With just over a week left in the current 2020/21 tax year, you may well already be thinking about getting your personal tax return for the year filed. And, whilst there are obvious things that are going to affect your tax liability, such as any personal income that has not been taxed at source, there may be some other things that you will need to include that are not so obvious. So, to avoid any surprises, we have broken down some of the things that you may not necessarily immediately think of having to include on your return.
If you are used to working in PAYE employment, and therefore having your student loan repayments deducted at source, then it may be that you’ve not given much thought to these before. However, if you have income that hasn’t been taxed at source, then you will now need to take student loan repayments into account as well.
If you have ever been in receipt of a student loan, then once your income goes over a certain threshold, you will need to start repaying this loan. There are currently two different thresholds dependant on when you took out your loan:
• If the first year of your course started before 1st September 2012, you have a Plan 1 loan. The 20/21 payment threshold for this loan is £19,390, rising to £19,895 from 6th April 2018.
• If the first year of your course started after 1st September 2012, you have a Plan 2 loan. The 20/21 payment threshold for this loan is £26,575, rising to £27,295 from 6th April 2018.
Once your income exceeds the relevant threshold, you will then need to pay 9% of anything received.
If you are responsible for a child under 16 (or under 20 if they are in approved education or training), then you are most likely to be eligible to receive Child Benefit from the government. This usually equates to £21.05/week for the first child, and £13.95/week for any additional children.
However, if you have individual income of over £50,000 and either yourself, or your partner receives this Child Benefit, then you will have to pay a tax charge, known as the ‘High Income Child Benefit Charge’ when you come to complete your personal tax return for that tax year. This tax charge is calculated on a sliding scale, so if your personal income is between £50,000 and £60,000 then you will only have to pay a portion of the Child Benefit received. If, however, you earn over £60,000, then you would have to pay the full amount back.
Charitable Donations (Gift Aid)
If you donate to a registered charity (and make a Gift Aid declaration to enable the charity to be able to claim an extra 25p for every £1 you give) and are a higher/additional rate tax payer, then including these donations on your personal tax return will help bring your tax liability down. You will be able to claim the difference between the rate that you pay and the basic rate on your donation.
So, as an example, you donate £100 to a charity and they claim £25 Gift Aid. You pay 40% tax so on your tax return you will be able to claim back £25 (£125 x 20% (the difference between your tax rate and the basic tax rate)).
Private Pension Contributions
Again, if you are a higher/additional rate tax payer, and make contributions to your pension personally (not from your salary before tax), then you will be able to claim tax relief on those contributions (up to 100% of your annual earnings).
If you are a higher rate tax payer, and your pension provider claims the first 20% relief on your behalf (relief at source), you will be able to claim tax relief on the extra 20% on your self assessment return (and if you are an additional rate tax payer, this will be 25%).
There is an annual allowance for this relief of £40,000, but you may be able to bring forward any unused allowance from the previous 3 tax years.
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