Accountant

The five minute guide for Self-assessment Tax Return

Preamble

The deadline for filing and submitting your self-assessment tax return for the last tax year (6/4/2014‒5/4/2015) is now only a matter of days away, there is no time left to procrastinate.

You can call your accountant today and get help, or you can go the DIY route, whichever route you go for, you’ve got get it done fast. Here are some of the fines and penalties for late filing and late payment; late filing penalties are worse, with potential to leave a gaping crater in your finances.

The self-assessment tax return

A self-assessment tax return (also known as the SA100), is HMRC’s main form to collect information on income and check tax liability for the past tax year. Self-assessment is used by self-employed taxpayers, but a range of income streams must be detailed on a self-assessment tax return, even if your main income is taxed at source through PAYE. These include:

  • Self-employed
  • Partner in a business partnership
  • A company director
  • Annual income over £100,000
  • Sold a second home, share, or other chargeable assets, e.g. personal possessions worth £6,000 or more
  • (excluding your car) and CGT is due
  • Income from goods sold online
  • Income from savings or investments over £10,000 that hasn’t been taxed at source
  • Income over £2,500 (e.g. rental income) that hasn’t been taxed at source
  • To claim expenses or tax reliefs
  • You or your partner receive child benefit and your income is over £50,000
  • Income from overseas liable to UK tax
  • Income from trusts, settlements, or an estate
  • Lived or worked abroad or not a permanent UK resident
  • A trustee of a trust or registered pension scheme

Note: You will probably not receive notification from HMRC to complete a self-assessment tax return unless you are self-employed. However, if you earn income from any of the above sources, and you think you may need to complete a tax return, take action NOW! Refer to our blog on the arsenal of new HMRC powers to investigate your earnings not taxed at source, and see for yourself why trying to hide income is just not worth it.

Deadline

The deadline to file a self-assessment tax return online for the 2014‒15 tax year is 31 January 2016, a matter of days away. This is also the deadline to pay any tax owed, and there are penalties for not paying what is owed by the deadline.

Getting started

To file and submit a tax return online you must register with HMRC. This should have been done by 5 October 2015, but if you have not yet registered, you may still be able to do so, but it is important you contact HMRC directly to register NOW.

When you have registered for online services, HMRC send an activation code by post, but this can take up to ten days. Once the code arrives, you must activate the account within 28 days or it will expire, in which case you will need to request another one. If you have mislaid your self-assessment online account user ID and password, you can request a replacement online.

Do you believe you have nothing to pay?

If in doubt or tempted to ignore income, don’t just avoid it, ask you accountant or let HMRC be the judge of whether it should be taxed! Should you believe you owe nothing in tax or that you have already overpaid, but earned income not taxed at source, then see your accountant or declare it to HMRC. If self-employed, and in receipt of a notification to file a tax return from HMRC, you must submit a return by the 31 January deadline or pay a fine and penalties. This applies even if you are an employee and all your income is taxed through PAYE.

Do you believe you have over-paid?

If it turns out you have overpaid tax, HMRC will send you a tax rebate when your return has been processed.

Missed deadlines

There is an immediate £100 penalty (whether you owe tax or not) and additional daily penalties of £10 the longer you delay, plus interest on what you owe for late, missed, forgotten or ignored tax return deadlines and payment of what you owe. In most cases, no amount of pleading after the deadline will make any difference. If you are unable to file your tax return online by 31/01/2016, there may still be time to offer a reasonable excuse to persuade HMRC to waive the penalty. Few excuses for late filing are accept to HMRC, among the exceptions are the recent death of a partner or an unexpected stay in hospital.

Self-assessment tax return, before you start

Familiarise yourself with all the questions, and make sure you understand everything before you start.

Check you have your HMRC code to hand.

Paperwork

Make sure you have all the necessary information to hand.

Details of your income

  • P60 (if you earned more than £8,500),
  • P11D (which outlines details of expenses and benefits
  • Payslips
  • Interest statements from banks and building societies
  • Details of pension contributions made
  • Information about Gift Aid donations

Filling in your return

Log on to HMRC online tax return

Checking personal details

  • Begin to fill in the sections relevant to you and your circumstances (HMRC’s system reacts to your answers as you input them, e.g. sections not relevant to you disappear).
  • HMRC online provides reminders about where to find the figures to fill in particular sections, i.e. on P11D, P60, or payslips. It is as well to have read and have to hand the guidance notes.
  • Self-assessment taxpayers should report everything earned over the tax year from 6/4/2014‒5/4/2015, including income from employment, self-employment, property sale, or rental, and interest and gains on savings and investments (see list above).
  • Tax is calculated automatically as the return is filled in.
  • You can save the online tax return at any time and return to it later.
  • Obvious mistakes are highlighted by the software

Check your return

When you have completed your return, check it, to make sure all the information and figures are correct and there are no gaps.

Send your return

Do not forget to press send.

Confirmation

You will receive an on-screen confirmation message that your tax return has been received, together with a reference number from HMRC.

Help!

For help filling in your tax return visit the self-assessment tax return page on the HMRC website or call the helpline on 0300 200 3310.

Accountants

There’s still time to ask an accountant if you need help you get your self assessment tax return filed on time.

Problems paying what you owe

File a tax return even if the amount due is impossible to pay immediately; fines for late payment are a lot lower than fines for late filing.

Visit HMRC’s Business Payment Support Service or call 0300 200 3835 to defer payment of tax liability on the due date. NOW, get started, and good luck.

About the Author:

Sumit Agarwal
, A specialist accountant and tax adviser for freelancers, contractors and small businesses since 2005, He is an expert in business growth and development strategies. A renowned tax expert for owner managed businesses and contractors, He won the British Business Forum’s Young Entrepreneur Award in September 2012, presented at the House of Commons by MP Vrinder Sharma.