Filing your tax return this Christmas? Don’t miss out on these stocking fillers

Filing your tax return this Christmas? Don’t miss out on these stocking fillers

With more than 22,000 people filing their tax returns over the Christmas period last year* – and 3,275 people submitting their forms on Christmas Day itself – Dawn Register from accountancy and business advisory firm BDO has pulled together some advice to help you claim all your entitlements over the festive period.

Claim tax relief on pension contributions

If you make personal pension contributions, you are entitled to relief at your marginal rate of tax. If you pay contributions directly to a personal pension, you will get basic rate tax relief at source. However, if you are a higher rate or a top rate taxpayer, you’ll need to claim the additional 20% or 25% through your tax return. And if you are a sole trader or in a partnership you will need to claim all your pension tax relief through your tax return. Broadly speaking, on your 2022/23 tax return you can claim relief for pension contributions made during the tax year from 6 April 2022 to 5 April 2023. 

Reduce or cancel out your High Income Child Benefit Charge

If you or your partner claims child benefit, your benefit will begin to be clawed back if you or your partner’s salary hits £50K a year. When the salary of the higher earner rises to £60K a year, you will have to pay back the whole benefit.

If you have upped your pension contributions to bring your salary down below the £60K limit, you can reduce the level of your high income child benefit charge. If you can bring it down to below £50K, you won’t have to pay the charge at all. So, it is important to include details of any pension contributions for this reason. If you didn’t make any pension contributions during 2022/23 and you are affected by the high income child benefit charge, it is worth considering if you want to make any pension contributions for the current tax year before 5 April 2024.

Keep your personal allowance and entitlement to Tax-Free Childcare

You can get up to up to £2,000 a year for each of your children to help with the costs of childcare. If you earn above £100K your personal allowances are tapered away and you lose the eligibility for tax-free childcare. So if someone with two children on a salary of £105K has made a £5K gross pension contribution, they will retain the right to £4K in free childcare and make a tax saving of £2,000**.

Claim tax relief on charitable donations

If you have donated to charity using gift aid, the Government tops up the donation giving the basic rate tax relief due on it to the charity. However, higher and additional rate taxpayers can also claim the difference between their top tax rate (either 40% or 45%) and the basic rate (20%) on the total (gross) value of a donation made. Don’t forget to claim for both regular donations as well as one-off gifts. Gift aid donations also work to re-instate your entitlement to the personal allowance, where your income is over £100k. You can claim relief for any charitable donations made during the tax year as well as any made up to the date you file your tax return. So if you wait to file until the deadline, you can claim relief for gift aid donations made between 6 April 2022 to 31 January 2024. 

Working from home? There’s a tax relief for that

If you have to work from home for all or part of the week, you may be able to claim tax relief for additional household costs. You can either claim tax relief on £6 a week or on the exact amount of extra costs you’ve incurred above the weekly amount (such as business phone calls or gas and electricity for your work area) but you’ll need evidence such as receipts, bills or contracts to claim the higher amount. To note, you cannot claim this tax relief if you simply choose to work from home.

Claim tax relief on your venture capital investments

While this type of investment can come with a higher risk profile, if you’ve invested in a young company through the Enterprise Investment Scheme (EIS) or Seed EIS, remember to claim this tax relief through your return. In certain circumstances, you may also be able to claim for EIS and SEIS investments made since April 2023 so you can get your relief faster. You need to have been provided with the investment certificate by the company to be able to claim the relief on your tax return, if you have not received it by 31 January then you should submit an amended return to claim the relief once you receive it and then you will obtain a tax refund.

Dawn Register, Head of Tax Dispute Resolution at accountancy and business advisory firm BDO said:

“Christmas can be a very busy period, and it might be tempting to try and file your tax return as quickly as you can to get it out the way. But it’s worth taking the time to check you are claiming for everything that you are entitled to. And in certain circumstances, not claiming for things like tax relief on pension contributions can be a costly mistake, as you could forfeit your right to certain valuable benefits.”

ENDS

Note to editors

*HMRC figures for the number of people filing tax returns between Christmas Eve and Boxing Day 2022 – see https://www.gov.uk/government/news/its-a-cracker-3275-file-tax-returns-on-christmas-day

** based on a salary of £105K, a gross pension contribution of £5,000 will reduce your income to £100k. Being a 40% tax payer you will benefit from £1,000 higher rate tax relief and £1,000 for re-instated personal allowance

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