So if you need to complete a tax return what information do you need?  A list of the common items follows:

1. End of year P60 from your employer (you should have this by May each year) and any pensions or benefits received
2. Benefit in kind form P11D from your employer (by July)
3. Details of interest received on all current and savings accounts
4. Details of all dividends received (including those from your business)
5. Profits from your trade if self employed
6. Details of rental income net of relevant expenses
7. Details of any capital gains on sale of assets

You can also get tax relief for some items:

1. Personal pension contributions
2. Payments made under gift aid
3. If employed certain expenses incurred wholly, exclusively and necessarily for your employers business may be allowable (this includes 40p/mile, for business mileage upto 10k miles, even if you are paid less than that)

The easiest way to collect these is to put them into an envelope as they arrive then you can complete your tax return as soon as you have collected everything.  This list includes all of the more usual items however you should ask your accountant if you have any specific questions.

We hope you find the contents of this blog useful, you should of course always seek professional advice for your specific needs.  Alastair Wood, AW Accounting  – Accountants who “speak your language”

1. For the wife to be paid a small amount, she was involved in a number of administrative roles within the business.  This has to be restricted to £95 per week otherwise the Carer Allowance would be restricted.  A matter of note is that if you are in receipt of Carer Allowance, all of your basic NI contributions are covered.
2. As the client made large contributions under Gift Aid his basic rate tax band was already in excess of £37400 limit.  His income could therefore go up to this greater limit without paying tax at the higher rate.  Clearly if he wished to and had the finances he could increase the amount given under gift aid to increase this further.
3. He wished to make a pension contribution and having planned in advance of the end of the tax year, I was able to advise him of how much he could pay to avoid having to pay higher rate tax by extending his basic rate band further.
4. He did not necessarily want to make too large a pension contribution as he is approaching retirement age so he now has the choice to make a smaller pension contribution and potentially fully utilise his ISA allowance of £10,200 for 2009/10.
5. He had not been advised on what expenses he could claim on his company and I was able to assist him in this area, covering items such as use of home as office, and claiming the mileage rate.  He had also just gone over the VAT limit, a fact he could easily have missed as he had excluded part of his income.
6. He has now secured a full time PAYE position so the company may or not be retained but the moral of the story is to get advice early to make sure you:
   1. do not miss out on opportunities and
   2. also avoid the pitfalls.

We hope you find the contents of this blog useful, you should of course always seek professional advice for your specific needs.  Alastair Wood, AW Accounting  – Accountants who “speak your language”

Mileage rate

In order to work out the tax relief on the pure mileage rate it is simply a matter of multiplying the business mileage by the 40p per mile for the first 10k miles and 25p on mileage over 10k per annum.  This figure is fully allowable for tax purposes.

Business Proportion of Actual Costs

Working out the tax relief based on actual costs is a little more involved.  First all of the expenses need to be identified including:

• Fuel
• Insurance
• Road Fund Licence
• Servicing and repairs and MoT
• Finance interest (if purchasing under finance)

To these you can add leasing costs, or capital allowances (a measure of the depreciation allowable for tax purposes).  In line with government policy each of these are more beneficial for low emission vehicles (<160g CO2):

Lease costs are restricted by 15% if emissions are greater than 160g, but allowable in full if less than 160g.

Capital allowances are a percentage calculated on the cost of the vehicle purchased or the value brought forward from the previous year.  The allowance is 20% if the emissions are less than 160g and only 10% if more than 160g (also a special 100% allowance for vehicles with emissions less than 110g).  This allowance is deducted from the cost or written down value each year so the allowance reduces over time.

Once all of the costs have been identified it is simply a matter of pro rata the costs for the proportion of business mileage, which is then allowable for tax purposes.  As noted above capital allowances will reduce year on year so you should estimate future years too.  It is then simply a matter of seeing which option offers the most tax relief.  In broad terms if running costs are low and business mileage a small proportion, then the mileage rate will probably be beneficial.  You should however always seek advice to make sure all circumstances have been considered.