Nobody likes paperwork, but not staying on top of tax and pensions life admin can cost you money in fines, fees or losing cash you're owed.
We talk to the experts for seven ways to better manage it during the next 12 months.
Make time to get on top of your pension admin
- Make a date Start simply so you know exactly when tax returns or payments are due.
- Keep an eagle eye on your expenses Knowing what you need to claim back is key for your personal tax return or as a self-employed person. There are plenty of apps such as SimpleTax and Receipt Bank and that can help.
- Sweat your savings Making your money work harder and faster should always be a top priority. If you have a pot of money sitting in the bank that's not earning much interest, it may be better to overpay some into your pension each year by topping it up.
- Focus on your forecasts Knowing what you'll receive when you retire and how much you will need – and whether there's a shortfall – is crucial. At the start of each tax year, update those figures.
- Try out some new tech If you've oversaved without even thinking about it, you can deal with bigger than expected tax bills calmly.
- Be in the know With the government regularly updating tax and pensions law, and potentially the age at which you can retire, it's important to know the latest news from the Treasury. You can mark the date of the Chancellor's Budget and Autumn Statement in your diary – these are usually in March and November.
- Know your limits If you have money to save then an ISA will help you boost for savings with tax free interest. Each year you'll get a new personal allowance, currently £20,000. Pension contributions are capped at £60,000.
‘Don’t leave them until the last minute as that’s when more mistakes are made,’ says Mariah Tompkins, founder and owner of WKM Accountancy Services (@wkmaccountancy). ‘Tax returns are issued in April and you have until January the following year to complete them.
‘We normally advise clients to prepare the paperwork so that by the end of June all tax returns are submitted; this is also beneficial for those who have to claim tax credit by end of July,’ she adds.
Top tip: Set a reminder on your phone for two months before, a month before and two weeks before the tax returns date. Not gone digital with your diarising yet? Use colour coding in your calendar like traffic lights. Two months before the due date colour it green, one month before use orange and two weeks before mark in red so your mind knows it's urgent.
‘Keeping up to date with recording your income and expenses gives you a real-time view of your tax liability. Lost receipts can prove costly over time,’ says tax expert Mike Parkes, of the SimpleTax app (@GoSimpleTax).
This handy government guide gives a good overview of what records and notes you should be keeping to do your tax return.
Top tip: Even if you're not claiming back expenses, it still pays to keep paperwork in order. Use an alphabetical filing system to instantly lay your hands on relevant documents.
That means it's crucial to keep a detailed look at what's saved in the bank for a rainy day and what you can do without from both your savings and your regular income.
Top tip: Always seek professional advice on your tax liabilities from financial experts, as it may be more beneficial for your future to overpay your mortgage rather than pension.
If you’re in a defined benefit scheme then you should receive an annual pension statement from your provider(s) so always make sure they have your latest address details should you move during the life of your pension.
Also be clear on what your State Pension entitlement is and given recent changes, what age you are due to receive it.
Top tip: Call us geeky but, as far as we’re concerned, nothing beats a good spreadsheet. If you’re struggling to create your own, Microsoft have a great personal budget spreadsheet that you can download and repurpose. Alternatively, you can try a pension calculator to work out how much income you could get from your pension pot.
‘People haven’t changed their savings approach for decades. They think of chunks of money leaving accounts at the beginning or end of each month but it doesn’t have to be this way,’ says Victor Trokoudes, of personal savings assistant Plum (@withplum), which is linked to your current account and sends you alerts to Facebook Messenger showing how much you're saving.
‘Our app calculates how much you can afford to put aside based on your spending data and transfer over small amounts every couple of days,’ he adds.
Top tip: Often online banking offers a sweep function – just ring up to ask if your account has this facility. This can push an amount you choose from your current account to savings at regular intervals meaning spare change can soon mount up.
Top tip: Why not set up something simple, like a Google Alert, to send you an email when there's a pension or tax story in the news? You can even create a keyword for when your own pensions provider is mentioned.
‘It’s crucial to keep these numbers in mind when planning your tax and pensions admin. You need to be sure you have fully utilised your annual pension contribution allowance so your pot can achieve full tax relief and grow tax-free, says Will Taylor, an accountant and founder of Brighton-based Will Taylor Chartered Accountants (@wi11taylor).
Top tip: If you have income from land and property, you must now detail and record all your repairs expenses given the generic ‘wear and tear’ allowance has been removed. You will need to substantiate all such costs so track them on a spreadsheet and keep the receipts or, better still, use digital receipt apps like Receipt Bank to automate and save clutter.
