Gifts: You can give up to £3,000 per tax year without inheritance tax implications. Amounts above this may be subject to inheritance tax if you pass away within seven years of the gift.
• Income: Money received as income is subject to income tax.
• Capital gains: Proceeds from the sale of assets may be subject to capital gains tax if they exceed the annual allowance.

12. How long does it take for HMRC to send a refund?
HMRC typically processes tax refunds within:
• Online returns: Approximately 5 working days.
• Paper returns: Up to 6 weeks.
Delays can occur during peak times or if additional information is required. You can check the status of your refund through your Personal Tax Account or by contacting HMRC.

13. How many years back can HMRC investigate?
HMRC’s investigation periods are:
• Up to 4 years: For innocent errors.
• Up to 6 years: For careless behavior.
• Up to 20 years: For deliberate tax evasion.

14. What are HMRC penalties?
HMRC imposes penalties for various offenses, including:
• Late filing of tax returns: Starting with a £100 fixed penalty, escalating with continued delay.
• Late payment of tax: Initial 5% of the unpaid tax after 30 days, with additional 5% penalties at 6 and 12 months.

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UK landlords have a reason to be optimistic. In 2024, rental yields are on the rise, offering lucrative returns for property owners. This upward trend is primarily driven by stable house prices, a growing demand for rental homes, and a favorable market for investors. According to recent data from a Buy-to-Let mortgage specialist bank, the average rental yield in September 2024 was 6.72%. This is a slight increase from the 6.69% recorded in the previous quarter and a noticeable rise from the 6.48% seen a year earlier. In this article, we’ll delve into the key factors behind this surge, the best-performing rental properties, and how landlords can maximize their returns in today’s competitive rental market.

Best Rental Yield Performers

When it comes to rental yield, certain property types are leading the charge. Houses in Multiple Occupation (HMOs) have emerged as the top performers, with an impressive average yield of 8.34%. Freehold blocks follow closely with a yield of 6.66%, while flats and terraced houses also provide solid returns, offering yields of 6.02% and 5.94%, respectively.

For landlords seeking the highest returns, HMOs are clearly the standout choice. These properties, often housing multiple tenants, can generate substantial rental income, making them an attractive option for savvy investors. However, this doesn’t mean traditional properties like flats and terraced houses are not worth considering—they can still provide favorable yields, especially in areas where demand is high.

What’s Driving the Upward Trend?

The rise in rental yields can be attributed to several key factors, primarily the growing demand for rental homes coupled with stable house prices. Over the last 18 months, rental yields have soared as limited supply and steady property prices have created a favorable environment for landlords.

Experts suggest that while HMOs deliver the highest returns, more traditional options, such as flats and terraced houses, can also produce good yields. The key takeaway for landlords is that, regardless of the property type, the rental market continues to offer promising opportunities for robust returns.

Location-wise Rental Yield Data

Location plays a critical role in determining rental yield, and some regions are outperforming others. Landlords in the North of England, particularly in the North East and Cumbria, are reaping the largest rewards, with an average yield of 8.02%. Wales isn’t far behind, with a yield of 7.95%. On the other hand, Greater London has the lowest rental yields, averaging just 5.52%. This is largely due to the high property prices in the capital, which make it more challenging for rental income to keep pace.

The figures for the third quarter of 2024 indicate that the average yield was based on a property value of £343,356 and an annual rental income of £23,076. This data reinforces a critical point: areas with cheaper properties tend to generate higher rental yields. For landlords, choosing the right location is essential to maximizing profits.

Are Rental Yields Just One Piece of the Puzzle?

While rental yields are a crucial factor for landlords to consider, they don’t provide the complete picture of profitability. Analysts suggest that existing properties tend to perform better than newly purchased ones, primarily because they benefit from the appreciation of house prices and rental income over time.

Profitability also depends on a variety of other factors, such as the financing structure of the property, capital gains, and any improvements made to enhance its value. For instance, investing in renovations or upgrades can not only increase rental income but also elevate the property’s value, contributing to greater overall returns.

Since mid-2022, rental yields have been climbing due to rising rents fueled by limited supply and steady house prices. For smart investors, this presents a continued opportunity to capitalize on the growing demand for rental properties.

As rental yields rise, UK landlords have a prime opportunity to benefit from high demand and limited housing supply. However, there are challenges to be mindful of, such as rising financing costs and stricter regulations, which could impact profits. Careful planning and strategic decision-making are essential for making the most of the current market.

For investors considering Buy-to-Let opportunities, choosing the right property type—whether it’s an HMO, freehold block, or a more traditional flat or terraced house—can help maximize rental returns.
With the market showing continued promise, those who make informed decisions and plan ahead are poised to reap the benefits of a thriving rental market.
If you’re a landlord seeking expert advice on managing your rental property portfolio, including accounting, compliance, and tax advisory services, Felix Accountants is here to help guide you through the complexities of the rental property market.

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According to a recent news report, leaseholders are now paying an average of £600 more each year in service charges than they did five years ago. In some cases, these charges have risen more than 400% which has made it difficult for residents to pay and almost impossible to sell their homes.
This increasing service charge for leaseholder properties seems to be putting a lot of strain on the finances of property holders. So, it is worth exploring what these service charges are, what they cover and what leaseholders can do if they think they are too high.

What Are Leasehold Service Charges?

The leasehold system in England and Wales has existed since the Middle Ages, but the current scheme started in the 1920s. Under the present system, leaseholders acquire the right to live in a property for a fixed time. This is in contrast to freeholders who purchase the land beneath their property.

Leaseholders are then required to pay service charges to freeholders or managing agents for things like building maintenance and insurance. The charges listed in the lease change each year based on costs and are usually paid in advance. However, older leases might allow payment after the costs are incurred.

England has more than 4.7 million leasehold homes, making up 19% of all homes. This number has been growing quickly, with about 100,000 new leasehold properties added each year in the last five years. London has the most leasehold homes, at 1.3 million, followed by the North West with 910,000, making up 36% and 27% of the housing in those areas, respectively.

How Are Service Charges Calculated?

Put simply, the leaseholder service charge is based on what the freeholder (or the landlord) thinks they will need to spend in the coming year. That is to say, they estimate service charges based on expected costs for the next year. At the end of the year, the landlord must show a breakdown of the actual costs.

If expenses are higher than expected, leaseholders are charged the difference, known as a balancing charge. The extra payment is credited toward the next year’s charge if costs are lower. For improvement projects (not repairs), landlords must consider the financial hit on leaseholders and look for cheaper options.

What Are the Problems with the Leasehold System?

Many believe freeholders and their agents are taking advantage of the present leasehold system and charging unfair fees. That is why there is a growing voice, even in political circles, for leaseholds to be abolished entirely.

However, freeholders defend themselves, saying they are forced to raise service charges because of the rising costs of energy, insurance and materials. They claim that these factors are not in their hands and that the present financial trend is a by-product of the larger cost-of-living crisis.

In 2017, the government planned to end leaseholds for new buildings, and recent changes to the Leasehold and Freehold Reform Act introduced rules for clearer cost breakdowns. But the changes still need additional laws, which have not yet been proposed.
The government is now working on a Bill to create a “commonhold” system, where residents own the land under their buildings. This is expected to happen by the end of the current Parliament, but some campaigners worry the government’s plans don’t help those already trapped in the leasehold system.

What to Do About “Unfair” Service Charges?

A landlord can only charge service charges on leaseholder properties if the costs are reasonable and the work for which the service charge is being levied is done properly. If a leaseholder thinks the charge is unfair, they can challenge it at a tribunal. In England, this would be the First Tier Tribunal (Property Chamber) and in Wales it is the Leasehold Valuation Tribunal.

A service charge demand must include the landlord’s name, address and a summary of the leaseholder’s rights, including the right to challenge the charge. If the demand does not meet those rules, the leaseholder can legally refuse to pay until it is properly requested.

How to Challenge Service Charges

If service charges seem too high, the work was not done correctly, you are unsure how the money is being spent or you are being charged for things not in your lease, you can challenge them.
You can ask the landlord to show you their accounts, receipts and other documents within six months of getting a cost summary. It is illegal for a landlord to deny the request.
If your lease allows the landlord to take action for unpaid charges, they must follow the legal process and get a court order. This will only happen if you admit you owe the money or a court confirms it.

The sharp rise in leasehold service charges is becoming a major financial strain for many homeowners with some facing charges that are impossible to pay. As the number of leasehold homes grows, so too does the concern over unfair fees and a lack of transparency in the system.
Although there are ways to challenge excessive charges, the process can be complicated and costly. With ongoing legal reforms, it is hoped that future changes will better protect leaseholders, but there remains uncertainty for those currently trapped in the system.

Recent Legislative Developments

• Leasehold and Freehold Reform Act 2024: This Act introduces significant changes to the leasehold system, including:
• Extended Lease Terms: Standard lease extensions have been increased to 990 years for both houses and flats, providing leaseholders with greater security and reducing the frequency of renegotiations.
• Simplified Freehold Acquisition: The process for leaseholders to purchase their freehold has been streamlined, making it more accessible and cost-effective.
• Enhanced Transparency: The Act mandates clearer disclosure of service charge costs, enabling leaseholders to better understand and challenge fees.

These reforms aim to balance the relationship between leaseholders and freeholders, offering more control and protection to homeowners. gov.uk

Leasehold Reform (Ground Rent) Act 2022

 This legislation effectively eliminates ground rents for most new residential leasehold properties in England and Wales, reducing the financial burden on future leaseholders. commonslibrary.parliament.uk

HM Revenue & Customs (HMRC) Tax Implications Guidance

HMRC provides detailed information on the tax treatment of leasehold properties, including the implications of service charges and ground rents. It’s essential for leaseholders to understand these aspects to ensure compliance and optimize their tax positions. taxadvisermagazine.com

Service Charges in Leasehold Properties

Service charges are payments made by leaseholders to cover the costs of maintaining and managing communal areas and services as specified in the lease agreement. This can include expenses related to repairs, cleaning, insurance, and other shared amenities. gov.uk

Rights and Protections for Leaseholders

Consultation Requirements: Landlords are obligated to consult leaseholders before undertaking significant works or services that will result in substantial costs. Specifically, if the contribution for any single leaseholder exceeds £250 for planned work or £100 per year for ongoing services, a formal consultation process, known as a ‘Section 20’ consultation, must be followed. Failure to adhere to these requirements can limit the amount a landlord can recover from leaseholders.  gov.uk

Dispute Resolution: Leaseholders have the right to challenge unreasonable service charges through the First-tier Tribunal (Property Chamber) in England or the Leasehold Valuation Tribunal in Wales. This provides a formal avenue to contest charges that are deemed excessive or unjustified. gov.uk

Best Practices for Leaseholders

Documentation and Transparency: It’s advisable for leaseholders to request detailed breakdowns of service charge expenditures and to keep thorough records of all communications and transactions related to service charges. This practice enhances transparency and provides a solid foundation should any disputes arise.

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