What questions do you have about your tax return?
Does it even apply to you?
What’s the secret to getting the entire experience over with quickly?
We’ve put together the definitive guide to filing your tax return on time.
It might not be fun, but if you’re self-employed then it’s got to be done. You may even find you’re due a refund!
Self Assessment is a system for working out and paying tax on your income, operated by HMRC (HM Revenue & Customs – formerly known as the Inland Revenue). You only need to do a Self Assessment form if you do not pay tax on your salary through PAYE. Self Assessment tax return forms are issued every April, covering the previous 12 months (i.e. the tax year to 5 April just passed).
If you only have one job, and no income from anywhere else, you’ll probably never need to fill out one of these forms. HMRC will usually send you a tax return form automatically (or a ‘notice to complete a return’ if you normally file electronically) if you’re required to complete one. However, if you realise you do need one and they haven’t cottoned on, it’s your responsibility to ask for it.
For many people, their first brush with Self Assessment will be when they become self-employed. If you’re about to take that step, this guide from GOV.UK should point you in the right direction. Alternatively check out our article on managing your finances as a freelancer.
It’s advisable to gather all the paperwork you will need before you begin. Getting three-quarters of the way through the form only to discover that you’ve lost a crucial bit of data is guaranteed to try your patience.
And apart from anything else, if you’re required to fill in a tax return (online or on paper), keeping your paperwork up to date is actually a legal requirement.
Everyone must keep records of their income (and any capital gains) for at least 22 months after the end of the tax year.
And if you’re in business and are self-employed as a sole trader or a partner, or have rental income, you need to keep the records for at least five years and 10 months after the end of the tax year.
So, what will you need to hand? A comprehensive list of required documentation can be found here, but here’s a quick breakdown:
You don’t normally need to send any documents with your Self Assessment form. If, subsequently, HMRC do ask to see any documents, make sure you keep a photocopy.
If there’s something you need to send, make a photocopy and keep the original document in a safe place for future reference.
You should now be ready to fill in those all-important forms.
Every HMRC Self Assessment pack includes the core tax return SA100 form. On top on this, the chances are you’ll have to fill in one or more additional sections.
The extra pages you’ll need to complete will depend on your circumstances. For example, self-employed status, capital gains and rental income all require different extra forms to be completed, so fill in those that apply to you and ignore the rest.
HMRC will usually send you the forms that are relevant to you. You’ll also receive the HMRC guide to filling in your tax return (also here). It goes through the questions step by step.
However, if they don’t send you all the right bits, you can print missing forms from the HMRC website, or call the Self Assessment orderline on 0845 9000 404.
If you need help filling anything in, call HMRC’s Self Assessment helpline on 0845 9000 444. It’s open Monday to Friday from 8am to 8pm and on Saturdays from 8am to 4pm. They also provide general advice on Self Assessment.
If any of your personal details change, or if you find that you or the tax office have made a mistake, let HMRC know as soon as possible.
You can only be penalised if your return is incorrect through carelessness or you’re deliberately misstating the figures. You can be criminally convicted if you try to cheat the tax system.
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If you miss the deadline by just one day you could face a £100 penalty, regardless of whether you have no taxes to pay or have paid the tax you owe. If you don’t settle your bill immediately, you’ll also start paying further penalties and interest charges. Surcharges – effectively penalties – can apply if you’re significantly late. But if you pay all your tax on time, that can eliminate any late-filing penalty.
These are just a few of the good reasons not to leave your tax return until the last minute. If you do, there will also be no time to correct any mistakes, or to ask for help if you run into problems. Get started early; it’ll mean much less hassle for you in the long run.
If you want to send your forms by snail mail, remember that the deadline is 31 October, so allow plenty of time.
Double-check that you’ve signed and dated everything, and that you’ve included all additional pages.
And finally, remember to take a photocopy of the whole thing, in case it gets lost in the post. HMRC won’t acknowledge receipt, although it will let you know when your form’s been processed.
If you get your paper returns to HMRC by 31 October, they can calculate your tax for you.
They’ll also let you know the amount you need to pay by the following 31 January, and if you owe less than £2,000, they may be able to collect the money through your tax code rather than as one lump sum.
Firstly, there’s no hassle with paperwork and no danger of it getting ‘lost in the post’.
You also buy yourself an extra three months, with a 31 January deadline.
You receive an immediate acknowledgement, so you know it’s arrived safely, and you can save the form as you go along so you don’t have to complete it all in one sitting.
The HMRC software will automatically calculate your tax for you, and if you are owed any money by HMRC, you’re more likely to get it sooner because your form should be processed quicker!
To file your return in this way, you’ll need to register online and request an ‘activation PIN’ from the HMRC website. To do this, you’ll need your Unique Taxpayer Reference (UTR), which you’ll find on form SA100 of your tax return, and your National Insurance Number or postcode.
It can take up to a week to receive your account password and become fully registered, so don’t wait until the last minute!
For information on how to do it, check out the HMRC website.
Once you’ve completed your form, just make sure you print a copy off or save one on your computer, so you can still refer back to it if necessary.
Make sure you’ve included all the relevant pages. Once you’ve done this, send it off and wait for it to be processed to see if you owe money or are owed money.
Now you can sit back, relax, and enjoy a cuppa knowing your tax return is done and out of the way for this year.
If, however, you are finding the process less forgiving and are pulling your hair out trying to get to grips with all of those figures, get a professional to help.
The Chartered Institute of Taxation (CIOT) and the Institute of Chartered Accountants of Scotland (ICAS) have online directories of certified number crunchers. Look for someone who specialises in your area – if, for example, you’re a freelancer, you need an accountant who specialises in advising freelancers. Ask around for recommendations – particularly those working in the same kind of industry as you.
Jane Moore, from the Institute of Chartered Accountants, has a few ideas to help you along the way: