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Interest and Dividends - 2016/17 Tax returns

Interest and Dividend entries on 2016/17 Tax Returns

Relative to designing tax return questionnaires for clients - does anyone know yet whether (in view of the new dividends and personal savings allowances) any concessions are to be made in terms of not needing to report small amounts of interest and /or dividends on 2016/2017 personal tax returns.

As income covered by these allowances still counts towards establishing whether the person is a higher rate taxpayer, it does not seem to be that easy to frame any concession.  On the other hand - to have millions of (clearly) basic rate taxpayers scrambling round bank statements and dividend vouchers to quantify relatively minor amounts of income of these types seems rather pointless.   

In previous years - draft tax returns have been available on the HMRC website by now to check on this sort of thing  - but not (as far as I can see) this year.

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By Mr_awol
27th Jan 2017 08:34

Do you mean a concession from the requirement to file a Tax Return, or a concession from declaring it for someone who has to file anyway?

TBH I think an official concession would be more hassle than its worth. I currently chuck in a £5 estimate for BR taxpayers if they are certain that their bank interest is less than that, and will continue to do so - but if anyone is getting more than that I expect them to tell me how much it was. It's not exactly a chore.

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27th Jan 2017 08:35

I shouldn't think so. It has always been the case that if you complete a tax return you should include all the income that is taxable, even if it is covered by an allowance. For instance, you would not omit small amounts of income from a return just because they were covered by Personal Allowances.

I would not expect any concessions on reporting, especially with HMRC's Connect system being so crucial to their strategy of closing the tax gap - I am sure they will expect all entries to be complete in line with their external source records.

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27th Jan 2017 09:46

Agreed.

If you start omitting dividends and income covered by allowances, you would need to consider omitting salary covered by your personal allowance - the theory is just silly.

A Tax Return should (and always will be) a record of ALL of your taxable income.

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27th Jan 2017 09:52

Has no-one the patience to wait and see any more?

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to lionofludesch
27th Jan 2017 11:36

Exactly. And even if it is only in connection with checklists, how will you know that the dividends or interest are in the exempt band unless you ask?

Perhaps there's going to be a box to tick called "same as last year!"

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27th Jan 2017 11:12

Hopefully, when the new agents online facility is rolled out, we will have access to savings interest paid.

Dividends should already be made known to agents as part of preparing tax returns, so surely it doesn't require any extra info?

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to legerman
27th Jan 2017 11:26

legerman wrote:

Hopefully, when the new agents online facility is rolled out, we will have access to savings interest paid.

Dividends should already be made known to agents as part of preparing tax returns, so surely it doesn't require any extra info?

Well, you may have overlooked a possible scenario. I don't audit all the companies in which my clients hold shares.

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to lionofludesch
27th Jan 2017 15:58

lionofludesch wrote:

Well, you may have overlooked a possible scenario. I don't audit all the companies in which my clients hold shares.

One of the questions on the tax return is "Did you receive any dividends from uk companies....." so shouldn't the client already be notifying us if they have received dividends? Obviously the client needs to be asked the question but my earlier point was that this hasn't changed between 15/16 and 16/17, we still need to know the amount of dividends received.

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27th Jan 2017 11:58

Not to mention that neither dividends nor interest are exempt from tax, but are merely taxed at 0% within the "allowances". Even though they don't directly attract a tax liability, they could cause income to be nudged into the next tax band.

Deliberately leaving them off Returns would potentially be evading tax.

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to SteLacca
27th Jan 2017 14:19

Thanks for the responses - even though none of you seem very keen on my idea. I am not suggesting 'deliberately leaving' income off returns or 'evading tax' (as SteLacca opines). I was thinking maybe something like a tax return question as 'If your total income is less than £35000 and your total interest and dividend income is less than £500 - tick this box ____. Otherwise enter the actual totals in the following boxes'. This would save quite a lot of people time and trouble (and perhaps even accountancy fees - but are we allowed to say that on this site?)

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to John Stone
27th Jan 2017 14:54

What's the point? You have to work out your income to know that, once you've worked it out just stick it in the box.

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to Duggimon
27th Jan 2017 16:16

So - self employed accounts done - profit £30000. Client has (say)10 different accounts - approximate interest totalling (say) £50. Why should he (or more likely me) have to dig them all out and add em up? Pointless and a waste of money. Why not just tick the box I mentioned?

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27th Jan 2017 16:46

Self-employed page completed. You tick a box to say he has inconsequential interest. HMRC open an enquiry and find another £30,000 of undeclared income, and a secret bank account with another £900 interest.

Who's responsible for the failure, then? Him, you, or are you jointly responsible?

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to SteLacca
29th Jan 2017 19:39

Your point is completely irrelevant. The client signs the Return including the box which says his interest is less than (say) £500. If that (or any other entry on the Return) is incorrect - the client is responsible. Just as he would be now. My proposal does not affect this position one jot. It just saves a lot of (honest) people from a completely pointless waste of time and expense totting up income which is never ever going to be taxed.

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to John Stone
29th Jan 2017 21:06

They could all have done that totting up in the time this thread has been going.

HMRC are the people you need to raise this idea with.

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By SXGuy
30th Jan 2017 11:08

There seems to be 2 questions in this. 1 being does he have to declare it. And 2 why should he.

First answer is yes. 2nd answer is because all income has to be declared regardless of whether its taxable, if you are required to file a tax return.

I think it's pointless adding pension information since hmrc already know it, but at the same time I still need to know it in order to calculate a client's overall tax position. By entering that info in to the tax return it at least demonstrates the agent has bothered to do his job properly or not, if nothing else.

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31st Jan 2017 09:01

Very impressed John Stone that you are thinking about 2016/17 Tax Returns at this time of year.

Personally, I am sick of the sight of them and once today is over have a month off thinking about them.

HMRC may well include a box that if interest and dividends are below X they do not need including. They will probably issue the draft 2017 Return on 31/03/17, so we will have to wait and see.

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