I was working with a landlord client today getting the final information for their tax return and something strange happened.
They told me that they would rather overpay income tax than have HMRC look in to their affairs. Now you might say that is a reasonable approach if you have huge complex affairs and the amount involved in minor.
This however was a landlord with two rentals. They didn’t think it was worth claiming the interest they pay on their mortgage because in their own words “It isn’t much. It won’t make any difference.”. They then told me that they would rather overpay than have any hassle.
The interest was just over £2,500 a year. That would reduce their tax by £500! They also didn’t claim on their 2023 tax return! Another £500!
Adding the interest took a few seconds and amending the 2023 return (before 31st January!) will take maybe 10 minutes as all they have to do is log in to their digital tax account and amend it.
In a stroke they have anon tax back each year to entirely pay their fees for tax return services! Handy!
Always claim the right expenses. As much as overpaying can seem like a safer option there really isn’t any risk at all in claiming legitimate expenses. Ironically if you don’t claim something, and HMRC run your number through their ratio testing, that could through up an enquiry for a completely different reason! If your figures don’t look believable because you are manipulating them that is far more dangerous.