The new 2019/20 tax year for individuals began on 6 April 2019. Is it time for a fresh approach to your tax affairs?

Most UK taxpayers don’t ever have to submit tax returns, but that doesn’t mean you can just leave it to HMRC to get your tax right.

• You could be paying too much tax because you haven’t claimed tax reliefs to which you are entitled.
• You could be paying too little tax because the rules have changed since you last took professional advice.
• You may want to consider planning for the future. This can range from ensuring you will get a full state pension to reviewing what your family will have to pay in Inheritance Tax (IHT) when you die.

Over the next couple of weeks, you might want to:

Check your tax code.

Your PAYE tax code determines how much tax your employer deducts from your pay each month, but that doesn’t mean your tax is right. Does your code include adjustments for your other income? Are you claiming higher rate relief for your Gift Aid donations? Is HMRC collecting tax for earlier years in this year’s code?

Think whether you might need to submit a 2018/19 self-assessment tax return.

Has anything changed in your life? You might need to submit a tax return if for example you have sold property or received untaxed income. Becoming a company director or joining a partnership can also mean you need to register with HMRC as a self-assessment taxpayer, as can receiving trust income or having total income over £100,000.

Take time to understand what kind of pension scheme you are in.

Pension rules are very complex, but if your income is over £110,000 and your employer contributes to your pension you may have extra tax to pay. In some cases your pension scheme can pay the tax for you, but that will reduce your future pension. Talk to your financial and tax advisers if you think you might be affected.

Review your tax residence for 2018/19.

Tax residence is looked at separately for each fiscal year on the facts for that year. So being non-UK resident in 2017/18 does not mean you will remain non-resident in 2018/19. And if you are UK resident, you then have to establish if you are a UK taxpayer or a Scottish taxpayer for some (but not all) income tax purposes. Where you live affects your tax liability.

Check your National Insurance Contributions (NIC) record is complete and correct.

This is important because you will only get a full new state pension (now £8,767 per year) if you have a full 35 qualifying years of contributions or credits. You can check your record online, and you may be eligible to pay voluntary contributions if required.

Add up your assets and calculate IHT at 40% on the non-exempt element.

The most important way to save IHT is to make a will, and everybody should have one. There are many and varied IHT exemptions, some for particular assets and some for particular recipients. IHT could be charged at 40% on what you own when you die, but advance planning can dramatically improve the position for your loved ones.

Remember to visit our Tax Planning Guide for other areas to bear in mind for you longer term planning. 

Please get in touch with one of our personal tax advisers if you need help with your Spring clean.