We are now right at the beginning of the new tax year and it is a good time to take a look at your tax matters and sort out all forms and paperwork, so here are a few points that are worth paying attention to.

• Employees and pensioners - check your coding notice It is advisable to check your PAYE coding notice each year. Whether you have a company car, make pension contributions, incur work related expenses or your tax code takes into account underpayments from earlier years make sure that all adjustments are calculated correctly.  If you notice any errors you can get in touch with HMRC (your coding notice should provide contact details) and request the necessary adjustments to your tax code to be made. But don’t delay this as new codes will start to be used by employers and pension providers from 6 April.
• Employers – Complete 2010/11 P. A.Y.E. by 19th May
  Most employers now have to file their year end returns online, including filing the Employers Annual Return (P35) together with P14s for individuals. Whether you are intending to file annual returns online or on paper, the forms must reach HMRC by 19 May.  All employers must give their employees’ copies of the P14 (P60) by 31 May.  There is now an option to distribute P60s electronically.  The deadline  for employers to pay 2010/11 PAYE is 19 April but interest and penalties may be due if HMRC find that employers have not paid PAYE on the correct dates throughout the year.
• Students
  • Are you working during the holidays?
    Students working only during holidays are likely to earn less than their personal allowance over the whole tax year - £7,475 for 2011/12 (£6,475 for 2010/11).  If you think you shouldn’t be paying any tax, ask your employer if you can complete a form P38(S).  This would allow you to be paid without tax being taken off your wages. However please note that National Insurance contributions may still be deducted depending on your weekly or monthly income. 
  • Do you have to start to pay back your student loan from April 2011?
    Student loan borrowers who completed or left their higher education course recently may have to start making repayments from 6 April 2011 if they are earning over £15,000 a year.
• Self-Assessment Tax return for 2010/11 – do you need to complete one?
  If you are already registered to complete self-assessment tax returns, you should receive a notice to complete a return online or a paper return shortly after 6 April.  Although the deadline for online tax returns is 31 January 2012 you should now start putting together all the information you might need to complete it.  Completing your tax return early could be beneficial for a number of reasons.  For example if you are due to make a payment on account on 31 July and your actual tax liability turns out to be less than the previous year you could reduce your payment on account accordingly.  Or if you are due a tax refund the sooner you submit your return the sooner you will receive the repayment.  Calculating your tax liability early would also help with cash planning.
  If you don’t receive a paper self-assessment tax return or a notice to complete one, but you think you might have tax to pay for 2010/11 (for example, you may have a new source of taxable income on which sufficient tax has not been deducted at source, e.g. rental property income) you must inform HMRC by 5 October 2011 in order to avoid a penalty. 
• Are you due a tax repayment for 2010/11?
  There could be various reasons why you might have paid too much tax, you can then claim it back after the end of the year. If you have to to complete a self-assessment tax return, you should receive your repayment soon after you file your return. However if you don’t normally fill in a tax return, you will need to make a separate claim.
• Savings – are you paying too much tax?
  It is always advisable to obtain professional financial advice when deciding what to do with your savings.  However here are a couple of points to consider to help you maximise the tax efficiency of your savings:
  • Cash Individual Savings Accounts (ISAs)
    If you have cash savings consider putting them into a tax-free ISA.  Interest earned from non-ISA accounts is taxed at 20% (or 10% if your income falls within the tax savings band). By putting cash into an ISA, you can earn interest tax-free. The maximum amount of cash you can invest in an ISA in a tax year is increasing to £5,340 per person from 6 April 2011 (up from £5,100 in 2010/11). You can also hold stocks and shares and other types of investment in ISAs, the overall ISA allowance in 2011/12 (including cash ISA) is £10,680.
  • Can you get your savings interest without tax taken off?
    If your total income for a tax year falls within your personal tax allowances and you therefore don’t pay any tax, you can register with your bank or building society to have interest paid on your account without tax taken off.  To do this, you complete form R85 which you can either download or ask for one at your bank or building society.  Now is a good time to do this.
• Should you consider Incorporation?
  As you are probably aware the rate of Corporation Tax was reduced to 20% from April 2011, at the same time Class 4 National Insurance increased to 9% from 6th April 2011.  So if you are operating your business as a sole trader incorporation is possibly worth considering.    A lot of profitable business can save a considerable amount in tax and national insurance by trading through a company and taking most of your earnings as dividends, compared with operating as a sole trader.  This needs to be balanced against the additional administration and compliance costs resulting from the operation of a company.