Tax refunds are more common than you think, but not everyone claims what they’re owed. Read on to make sure you don’t miss out.

1. Why tax rebates happen
2. How to get a tax refund
3. Check the online gateway
4. Ask your accountant
5. Check if you can defer or cancel payments
6. Claim a tax rebate on ‘payments on account’
7. Do NOT use a company that claims to get you a refund
8. More tips

Why tax refunds happen

Tax rebates are far more common than you might think. You just don’t hear about them because HMRC try not to shout about it!

Some of the most common reasons you might be due a tax refund are:

• You started a new job and were taxed under an emergency code at the beginning.
• HMRC sent the wrong tax code to your employer or your employer does not use the correct code. This can often go back many years, so it’s worth checking retrospectively. You never know, you might be due a tax refund from 10 years ago or even longer!
• You’re a pensioner with more than one workplace pension. Your tax-free personal allowances may not have been allocated properly, meaning you might have paid too much tax.
• You have more than one job. The employer at your second job will automatically deduct tax at basic rate so you may not get the benefit of all your tax-free personal allowances. This regularly affects students and low paid workers, who could really do with the tax refund.

If you think any of these circumstances might apply to you then make sure you check if you’re eligible for a refund. And if you are, make sure you claim it!

How to get your tax refund

This is the bit everyone is dying to know. Getting your refund may sound like a complicated process, but in reality it’s very straight forward.

You should be able to do it online, without wasting hours and hours trying to make sense of the whole system. Although, if your tax affairs are more complex it might take a bit longer.

It’s really important to get it right and you could end up with a large cheque at the end of it, so make sure not to rush the process and do it properly.

Remember: asking HMRC to investigate your tax code or tax liabilities could mean they discover you actually owe MORE tax. So, be prepared for this to happen, too!

Check the HMRC online gateway

The first place to check is the government’s online gateway. If you don’t have your online portal set up yet, it can take a bit of time. You’ll need to prove your identity online and wait for a unique code to be sent to you in the post to complete the application.

You can claim your rebate here.

This portal helps you find out if you can claim a tax rebate if you paid too much due to any of the following reasons:

• Pay from your current or previous job
• Pension payments
• Income from a life or pension annuity
• A redundancy payment
• A self-assessment tax return
• Interest from savings or PPI
• Foreign income
• UK income if you live abroad
• Fuel costs or work clothing for your job

If you think you’re owed a refund for any other reason, read on…

Ask your accountant

If in doubt, ask a professional.

Asking an accountant will be a particularly good idea if you’re self-employed, have a second job, or have income from something else (like a buy-to-let property). Paying tax as a self-employed individual is much more complex, so taking advice can be a really good idea.

An accountant will probably charge you a couple of hundred pounds for their basic service, including a self assessment tax return.

A good accountant will likely spot where you can save WAY more than that on your return, so it’s always worth investing in. There’s a high chance they’ll successfully get you a tax rebate too, so you could well end up with more money than if you didn’t hire them in the first place.

Just make sure you find a reputable accountant. Sadly, some unscrupulous businesses and individuals try to take advantage of those desperate for a tax rebate.

Check online reviews before committing to an accountant or ask your friends and family for recommendations. That way, you’re far more likely to end up with a good accountant who wants to help you.

Check if you can defer or cancel payments on account

If you’re self-employed you may be able to defer or cancel payments on account. This will apply to you if you’ve earnt less this year than you originally predicted, or less than you made last year.

Another reason you might be apply to defer payments is if your tax relief entitlements go up. This would mean that the amount you owe is less than you would have expected when you made your original payments on account.

You can apply to reduce or defer your payments on account here. If you’re struggling with the online form, you can fill it out manually and post it to HMRC.

Claim a tax rebate on payments on account

You may be able to claim a tax rebate on payments on account from last year if you’ve earned less than anticipated this year. With many self-employed people seeing a decrease in earnings due to Covid-19 lockdowns, the likelihood you’ve overpaid your tax is significantly higher.

If your earnings have fallen below expectations, your previous payments may have been too high. This can be corrected before you pay the tax, by making a claim to HMRC to reduce your payments.

A lot of people don’t do this because their income is uncertain and it’s hard to plan ahead. Don’t worry if this is the case. If your final tax bill turns out to be less than the tax you have actually paid you can claim a tax rebate.

Pros and Cons of using a company that claims to get you a refund

PROS

Everything will be done for you and will save you a huge amount of work and admin.

Time saving.

CONS

These companies may seem tempting, particularly if you’re feeling overwhelmed and are worried about claiming your refund. Don’t fall for their clever marketing and be very careful who you select. Some will deliberately make the process seem more complicated than it is to try and get your business. All they’ll actually do is take a huge cut of any refund you get.

They won’t do anything you can’t do yourself through the HMRC portal. Doing it yourself means you’ll end up with the full refund in your pocket and won’t have to share any of it with any third parties.

Alot of these companies will charge you almost as much as you’re owed from HMRC, so you’ll barely see a penny of YOUR refund.

Remember – if something seems too good to be true, it probably is. You can almost certainly achieve a better outcome on your own.

More like this…

If you found this article useful you might also like these.

• Self Assessment Online – The Definitive Guide
• Second Job and Side Hustle Taxes Explained
• Help to Save: £1200 Tax-Free Cash From the Government

The post Are you due a tax refund? HMRC won’t tell you! appeared first on MoneyMagpie.

Here’s the 8 money questions to ask yourself!

• Am I Financially Prepared for an Emergency?
• Do I Spend More Than I Earn?
• What is My Credit Card Balance?
• How Much Debt Do I Have?
• Am I Paying More For Anything Than I Need to Be?
• What Happens to a Mortgage If You Split?
• Should I be Investing on the Stock Market?
• Is Paying for a Warranty Worth It?
• More Money Questions

Am I Financially Prepared for an Emergency?

If 2023 has taught us anything it’s the importance of being prepared for an emergency! It’s hard to know exactly what you will need until the time comes, but 3 – 6 months of necessary spending is a good guide. You need the money to be in an easily accessible savings account, ready for when you need it.

However, it’s a fine line between having enough and putting too much in there. Interest rates on savings accounts are shockingly low at the moment. In fact, interest rates are lower than the rate of inflation, so if you over-inflate your emergency fund, your money will slowly be losing value instead.

As well as having an emergency fund, do you have an asset you could borrow against if you had to? It’s not always as an ideal solution, but it can save you from the larger cost of getting a personal loan or using high-interest credit cards.

Do I Spend More Than I Earn?

You may think you don’t, but there are a shocking number of Brits who regularly spend more than they earn. According to research by the Office for National Statistics, on average each UK household spent £900 more than they received in income in 2017 alone. The problem for many people is that they’re simply unaware of how much they’re spending!

Due to cards and contactless, it is so easy to lose track of how much you’ve spent. The best way is to create a regular habit of checking your bank statements and monitoring where your money goes. Take some time to sit down with your accounts and face reality. How much do you actually earn? Once all your living costs have been taken out, how much do you have left? Create a budget and stick to it! Your finances dictate the lifestyle you can afford to have, not the other way around.

what is My credit card balance? (and what are the interest rates on it?)

Credit cards are great when they’re used properly, but they have made it far too easy for us to overspend without a second thought! Only purchase something on a credit card if you know you’ll have the funds at the end of the month to pay it off. However, life sometimes does throw surprises our way. There may be a month when, for some reason, you might not be able to pay the balance off in full. In preparation for this, make sure you’re aware of your credit card interest rates, how much it’ll cost you, and always use the card with the lowest APR if you might not be able to pay the full sum.

Remember to monitor you balance carefully to make sure you’re staying on top of payments. Find out more on how to use credit cards to build your credit score here.

how much debt do I have? And How to Pay It Off

Debt can be overwhelming and if you don’t stay on top of it it can easily spiral. When asked, a lot of people tend to underestimate how much debt they really have by 25%. UK citizens actually owed £1.6 billion in debt at the end of January 2020. While the average debt total (including mortgages) per adult was £31,845, higher than the average annual income.

Prioritise your debts by paying off the ones with the highest interest rates first, or think about applying for a debt consolidation loan. Check out our article How to Stop Debt Overwhelming You for more information, and see what MoneyMagpie founder, Jasmine, has to say about paying off debt below:

Am I Paying More For Anything Than I Need to Be?

Recurring expenses are something that we don’t think about often. They just come out of our account automatically without us ever paying much real attention to them. Meaning plenty of us are left paying for products and subscriptions long after we still need them, simply because we forget to cancel.

Go through your accounts carefully and question every expense. If you’re not using something anymore, or not using it enough – cancel! You’ll obviously still have things you’ll need to continue paying for, like insurance. But it’s always worth negotiating with your provider to try and get a better deal. Never simply auto renew a policy – you can almost always get it cheaper.

What Happens to a Mortgage If You Split?

Sadly, many people who do get mortgages together, whether friends or partners, do end up going separate ways. Knowing your options in advance can help you to prepare for the worst case scenario, as managing a mortgage in a break up is no small feat.

The key thing to remember is you’re both liable for all repayments. A mortgage provider doesn’t care about your personal life, so just because your partner is no longer paying their share it doesn’t mean they’ll let you only pay half. If you fall behind on repayments it will negatively impact both your credit scores.

The options you have are:

• Sell the house – Pay off whatever remains of your mortgage and split the rest of the money. If you’re in negative equity (when the value of your house falls below your mortgage balance), then you’ll have to divide the outstanding debt between you.
• Buy the other partner out – If you can afford to, one of you could buy out the other. However, you will have to prove to your lender that you can afford to continue the repayments on your own.
• Keep a stake in the property – Buying a proportion of your partner’s stake is an option if you can’t afford to buy their whole share. This way, one of you would own most of the property but the other could keep a stake in the home. They’d also be entitled to a percentage of the value if the house is sold at a later date.

Find out more about how to handle this situation in the video below:

Check out How to Prepare for a Post-Lockdown Divorce for more details, too.

Should I be Investing on the Stock Market?

This is one of the money questions we hear a lot, and the simple answer is yes. Everyone who can afford to do so should be investing – even if it’s just £10 a month. Really, investing is the best way to save for the long term. Interest rates on savings accounts are shockingly low so investing is the only real way to see a return on your money.

To a beginner, the stock market can seem overwhelming and rather daunting. How do you get started, or even know what to do? Read 7 Investment Tips for Stock Market Beginners for all the help you’ll need on making the first step.

Is Paying for a Warranty Worth it?

You’ve bought something nice and new and you want to protect it – that’s completely fair. The trouble is, a lot of warranties don’t actually give you that much for your money. In some cases you might get a couple of extra years, but we’ve found cases where an extended warranty cost over half the price of the product itself. And you may never end up using the warranty!

Instead, if you have contents insurance, check whether your items will be covered on that policy. What’s the excess? It’s often cheaper than the cost of a warranty. It’s always worthwhile checking as there’s no point paying to cover the same thing twice.

Also, if you are considering paying extra for a warranty check with the manufacturer and retailer first. Many manufacturers guarantee their products for a minimum of 12 months, with some up to 2 or 3 years and plenty of retailers often have their own guarantees as well.

Jasmine tells you what she thinks about paying for warranties in the video below.

More Money Questions

If you have even more money questions, why not head over to our messageboards where you can ask away and also find plenty of help from fellow readers.

Or check out one of our detailed articles answering different questions below:

• Do You Need Income Protection Insurance?
• Should You Invest in Penny Shares?
• Should I Save or Pay Off Debt? How to Decide
• Are Consolidation Loans Worth It?

*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.

The post 8 Money Questions You Should Know the Answers To appeared first on MoneyMagpie.

If you’re agonising over these questions, then you’ve come to the right place. We’ve put together the definitive guide to filing your tax return on time.

It might not be fun, but if you’re self-employed then it’s got to be done. You may even find you’re due a refund!

• What Is Self Assessment?
• Does It Apply to Me?
• Before Getting Started
• What Do I Need to Fill In?
• When Is the Tax Return Deadline?
• How Can I Send It?
• On Completing Your Tax Return…
• Tips and Tricks
• More Self-Employed Tips

What is Self Assessment?

Self Assessment is a system for working out and paying tax on your income, operated by HMRC (HM Revenue & Customs – formerly known as the Inland Revenue). You only need to do a Self Assessment form if you do not pay tax on your salary through PAYE.

Self-Assessment tax return forms are issued every April, covering the previous 12 months (i.e. the tax year to 5 April just passed). For example, the Self Assessment tax return due on the 31 January 2021 is for the previous year’s work from April 2019 to April 2020.

Does it apply to me?

If you only have one PAYE job, and no income from anywhere else, you’ll probably never need to fill out one of these forms. HMRC will usually send you a tax return reminder when you need to send one – once you’ve registered for it once. However, if you realise you do need one and they haven’t cottoned on, it’s your responsibility to ask for it.

There are several reasons why Self Assessment may apply to you. Here are the main ones:

• You’re self-employed and have earned more than £1,000 this year from your self-employment
• You have income from letting any property or land you own
• You’re a company director
• You receive other untaxed income, or significant capital gains, and the tax due on it cannot be collected through a PAYE tax code
• You’re a member of Lloyd’s of London insurance and reinsurance market
• You receive annual income from a trust or settlement, or any income from the estate of a deceased person, and further tax is due on that income
• You have taxable foreign income, even if you’re claiming that you are not normally resident in the UK
• You’re a minister of religion.

For many people, their first brush with Self Assessment will be when they become self-employed. If you’re about to take that step, this guide from GOV.UK should point you in the right direction. Alternatively check out our article 9 tips to maintain positive cash flow for your freelance business.

Before getting started

Before you begin, gather all the paperwork you need. You don’t want to get three-quarters of the way through to discover that you’ve lost a crucial piece of data. This will most certainly try your patience!

And apart from anything else, if you’re required to fill in a tax return, keeping your paperwork up-to-date is actually a legal requirement. You’re required to keep a record of your income (and any capital gains) for at least 22 months after the end of the tax year.

However, if you’re in business and are self-employed as a sole trader or a partner, or have rental income, you need to keep the records for at least five years after the end of the tax year.

What you’ll need

You may be wondering what forms you’ll need in order to file your self-assessment. HRMC have published a comprehensive list of the required documentation, which can be found here.

But we’ve also made our own quick breakdown of the paper work you need:

• Your P60
• Details of any pay and taxable expenses and benefits received from your employer
• Bank and building society statements
• Cheque and paying-in book stubs
• Any dividend vouchers you have
• Your self-employment accounts
• Documentation about any capital gains that have been realised
• Information on other income including investments, savings, pensions, property or benefits you receive
• Paperwork on anything you can claim for, like self-employed expenses or charitable donations.

You don’t normally need to send any documents with your Self Assessment form. However, HRMC may ask to see these documents at a later date. To avoid any stress, make sure you keep a photocopy or digital copy and keep your records organised.

If you’re asked to send across any documents, send the photocopy and keep the original in a safe place.

You should now be ready to fill in those all-important forms!

What do I need to fill in?

Every HMRC Self Assessment pack includes the core tax return SA100 form. On top on this, the chances are you’ll have to fill in one or more additional sections.

The extra pages you’ll need to complete will depend on your circumstances. For example, self-employed status, capital gains and rental income all require different extra forms to be completed, so fill in those that apply to you and ignore the rest.

At the moment, you can choose a paper or online tax return. In the near future, all but the biggest exceptions (such as living in a rural area with no internet) will need to file online. If you want a paper copy, HMRC no longer send this to you. You must download the SA100 form from the website. When you file online, you’ll be asked questions that help determine which section of the return you need to fill out. Then, you’ll only be shown those relevant pages – so that helps eliminate a lot of confusion!

If you need help filling anything in, call HMRC’s Self Assessment helpline on 0300 200 3310. It’s open Monday to Friday from 8am to 8pm and on Saturdays from 9am to 5pm. You can also Tweet HMRC @HMRCcustomers. They provide general advice on Self Assessment and they’ll answer any questions you may have.

If any of your personal details change, or if you find that you or the tax office have made a mistake, let HMRC know as soon as possible.

You can only be penalised if your return is incorrect through carelessness or you’re deliberately misstating the figures.

Remember! You can be criminally convicted if you try to cheat the tax system.

When is the tax return deadline?

The tax year starts on 6 April and lasts until 5 April the following year. After 6th April in any year, you can file your tax return – and doing it early doesn’t mean you HAVE to pay the tax owed immediately (but can help you to know how much you need to set aside by the deadline to pay). The deadline varies depending on how you plan on filing your return:

• If you’re sending your completed papers back by post, your deadline is 31 October
• If you’re completing an online tax return, you have until 31 January the following year
• Any tax owing must be paid by 31 January (many Self Assessment taxpayers also have to make payments on account by 31 January and 31 July).

If you miss the deadline by just one day you could face a £100 penalty, regardless of whether you have no taxes to pay or have paid the tax you owe. For the 2019/2020 tax year Self Assessment, you won’t receive a late fee if you file online before the 28 February 2021.

If you don’t settle your bill immediately, you’ll also start paying further penalties and interest charges. Surcharges – effectively penalties – can apply if you’re significantly late. But if you pay all your tax on time, that can eliminate any late-filing penalty.

These are just a few of the good reasons not to leave your tax return until the last minute. If you do, there will also be no time to correct any mistakes, or to ask for help if you run into problems. Get started early; it’ll mean much less hassle for you in the long run!

How can I send it?

Most people file their tax return online. However, you can also send it by post.

By post

If you want to send your forms by snail mail, remember that the deadline is 31 October, so allow plenty of time.

Double-check that you’ve signed and dated everything, and that you’ve included all additional pages.

And finally, remember to take a photocopy of the whole thing, in case it gets lost in the post. HMRC won’t acknowledge receipt, although it will let you know when your form’s been processed. You can also send via recorded delivery if you want to make sure you have proof of sending and tracked receipt.

If you get your paper returns to HMRC by 31 October, they can calculate your tax for you.

They’ll also let you know the amount you need to pay by the following 31 January, and if you owe less than £2,000, they may be able to collect the money through your tax code rather than as one lump sum.

Online

There is a big push by the government to ‘Make Tax Digital‘, and the advantages of completing the form online are clear:

• There’s no hassle with paperwork
• Your forms won’t get lost in the post
• You’ll also buy yourself an extra three months, with a 31 January deadline
• You’ll receive an immediate acknowledgement that your form has been filed
• There’s an option to save the form, so you don’t have to complete the form in one sitting
• The HMRC software will automatically calculate your tax for you
• If you are owed any money by HMRC, you’re more likely to get it sooner because your form should be processed quicker!

To file your return in this way, you’ll need to register online and request an ‘activation PIN’ from the HMRC website. To do this, you’ll need your Unique Taxpayer Reference (UTR), which you’ll find on form SA100 of your tax return, and your National Insurance Number or postcode.

It can take up to a week to receive your account password and become fully registered, so don’t wait until the last minute! For information on how to do it, check out the HMRC website.

Once you’ve completed your form, just make sure you print a copy off or save one on your computer, so you can still refer back to it if necessary.

On completing your tax return…

Make sure you’ve included all the relevant pages. Once you’ve done this, send it off and wait for it to be processed to see if you owe money or are owed money.

Now you can sit back, relax, and enjoy a cuppa knowing your tax return is done and out of the way for this year.

If, however, you are finding the process less forgiving and are pulling your hair out trying to get to grips with all of those figures, get a professional to help.

The Chartered Institute of Taxation (CIOT) and the Institute of Chartered Accountants of Scotland (ICAS) have online directories of certified number crunchers. Look for someone who specialises in your area. For example, if you’re a freelancer, you need an accountant who specialises in advising freelancers. Ask around for recommendations too. Other freelancers in your industry may know someone who they can recommend.

Tips and tricks

Jane Moore, from the Institute of Chartered Accountants, has a few ideas to help you along the way:

• Make sure you SIGN your tax return on the last page!
• If you want to complete your tax return online by 31 January, you need to register online, here.
• Only fill in the boxes that apply, don’t write ‘nil’ or ‘0’, just leave them blank.
• You don’t have to send any of your records/papers with the tax return, but you must keep them for at least 22 months (and in some cases five years) after the end of the tax year.
• Make sure you claim any tax relief under the supplementary pages. For example, you can get relief on Gift Aid donations.
• Don’t be put off by claiming if you don’t have exact amounts. You can give estimates based on what you think you spend, or use receipts from half of the year to calculate the whole year’s estimates. For example, if you buy stationery every month and believe you spend about £20 on it that would be reasonable – anything outrageous may be investigated by the tax office.
• If you’re waiting for information which may have a bearing on your assessment, you can put your tax return in on a provisional basis including a note stating that this is the latest information and you will send the final figures through when you can.
• The extra two pages are there for notes. If anything new and varied from your last tax return has happened, explain it in your notes. HMRC uses risk assessment software to see who they should investigate, so if your income was half that of the previous year, just explain it in a note and they may be satisfied.

Useful links and contacts

• HMRC Self Assessment guide
• HMRC Self Assessment Helpline: 0845 9000 444
• Top tips for avoiding tax
• For a slightly more cheery look at tax, check out our tax fun page.

More Self-Employed Tips

Want to know more about self-employment? Check out these articles next!

• Payments on Account: The Freelancer’s Guide
• Pensions for the Self-Employed Explained
• Benefits and Funding for the Newly Self-Employed
• Cashflow Management Tips for the Self-Employed
• Help to Save: £1200 FREE Cash from the Government!

The post URGENT: Self Assessment Online – The Definitive Guide to Filing Your Tax Return appeared first on MoneyMagpie.

Do you have a fantastic idea for a second business? Are you having to work extra hustles to pay your way in life?

At MoneyMagpie we have countless ways of making extra money from selling items to providing services.

Indeed, it’s reported 25% of people in the UK today have a side hustle.

Because of this growing trend, the declaration of side hustles has come under new light in recent weeks, and this news is now important to a whopping quarter of the population. With lots of people talking about the so called “side hustle tax” and others stating it is only for “traders”, many people have become confused about their taxes on side-hustles.

This can be said even more so for paying VAT. Lots of people are scared that they should be paying it on side-hustles. So we break down the rules and explain to you.

The Rules on Tax for Side Hustles

You will need to declare your side hustle to the Government if you earn over £1000 a year. When you’re selling products or doing something lucrative, this really isn’t much at all.  This has always been the case, but why it is suddenly in the news is a slight change in legislation which sees the government able to contact the aggregate for your details.

So, whilst the law hasn’t actually changed, it has become a lot harder to get away with sloppy bookkeeping.

The Importance of Tracking Your Earnings

A huge amount of us struggle with taxes simply due to not knowing where to start and how to do it. In truth, the government doesn’t make it easy (anyone who has ever done a self-assessment will back me on this). When it comes to tracking VAT, this becomes even more crucial.

What is VAT?

Even if your business is a side-hustle, in the eyes of the law you will be perceived as a business-owner.

As a business owner, you must register for VAT if your turnover surpasses £85,000 – either within the following 30 days or if the revenue collected in the last 12-months is over that amount. If your turnover is under £85,000, you can still register voluntarily.

Vat registration exceptions

In some circumstances, you won’t need to register for VAT.

Firstly, you can apply for a registration ‘exception’ by sending HMRC evidence proving that your turnover will not be higher than £83,000 in the next year. This request is adjudicated – so it can be rejected.

Secondly, there are two types of items that do not require VAT – exempt and ‘out of scope’ items. Examples of exempt products and services include buying and selling insurances, postage services, and health services. On the other hand, “out of scope” goods include statutory fees, goods bought and used out of the EU, goods sold as part of a hobby (e.g. stamps), and charity donations (if given nothing in return).

Once you’ve registered for VAT, you must comply with a few responsibilities. One of your main duties is charging the VAT correctly, depending on your rates – standard (most businesses), reduced (e.g. children car seats) or zero rates (e.g. goods exported to non-EU countries). You must also pay any VAT due to HMRC, submit VAT returns, and keep a VAT account with all the records.

What Are Your Responsibilities When VAT Registered?

You’ll need to keep track of your cashflow for tax returns. Bookkeeping is a skill you need to master, as you will need all your transactions, profits, costs, and revenue documented. You also need to pay Income Tax on your profits and pay Class 2 or Class 4 National Insurance, depending on your earnings.

Another part of your responsibilities is finding a great name for your business. You probably already have this bit figured out, but make sure you don’t include any existing trademarks. If you’re a sole trader also make sure you don’t include words like ‘limited’, ‘Ltd’, ‘LLP’ or ‘plc’.

Can I Get Help With This?

If you’re making money from a side-hustle or you’re operating a small business and it’s still quite new to you, there are companies that literally do all of the hard work for you and keep you within the law and without the stress. One such company is AbraTax. This is a VAT bridging software that does your VAT submission with HMRC.

How AbraTax works

Step 1 – Add your VAT registration

Step 2 – Grant AbraTax permission to submit your returns

Step 3 – Fill in your spreadsheets (these are compatible with any computer)

Step 4 – AbraTax will do the rest

Get a Free Trial Today

AbraTax are offering a month’s free trial to see how you get on.

Click here to give it a go and see how much more pain-free VAT returns can be.

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.

The post When Do You Need to Pay VAT on a Side Hustle? appeared first on MoneyMagpie.

Like everyone else, the tax office is looking for new ways to fill its coffers so if you sell goods on Vinted, Etsy or eBay then these companies now have to pass on information about you to ensure you pay tax and declare your income through self-assessment.

The platforms will have to declare how many sales their sellers have made and the income they’ve generated. New legislation started on January 1 and they will have to automatically share information with HMRC by January 31 next year – the first lot of data-sharing will cover the 2023/24 tax year.

Changes were implemented after the UK signed up to an agreement with the Organisation for Economic Co-operation and Development (OECD) to tackle global tax evasion. Previously HMRC had access to seller information from UK based online platforms when required. The new automatic system also covers overseas platforms.

Sellers rarely turn a profit but such platforms have become a breeding ground for businesses who specialise in reselling rare and valuable items. The new rules will reduce the risk of businesses slipping through the net and avoiding tax.

Twenty eight countries have signed up to the OECD rules.

Will everyone’s information be shared?

No. Only if you are selling 30 or more items a year and have total earning £1,735. But don’t forget that you may have to pay tax on that amount. Currently you can earn £1,000 or less and you shouldn’t have to pay extra tax because you are covered by what is known as the trading allowance. The limit applies to your overall earnings across all platforms.

If you are concerned that you might owe tax on your extra income, then you should fill in a self-assessment tax return by going to gov.uk and submit it for the 2022/2023 tax year by Wednesday, January 31. Even if you submit it through self-assessment it doesn’t necessarily mean you owe any tax, depending on what allowances you are entitled to.

If you don’t think you owe tax, you don’t need to do anything.

Is this a new tax?

To be fair to HMRC, it isn’t. If you didn’t owe tax on these earnings previously, you won’t have to start paying tax on them now. What it does do is make it easier for the tax office to find out what people are making on digital platforms and that means you do need to check whether you are going to owe tax on future earnings.

The rule change will also allow HMRC to share data with tax authorities in other countries that have also signed up to the new legislation.

An HMRC spokesperson said: ‘For people selling personal possessions online, absolutely nothing has changed. the reason we’re asking digital platforms to share information with us is to ensure businesses operating via these platforms pay the correct amount of tax and do not have an unfair tax advantage over high street and other traditional businesses’.

If you are flagged by a digital platform, the company is required to send you a copy of the information that has been submitted to HMRC which should help you declare the correct income and make complying with tax obligations easier.

The trading allowance for reselling items can’t be used by sellers who already receive income elsewhere. So, if you receive income from a company you or someone connected to you controls, an employer or the employer of your spouse or civil partner, you cannot use the allowance.

Vinted’s chief executive Adam Jay said: ‘It’s actually quite a small proportion of our users who will trigger this threshold. It’s only people making a profit from selling second-hand items that might be eligible to pay tax. We’ll be actively reaching out to those sellers explaining what the new requirements are and why they exist’.

How will it affect you if you are on benefits?

You are protected by the £1,000 trading allowance, however claimants of low-income benefits like Universal Credit can be asked at any time to provide bank statements or other documents to prove the information about your financial situation is accurate. So it’s important to be clear about your earnings. If you report an income of £2,500 or more, your Universal Credit payment will automatically stop.

Many sellers on sites like Vinted, e-Bay and Depop have hit out at the rules saying that they’d already had to pay tax (VAT) on the items they are selling and described the rules as grossly unfair when we are in the grips of a cost of living crisis.

Nevertheless one tax expert from the Association of Taxation Technicians said: ‘Don’t wait for the letter to come through or for HMRC to contact you. It’s always better if you think there may be tax for you to pay to declare it upfront as there may be penalties if you don’t’.

For more information go to gov.uk to find out if these changes affect you.

The post The Side Hustle Tax: Tax on Vinted and Depop Selling Starts NOW appeared first on MoneyMagpie.

New stats from Resolution Foundation estimate the government will net £40 billion a year by 2027-28 – dramatically more than the original £8 billion a year it was meant to rake in at its peak. Higher inflation typically equals higher wages, which will push more people into the next tax bracket. Had income tax bands been linked to inflation, rather than frozen, we’d have seen a sizeable leap in the amount people could earn each year before hitting the next tax bracket. On top of the frozen allowances, the government reduced the threshold for additional rate tax, dragging more people into the top rate of tax.

MoneyMagpie founder Jasmine Birtles has said, “This is what people like me have been warning about for the last couple of years. These ’stealth taxes’ creep up on workers and eat into their income. The already struggling working people are about to suffer an even further drop and we only have the government to blame”.

Head of personal finance at AJ Bell Laura Suter has said: “These latest figures highlight the staggering impact that higher inflation will have on the amount of tax the nation is paying. The government’s decision to freeze the income tax thresholds at a time when inflation has gone off like a runaway train has boosted government coffers – but at a large cost for most UK households.

 “While Jeremy Hunt will be rejoicing at the boost to his budget, it’s costing households at a time when their budgets are already stretched. AJ Bell calculations show that someone earning £50,000 a year will pay an extra £9,000 in tax across the six years of the threshold freeze, when compared to if the tax thresholds had increased with inflation. Had the government instead increased the headline level rate of taxation, rather than implementing a tax hike by stealth, the basic rate of tax would need to have risen to an astonishing 23.5% from last tax year to generate the same total tax bill for a £50,000 earner. The tax hike for middle-earners is particularly acute because they are vulnerable to the fiscal drag effect pulling them into a higher tax band.  

Tax the Poor to Feed the Rich

The post Jeremy Hunt Announces Largest Income Tax Rise in 50 Years appeared first on MoneyMagpie.

The middle-class squeeze: Wealth tax has been a topic of much debate in the UK, with a renewed urgency to think big on high tax policy. As we face the largest public finance crisis since the Second World War, the need to consider the implications of a wealth tax is arguably more relevant than ever. While public attitude shows a clear desire for the wealthier to be taxed more – with over half (56%) of UK adults supporting the introduction of a wealth tax and 6 in 10 (65%) ^[1] believing that the wealthiest individuals should be paying more in taxes than they currently do – what is less clear is how any cuts in inheritance tax would be funded.  One option could be a new wealth tax.

The Wealth Tax Commission was established in Spring 2020 to provide in-depth analysis of proposals for a UK wealth tax. Its report was published in December that year and proposed a one-off tax on the richest people in the UK. But what are its implications and is it time we started asking ourselves, what is a fair share for the wealthy?

58% of UK adults believe that the UK tax system is currently unfair, and that the wealthiest individuals are not paying their fair share. On top of this, over half of us (51%) believing that a wealth tax is a fair way to fund public services ^[2].  So, despite the then Chancellor Rushi Sunak saying in July 2020, ‘No, I do not believe that now is the time or ever would be the time, for a wealth tax’, much has changed since then and as John Maynard puts it, ‘when the facts change, I change my mind’.

As the cost-of-living crisis continues to see most of the UK struggling, biting against the upcoming Coronation of King Charles who has been criticised for not having paid any inheritance tax on assets worth over £1 billion inherited from the Queen; do these taxing times, beg the questions:

‘What are the implications of a wealth tax in the UK? And what do each demographic need to keep in mind?’

Lower income individuals: The introduction of a wealth tax could lead to a sense of fairness and greater equality. Currently, it is the upper-middle class who pay the highest rate of tax, while the super-rich take advice and use the generous swathes of exemptions and loopholes. A wealth tax could rebalance this situation, ensuring that those with significant wealth contribute more to the public good.

The middle class: The introduction of a wealth tax could have a significant impact on their retirement plans. Many middle-class individuals have worked hard to build up their assets, such as their homes, pension funds, and savings. A wealth tax could potentially reduce the value of these assets, making it harder for them to maintain their standard of living in retirement. This would need to be considered when designing any new wealth tax regime.

The super rich: The implications of a wealth tax could be more profound. The super-rich have access to a range of legal and financial advisors who can help them to minimise their tax liability. The introduction of a wealth tax could lead to a situation where the super-rich move their assets overseas, making it harder for the UK to collect the tax. This could result in a brain drain of talented individuals and entrepreneurs who are crucial to the UK’s economy. It’s essential to consider how any new wealth tax would impact the UK’s competitiveness as a place to do business.

The implications of a wealth tax in the UK are complex and far-reaching. While there is a clear desire for wealth to be taxed more, we must also consider the potential impact on different demographics. For lower-income individuals, a wealth tax could lead to a greater sense of fairness and equality. For the middle class, the implications could be significant for their retirement plans. For the super-rich, the implications could be profound, potentially resulting in a brain drain of talented individuals and entrepreneurs. As we move forward with this critical debate, we must ensure that we have a robust evidence base and consider the potential implications for all demographics. Only then can we design a wealth tax regime that is fair, equitable and meets the needs of the UK in the 21st century.

^[1] Source: YouGov, “Majority of Britons support the introduction of a wealth tax,” 9 September 2021
^[2] Source: Opinium, “Wealth tax seen as a fair way to fund public services,” 22 October 2021

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence

The post Fair Share for the Wealthy? King Charles Coronation Sparks Debate on taxes paid by the rich appeared first on MoneyMagpie.

Pay less and backdate your claim!

With a quick check, you can possibly get your council tax banding decreased by up to a few hundred pounds a year, and it can also be backdated to when you started living at your property: even way back to 1993 when council tax started to be paid!

How to find out your council tax band

Find out the Council Tax band for a home in England or Wales by looking up its address or postcode. For homes in Scotland, search on the Scottish Assessors website.

You can also use this service to challenge your Council Tax band if you think it’s wrong. You’ll need to provide evidence for your challenge. Start now on the Council Tax valuation list.

It’s well worth considering a few more factors, so first of all:

Investigate the houses in your area

Asking a neighbour is probably the quickest way to determine what band you’re supposed to be in. A sure sign that your band is incorrect is if people in your area are paying a different amount of council tax to you.

BUT do be aware that this investigation COULD lead to your council tax going up, or in very rare cases the band for your whole area being increased: this is after all a reassessment, not a guarantee of you paying less council tax.

So do some research first:

Property Values

If you have owned your property after 1991, just use the date of the sale and price paid: if you rent your property or bought it earlier, than this, you’ll have to get an estimated price. TIP: also try this process with neighbouring properties similar to yours, to see where yours compares.

Try using Rightmove, Zoopla or Nethouseprices to get fast results: just put in your street name and it’ll let you know the price of every property sold there since 2000.

You can then use this information to estimate what your property would’ve been worth back in 1991, and what band it’s in by using the Nationwide Calculator to determine all the house prices you’re after.

Other ways to apply

You can also call or email the Valuation Office Agency (VOA) to challenge your Council Tax band if you cannot use the online service.

The post Are you in the right council tax band? appeared first on MoneyMagpie.

Welcome to Ask Jasmine, the column where I round up some of the questions I have received from readers. In this edition, I answer many questions about saving for family members, sending money abroad and how to provide for non-UK residents.

I hope these answers can help you with any questions you may have. Don’t forget to leave any questions you have in the comments below or email me on help@moneymagpie.com.

• Can you advise on trust funds?
• How can I save money for a non-UK resident?
• Are Junior ISAs the best option?
• How can I put my money towards my family’s future?
• Complaining
• What can I do for my grandchildren who live abroad?
• What is the best way to save?

Can you advise on trust funds?

Could you please advise on registering trust funds for grandchildren when they are held in share funds with a fund manager, as I believe this is a recent requirement. This was not mentioned in your article in The Mail regarding savings for children. 

–

Thank you for your question.  This is a handy guide on how to register a trust fund: Trust Registration Service Completion Guide on YouTube. Kind regards, Jasmine  

How can I save money for a non-UK resident?

Can you tell me how I can save money for my new Granddaughter who is not a UK resident? She has just been born in France. I tried to buy Premium bonds but couldn’t, and I also tried to open savings account with a bank but I was unable to. Any idea what I can do? 

–

Thank you for your query. In short, because of anti-money laundering and fraud rules it is extremely difficult to set up a nest egg for non-UK residents. You cannot open a savings account for a grandchild who lives abroad. You could open an account in your own name and save for them, but that would be liable for inheritance tax. Your best option is to send money to the parents who can then save for their children. 

If you are concerned about inheritance tax, you can find more information on gifting money here. All the best, Jasmine

Are Junior ISAs the best option?

I have a financial query I hope you can help with. I am a UK citizen but have lived overseas for many years and my son was born overseas in New Zealand. My family still live in the UK and want to invest some money at birthdays and Christmas for his future. 

I have looked at options like Junior ISAs, but they all seem to require the recipient to be a UK tax resident, which my son is not. Currently, the money is just sitting in a standard UK savings account, but I wonder if there are other options that will likely provide a better return in the longer term. I am happy for the money to be inaccessible until he is 18 if necessary. I would appreciate your advice. 

–

In a similar response to the previous question, because of anti-money laundering and fraud rules it is extremely difficult to set up savings for non-UK residents. Here is a link to the different types of savings accounts that could give you a better return on your investments.

I hope this helps! Jasmine 

How can I put my money towards my family’s future?

Being 80 years old and not having a great deal of money to spend, l pay £40 per month into a Lloyd’s Bank Easy Saver account for my two great grandchildren. Is there a better way of putting that money away for their future? I don’t think there is much interest to be earned at Lloyd’s. 

–

Thank you for your question. I suggest you visit the link I gave in the previous question, showing the different types of savings accounts that may result in a better return on your investments.

All the best  Jasmine 

Complaining

Hey Jasmine, I want to make a complaint about a company but I’m not getting any response from them. What’s the best way to proceed?

–

Most of us don’t like complaining, but sometimes it is vital we do to get the service we deserve.

My Ask Jasmine columns are now sponsored by Resolver, and they’re a great service to use if you want to make a complaint.

Watch the video below to find out more about Resolver.

What can I do for my grandchildren who live abroad?

I cannot find out how to save money for my grandchildren who live in North Africa. They are getting older – I am getting poorer! You make all sorts of useful recommendations, but some aren’t accessible to foreigners. What can I do? 

–

You cannot open a savings account for a grandchild who lives abroad. You could open an account in your own name and save for them, but that would be liable for inheritance tax. Of course, if they do move back to the UK, you can gradually move those funds to their own accounts (a maximum of £3,000 a year can be gifted, after that, again they could be liable for inheritance tax). 

You can find more information on gifting money here. Your best option, in the short term, is to send money to the parents who can then save for their children. 

I hope this helps you! Jasmine 

What is the best way to save?

I am a 54-year-old male saving for my pension with a well-known London company. I have approx. £38,000 in the pot at present, but would like to obviously have more saved. As a modern-day parent, I have found it difficult to save more with 2 children and a wife. I also just put some towards my daughter’s wedding. 

Can you advise on best way to save? I have extra money in another account doing nothing.  

–

I recently hosted a webinar on the subject of how to save during a recession. I think it would give lots of answers to this question which could help you. You can watch it on catch up here.

Hopefully it gives you some answers you need Jasmine

–

Do you have a question for me? Leave it in the comments below, or email me your question on help@moneymagpie.com. I may just answer it in next week’s Ask Jasmine column.

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.

This blog is sponsored by Resolver

Resolver is the UK’s largest FREE, independent issue resolution service. Their aim is to help connect customers with organisations to resolve issues quickly and effectively.

They’ve set out to make it as easy as possible for anyone to get results and they ensure that you’ll always know you’re talking to the right person at the right time – and keep all the emails in one place for easy access. Working with thousands of household names, they have helped over 4m people tackle millions of issues and give companies invaluable insight so they can deliver the best service to their customers.

NEW – Resolver Pro with FREE Starter Package just launched for businesses to enhance their online reputation.

The post ASK JASMINE 7: How can I send money to family abroad? appeared first on MoneyMagpie.

Welcome to Ask Jasmine, the column where I round up some of the questions I have received from readers each week. This week, I answer questions about marriage allowance, interest rates, tax cuts and more!

I hope these answers can help you with any questions you may have. Don’t forget to leave any questions you have in the comments below or email me on help@moneymagpie.com.

• Can I recover marriage allowance from HMRC?
• Will my savings interest rates increase?
• What are the implications of tax cuts?
• Can I get my money back if I paid with a credit card?
• How can I get a refund on a cancelled airline flight?

Can I recover marriage allowance from HMRC?

Hiya Jasmine, 

Can you please advise; I spotted an advert on Wales Online’s news feed a few weeks ago telling me I could be eligible for a married man’s allowance tax rebate. I filled in some forms online but did not give my authority to get any potential rebate on my behalf, they came back and told me I was entitled to about £1200,00 and if I gave them my authority they would pursue the marriage allowance rebate for me. 

On checking the small print, it seems they take about 40% or more for doing the job. 

They’ve been chasing me ever since for my ok to go for it. If this is legit, is there any reason I can’t recover the money direct from HMRC myself? And if so, how? 

Thanks in anticipation. 

– 

Hi there, 

Unfortunately, there are numerous companies who are offering their services to claim your marriage allowance on a commission basis, when in fact claims can be made at no cost to the applicant. I am very impressed that you took the time to read the small print. 

www.gov.uk provides detailed information on how marriage allowance works, the criteria needed and how to apply which can also be done via their website. This link will take you directly to the relevant page. 

Wishing you all the best. 

Will my savings interest rates increase?

I have over £10,000 in a Halifax Savings Account, and the interest is still showing on my statements as 0.01%. Surely this can’t be right, as I know the Bank of England has increased interest rates this year? 

– 

Hi there, 

Good to hear from you. I know what you mean – it does seem very unfair to give you such a low interest rate. 

However, the bank isn’t tied to any particular rate. Many banks and building societies increase their interest rates as the Bank of England raises the base rate, but only if they want to attract more money from customers. Other institutions may have enough money to lend out so they don’t make it more attractive. There’s no law that says they have to raise or lower rates, unless they have a product that is specifically linked to the Bank of England base rate. 

The thing for you to think about here is whether you want to stay with the Halifax. You might want to move to a bank that is offering a better rate, although there is not a lot to choose from!  

All the best. 

What are the implications of tax cuts?

Hello Jasmine, 

Your MISS MONEYSAVER page in the Saturday Daily Mail is most useful and as you state – ‘Got a question?’. Yes, I have, and trust you can assist. I work, my wife does not. For this tax year 2022/2023, she has transferred 10% of her personal tax allowance to myself. 

In a recent copy of the Daily Mail, an article about tax cuts states, “[Liz Truss] wants an expansion of marriage tax-break rules to allow couples to transfer their full income tax allowances to the earning partner.” 

Can you comment on the implications of this? Would I receive the whole of her current £12,570? 

Thank you for your time. Regards. 

– 

Liz Truss has indeed said she wants to review family tax and tax allowances. As you rightly say, currently anyone who is married or in a civil partnership who earns less than the current tax threshold of £12,570 can transfer 10% of their tax allowance to their partner. Liz Truss wants to look at allowing people to transfer or share the whole of their tax allowance, which would indeed – theoretically – mean that you would be able to use all of your wife’s tax allowance, as she does not work. 

However, I must stress that this proposal lacks detail. I have looked at a number of sources and read interviews with Ms Truss and it is unclear to me whether this is a benefit she thinks should be available to anyone who is married or in a civil partnership, or whether it will be restricted to those who are parents and carers. She has been quoted as saying that people should not be penalised for looking after children or elderly relatives, which would imply this is a family tax pledge. 

We will watch this story as it develops and update the MoneyMagpie website with the latest information, if and when it becomes available. 

I have spoken to a couple of professionals (a tax specialist and an accountant), who think this is a very good idea, so let’s hope, if she wins, she is true to her word and that it benefits everyone. 

Kind regards. 

Can I get my money back if I paid with a debit card?

Dear Jasmine,

Recently I read the article regarding how you help a lady to get her money back. I am in the same situation, though I paid on my debit card not credit card.

On the 4th April 2017 I purchased my funeral plan for the sum of £3,595.00 which of course will now not be paid when I eventually depart from this mortal coil.

My question is, can you help or would it be better going through my bank – Santander – on this matter, in hopes that I can get my money back?

I am an 80yr old widow and I purchased this plan in good faith, so that my daughter would not have the worry of trying to pay for a very small funeral.

Please advise if there is anything I can do. 

– 

I am sorry to read about your situation. You are correct, I was able to help the lady you read about as she paid using her credit card and her payment was therefore covered by the Consumer Credit Act. 

You do, however, have a few options available to you. As you suggest, you can try contacting your bank to see if they can offer any help or advice. You could also make a claim as a creditor to FRP Advisory; however Safe Hands have stated they do not have the funds to provide full refunds. But they are exploring the possibility of transferring funeral plans to an alternative provider. Otherwise, you might only get 10-20% of your original payment back.  

You should have had a letter with the details on how to claim as a creditor? If you haven’t received the letter, you can phone the administrators on 0800 640 9928 or email safehands@frpadvisory.com. 

Kind regards. 

How can I get a refund on a cancelled airline flight?

Dear Jasmine, 

I have enjoyed reading your columns over the last two weeks and both have struck a chord with me and my wife… so thank you. 

Can I please pick your brains? We were subject to a flight cancellation on June 17 with Aegean Airlines, and have submitted a claim under EU 261 for flight cancellation redress. 

It has now been more than 6 weeks since its submission to Aegean headquarters in Athens, and despite a 30-minute hold and 5-minute conversation being reassured the claim is being processed, we have not heard or received anything. 

What would you do with an overseas provider? 

– 

Aegean should have issued your refund by now, although I have seen reports of refunds taking up to 60 days.  

This is a link to the Hellenic Civil Aviation Authority (CAA) which outlines the steps you need to take next:  https://hcaa.gov.gr/en/diadikasia-ypobolis-kataggelias  

You’ll see that the first step is to submit a complaint to the airline using the EU Complaint Form. I would send it via their online portal, and via email, but you could send it by post too:  

https://hcaa.gov.gr/sites/default/files/documents/telikh_eu_complaint_form_en_2_no-sign.pdf 

https://en.aegeanair.com/contact/ (you can upload and attach documents on this page) 

contact@aegeanair.com 

AEGEAN AIRLINES 

COMPLAINTS 

31, Viltanioti Street
Kato, Kifissia
Kifissia, Greece 14564 

The Hellenic CAA website suggests that you need to wait for a response after submitting the EU Compliant Form to the airline, however I think given that you have already waited so long for a response, you could send the form and supporting documentation (as listed on their website) to the Hellenic CAA at the same time: 

HELLENIC CIVIL AVIATION AUTHORITY – HEADQUARTERS 

P.O. Box 70360,
166 10 Glyfada,
Attica,
GREECE 

TELEPHONE: 210 8916000 

E-MAIL : YPA@HCAA.GR 

I appreciate this will all take time and effort, but it is the best way to proceed from this point. Good luck with your refund – I do hope it is resolved quickly. 

Kind regards. 

–

Do you have a question for me? Leave it in the comments below, or email me your question on help@moneymagpie.com. I may just answer it in next week’s Ask Jasmine column.

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. 

The post Ask Jasmine 5: “Can I recover marriage allowance?” appeared first on MoneyMagpie.