The dreaded tax bill - it's that time of year again!

05th January 2017

It’s that time of year again! The dreaded tax bill has to be paid and you may need to start saving for the next one that’s due at the end of July.

According to HMRC, 6,214 people submitted their self-assessment form on Christmas Eve, 1,944 on Christmas Day and 6,200 on Boxing Day. But if you were enjoying your Christmas too much to do your tax return, you need to beat the online deadline of 31st January.

If you submit a paper form, I’m afraid you’re already too late, as the deadline was 31 October. If you have missed it, you are likely to be in for a fine, unless you have a genuine excuse. However, before you start wracking your brains for a good one, HMRC have released a list of some cracking excuses that have not been accepted! (Alternatively of course, you can file your return online, but you will still need to hurry so you can can complete the necessary registration process.)

These include:

1.    “My tax return was on my yacht…which caught fire”

2.    “A wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed”

3.    “My wife helps me with my tax return, but she had a headache for ten days”

4.    “My dog ate my tax return…and all of the reminders”

5.    “I couldn’t complete my tax return, because my husband left me and took our accountant with him. I am currently trying to find a new accountant”

6.    “My child scribbled all over the tax return, so I wasn’t able to send it back”

7.    “I work for myself, but a colleague borrowed my tax return to photocopy it and lost it”

8.    “My husband told me the deadline was the 31 March”

9.    “My internet connection failed”

10. “The postman doesn’t deliver to my house”

But on a serious note, hopefully forward planning has helped you to have the funds available to pay the tax due – but as you may well have another bill in July, it’s time to consider where to place these funds, to make sure you are not caught short.

You want to make sure that you are making your money work as hard as possible, so you’ll need a competitive savings account – don’t just leave it in the bank. Even though it’s just for six months, it’s better for you to benefit from as much interest as you can, rather than your bank keeping it.

Notice accounts are currently paying better rates of interest than easy access accounts and if you are acting now, you should have time to open an account and give notice so that the funds are available for July. At the moment, the best rate is a 90 days’ notice account with Secure Trust Bank paying 1.32% AER. Check out our Best Buy table for more options. One thing to confirm when opening a notice account, is that you can put the funds on notice immediately if necessary, as some providers may not allow this.

If you don’t want the risk of forgetting to give the required notice, then an easy access account is likely to be the most appropriate. At the moment, the best easy access account is paying 1.01% gross – so don’t accept less by leaving it in the bank. For example, the HSBC Flexible Saver will be paying 0.01% from 25th January (reducing from the heady heights of the current rate of 0.05%). On £10,000 this would mean interest of just 50p over the next six months, rather than £50.

Of course there are also High Interest Current Accounts that we've mentioned before. These pay much higher rates of up to 5% AER but usually come with a number of terms and conditions and often will only pay the advertised rate on a small balance. Look at our Best Buy Table to see if any of these would suit you. 

Finally, Premium Bonds from National Savings and Investments could also be of interest. The maximum that can be invested is now £50,000 per person (single names only) and this can be accessed on an easy access basis. It’s a unique product as rather than paying an interest rate, your money is put into a prize draw and each month you may therefore win one or more cash prizes of between £25 and £1 million. Of course, you may win nothing, but that’s the gamble. On the above example of 1.01% interest, with a £50,000 deposit, you could miss out on around £250 gross interest over the next six months if you win no premium bond prizes at all – but you never know what you might win……..

If you’d like to talk through your options, call one of our savings experts on 0800 321 3581 – we’d love to talk to you.

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