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Employees and Directors Tax Return

Are you an employee or a director and need to complete a tax return?

1. Complete your tax return
2. Conduct a 6 year tax healthcheck to find out and obtain any tax refunds due to you. This is particularly necessary if you have had more than one employer during any tax year; have more than one employment at any one time; or have had business expenses you would like to claim tax back against.
3. A review of your national insurance contributions - If you are employed and self employed, TaxPenny will check for overpayment of NIC's and claim refunds for you.

Records which you will need to keep

If you're a UK taxpayer you should keep a record of the tax you pay each year and other records relating to your income.

Record keeping for income from employment

You should keep all documents containing details about your pay and tax that your employer provides, including:

• your P45 (keep part 1A of this)
• your P60 (pay and tax details for the tax year)
• details of your expenses and benefits, such as a company car or health insurance (your employer will give you these using form P11D)
• your payslips or pay statements
• certificates for any Taxed Award Schemes
• information about any redundancy or termination payment

You should also keep:

• A record of any tips or gratuities and details of any other taxable receipts or benefits that aren't included in any other documents. If your employer pays your tips or gratuities through a tronc system they operate, they'll deduct any tax and National Insurance due.
• Information about benefits in kind - for example meal vouchers - that you receive from anyone other than your employer in connection with your employment.

Expense records

When you're employed you may be able to claim for expenses to reduce the tax you'll have to pay. You'll need to keep records so you can include the expenses in your Self Assessment tax return.

Benefits records

You should keep any documents relating to:

• social security benefits
• Statutory Sick Pay
• Statutory Maternity Pay
• Jobseeker's Allowance

Pension records

You should keep:

• your form P160 (part 1A), which you received when you retired and started getting a pension from your former employer
• your form P60 giving details of your pension and the tax deducted
• any other details of a pension and the tax deducted from it

Interest, dividends or other income from UK savings, investments or trusts

You should keep all:

• bank and building society statements or passbooks
• statements of interest and any other income you've received from your savings and investments
• tax deduction certificates supplied by your bank
• dividend vouchers received from UK companies
• other vouchers such as scrip dividend vouchers
• unit trust tax vouchers
• life insurance chargeable event certificates
• details of any income you receive from a trust

You should also keep:

• details of exceptional amounts you've received, for example an inheritance or other windfall
• correspondence and other documentation relating to your savings and investments

Income from property

If you get income from letting out a property, you'll need to keep details of the rents you've received and the expenses you've paid. Find out more about our rental accounts service.

Foreign Income or Capital Gains

You'll need to keep any dividend vouchers, tax certificates and personal financial records. Find out more about Capital Gains.

Income from employee share schemes or share-related benefits

You should keep information on any share options awarded or share participation arrangements.

Capital gains or capital losses

You'll need to keep contracts and other documentation about assets you've bought, sold, exchanged, given away or acquired. You should also keep any bills, invoices or other evidence of payment such as bank statements and cheque stubs for the costs of buying, improving or selling assets - as well as copies of any valuations used in your calculations. More about Capital Gains here.

Business income or income from self-employment

If you're self-employed or in business there are certain records you legally have to keep. There are also good business reasons for keeping good records.

Your basic records will normally include:

• a record of all your sales, with copies of any invoices you've issued
• a record of all your business purchases and expenses
• invoices for all your business purchases and expenses, unless they're for very small amounts
• details of any amounts you personally pay into or take from the business
• copies of business bank statements

You or your accountant use these records to create a profit and loss account - which shows the sales income you've received and the expenses you've paid, and what profit/ loss you've actually made.

Capital allowances

It's helpful to keep a separate record of purchases and sales of assets that you use in the business, such as equipment. These need to be treated differently in your tax return.

You can claim capital allowances for assets, which means that rather than claiming the whole cost at the time you buy, you reclaim the cost over time.

Other records you must keep

All businesses are different and there are many specific types of detailed record that may need to be kept. Some examples of records you should keep include:

• cash book
• petty cash book
• order notes and invoices
• copy sales invoices
• details of any other business income received
• details of any private money brought into the business
• till rolls or other form of electronic record of sales
• details of any other income
• any cash taken out of the till to pay small business expenses
• bills and invoices for purchases and expenses
• a record of stock on hand at the end of the year
• all bank and building society statements, pass books, cheque stubs and paying-in slips which include details of business transactions

All this information will be useful in completing your Self Assessment return. You'll need to keep certain records and hold on to them for several years so that you can back up the information you put on your return.

How long must you keep your records? If your records are lost or destroyed

If you're not running a business you'll normally have to keep your records for at least 22 months from the end of the tax year to which they relate. For example a form P60 for the tax year 2006-07 mustn't be destroyed until after 31 January 2009.

It's advisable to keep documents relating to buying or improving assets until at least 22 months after the end of the tax year in which you disposed of the asset. These documents will help you calculate any capital gains or losses and answer any queries we have. For example if you dispose of an asset in February 2007 you must keep any records relating to its purchase, improvement and disposal until after 31 January 2009.

If your records are lost or destroyed

If your records are lost or destroyed and you can't replace them you must tell us what has happened and do your best to recreate them.

Once you've gathered replacement information you use this to complete your tax return. You must tell us whether any provisional figures are:

• estimated figures - you want us to accept these as final figures
• provisional figures - you are using these until you can confirm the figures (you must tell us when you will be supplying actual figures)

If you make adjustments at a later date and you've underpaid tax there may be interest and penalties to pay.

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