The information below is a general overview of the records typically required to complete a tax return and does not constitute professional advice.
The records you provide to your accountant once the tax year ends will depend on your individual circumstances and could change from year to year.
In the U.K., the tax year runs from the 6th April to the following 5th April, and you then have just under 10 months to file your tax return and ensure any tax liabilities are settled by the deadline on 31st January.
At Personal Tax Centre, we like to have a brief meeting with you each year to discuss any changes to your circumstances and obtain a summary of your affairs over the last year. This meeting allows your accountant to ensure they have everything needed to complete and file your tax return in a timely manner. In turn, this allows you with the longest possible lead time in the event you have a tax liability to settle.
What Records Will Your Accountant Need?
For any employment income you have received in the year, you will need to provide your accountant with a P60 or a P45. Each document is a record of the income you have received from your employment in the tax year, and the tax, if any, deducted. Whether you have a P60 or a P45 will depend on if you were still employed at the end of the tax year. A P60 is provided if you are still employed at the end of the tax year, and a P45 is given when employment has ceased during the tax year. You may also be provided with a P11D by your employer. A P11D is a record of taxable benefits you have received in the year and should be given to your employer along with your other records of employment.
Whether your income is from a state or private pension, your accountant will need to know the amount of pension income you have received, and the amount of any tax deducted for each source. For a private pension, this information will be received on a P60 at the end of the tax year. However, details of state pension payments in the U.K. are often sent at the beginning of the year and no P60 equivalent is sent at year-end.
If you own shares in a company, no matter how few, it is possible that you may have received dividend income. You will need to tell your accountant which companies you own shares in, how many shares you own and how much income you received from these shares. You will also need to keep a record of when you bought them and how much you paid for the shares, as your accountant will need to know this if you come to sell your shares in the future.
Note: If you own and run your own limited company, it is likely that your accountant will already have your P60 and records of dividend income you have received from your company.
Bank Interest Received
Whilst interest is currently at a record low, you will still need to declare any interest income received from your bank or as a result of your investments. Banks will often send out a summary of interest you have been paid in a given tax year.
Note: If you hold investments through a fund or broker, you will also need to be on the lookout for a consolidated tax voucher which details the amount of any dividend or interest income you have received through your investments in the tax tear, along with the amount of any tax that may have been deducted. Even though you may not have received the income into your bank account, it may still need to feature on your tax return and your accountant will need the consolidated tax voucher to ensure all sources of income are properly declared.
Self-Employment or Partnership Income
Whether you work as a self-employed person in your own right, or you work together with another self-employed person as part of a registered partnership, your accountant will need records of the income your business has earned during the year and any expenses incurred along the way. The reason your accountant will need an accurate picture of both your income and your expenses is to calculate your profit for the year, which will be the basis for calculating any tax due. The records you will need to provide will vary depending on how your business is run, but the items generally required are:
- Sales Invoices
- Purchase Invoices
- Bank and credit card statements
- Cheque and paying in books
- Details of any items paid from petty cash
- Copies of any new lease or finance agreements
- VAT returns and workings, if applicable
- PAYE and payroll records – including Construction Industry Scheme recrods for contractors.
Note: By keeping an up-to-date record of your income and expenses throughout the year, you not only avoid having to rush at the end of the year, but you will also save money as your accountant will be able to use these records to save time. It is also good practice to keep your records up to date as it allows you to become more familiar with the workings of your business and to spot any potential problems ahead of time. For clients that see the advantages of keeping their records up to date, but do not wish to do it themselves, engaging a bookkeeper can be a great way to maintain your records throughout the year.
Whether you rent your old house out to a friend or have a multi-property portfolio, your accountant will need to see records or the income you have received from your property rentals in the year, along with any expenses incurred. Your accountant will need as much information as possible regarding the expenses you have incurred, and to which property they relate, as how and when you receive relief for these expenses can vary quite significantly.
Note: For both self-employed businesses and those receiving rental income, it is also good practice to use a separate bank account to ensure there is a clear line between your personal expenses and those relating to your business or rental income. This will not only bring an additional level of clarity but will also save your accountant time, which in turn will save you money on their fees.
Capital Gains Tax
When disposing of an asset, such as company shares or a rental property, you may have to pay tax if the price you sell the asset for is higher than the price you paid. However, reliefs may be applied to decrease the taxable amount of the gain. To determine which reliefs may be applicable, your accountant will need to know the type of asset, the dates of its purchase and sale, your cost, and the price you sold it for. You should also inform your accountant of any other expense incurred in the purchase and sale of the asset. For a property, you should include any dates you lived in the property during your period of ownership and any major works or repairs to the property.
Payments to a Private Pension
Your accountant will need to know about any payments you have made to your private pension to ensure you gain the advantage of any additional tax relief available.
Charitable Donations Including Gift Aid
Your accountant will need to know about any charitable donations made during the year where you have elected to include Gift Aid. They will need to know how much you donated and to which charity. This will allow the charity to claim an additional 25p for every £1 you donate and could also provide you with additional tax relief. However, it should be noted that to be eligible to include Gift Aid in your donation, you must pay enough tax for the year to cover the amount of Gift Aid included in your donations.
Any ‘Other Income’
You should notify your accountant of any other sources of income received in the year to ensure they are properly declared. Whilst you may think a source of income is not taxable, your accountant will be able to apply the relevant rules and criteria necessary to make that determination.
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