Published in the Wigan Observer:

As 31 January is self assessment deadline many people will be rushing to complete their tax returns over the next few weeks. Last year 10% of returns were filed on the very last day alone. So it seems an opportune time to look at a few areas that will help to keep your tax bill down.

First of all the penalty regime is much harsher this year. If you are required to file a return, but don’t owe any tax, you must still file the return by the due date. Returns must also now be made on line and if you haven’t registered for on line services yet you need to do it now as the registration process takes around 10 days.

If you are self employed and do any work from home you can claim a deduction for a proportion of your household costs. Even if you just bring home some paperwork you are entitled to make a claim. A claim should be based on the proportionate use of the property for business purposes, which will be based on an assessment of time and space. In terms of space the easiest method to calculate your business proportion is to take the number of rooms used for business as a proportion of the total rooms in the house, but excluding hallways, bathrooms and kitchens. However if the rooms used for business are proportionately larger then you can make the calculation based on floor area. You can claim for items such as mortgage interest or rent, council tax, water rates, repairs, insurance, gas and electricity, telephone and cleaning. If you can make a case for a higher proportion of cost then do so, if for example your business equipment uses a disproportionate amount of electricity.

If you use your own car in your business you have two choices of method to claim a deduction. You can determine all the various costs of running the vehicle and claim on that basis, allowing for a proportion of private use, or you can claim a flat rate based on your business mileage. The rate for the year to 5 April 2011 is 40p per mile for the first 10,000 miles, and 25p thereafter. Unless you have a gas guzzler or particularly large insurance premiums due to age or claims history, then the latter will generally be more favourable. With either method it is necessary to keep mileage records and this is the only evidence that is likely to be accepted in the event of an HMRC enquiry and you must stick with the same method until you change vehicles.