Updated 11 October 2021
Tax returns are a headache – let’s make it less of one. Our quick-fire tips will help you keep on top of your responsibilities, so you don’t face a last-minute panic or, even worse, a fine from HMRC.
It is your responsibility to make sure you’re paying the right tax. And there are penalties for getting it wrong. If you’re not paying enough tax, or you miss important deadlines, you could face a fee and be charged interest. Alternatively, if you’re not making the most of allowances and reliefs, you could find yourself paying too much in tax.
With such an important bill relying on the accuracy of your admin, it’s understandable why tax return time is one of the most stressful in the calendar.
Not everyone needs to fill out a Self Assessment tax return, but lots of people do. For example, if you’re self-employed, earning additional income (such as from renting out a property), or earning over a certain amount and claiming child benefit. Some jobs require you to do a Self Assessment tax return, such as if you’re a trustee of a trust or a pension scheme, or if your taxable income is over £100,000. You’re also obliged to fill out a tax return if you’re required to pay capital gains tax.
This is not an exhaustive list, so it’s important to double check whether you need to fill one out. You can find the full list here.
No, you can ask an accountant to do your tax return for you. There’s a misconception that accountants just help businesses and extremely wealthy people, when, in fact, they help all kinds of people with personal finance matters too.
As well as filling in the tax return and taking you through the process of paying your bill, they will also make sure you’re not paying more tax than you need to, meaning they can help you make considerable savings. The amount you pay for your accountant can also be counted as an expense to offset your tax bill.
If you’re still considering doing your tax return yourself, here are a few pointers to watch out for.
Tax returns carry multiple deadlines. You normally have six months from the end of the tax year to register for the first time, until the end of that month (October) to send your paper return, and then until the end of the following January to fill your return online and pay your bill. There is also another payment deadline (in July) for making advance payments before your bill. So, for the tax year 2020/21, this works out as:
Register – by 5th October 2021
Submit paper return – by midnight 31st October 2021
Submit online return – by midnight 31st January 2022
Pay the tax you owe – by midnight 31st January 2022
Make advance payment for following tax year bill – by midnight 31st July 2022
Watch out for these deadlines. Miss the payment deadline, for example, and you could face a £100 penalty. If you’re down to the wire on payment day, choose a fast payment method such as a CHAPS, via an online or phone bank transfer or in person at the bank. These will go through quicker than a cheque, for example.
You’ll need to submit a lot of information in your tax return – much of which will be obvious details like your name. Before you sit down to fill it out, it’s worthwhile digging around for the information you need as this can take some time to gather. Make sure you have accurate information about:
Your income for the tax year
Contributions you’ve made to charity or pensions that may be eligible for tax relief
It’s also helpful to have your NI number, Unique Taxpayer Reference (UTR) and P60 at hand.
Any accountant will say how important it is to keep receipts for anything you buy that relates to income you make. This is because you may be able to use your expenses to bring down your tax bill, and having the receipts makes it much easier to calculate the total amount.
There are all kinds of expenses that you can claim, such as those for work-related travel, equipment, professional services, stock and more. The list is long, so do investigate what you can and can’t include.
If you’re self-employed and your turnover is more than £85,000, you’ll need to break down your expenses into different categories and a total amount. That’s where your receipts are essential. HMRC might also ask to see them as evidence.
Even if an accountant is going to do your Self Assessment tax return for you, they will ask you to keep hold of your receipts.
There are a few sections to the tax return, and you may not need to fill them all in. It helps to know exactly which sections apply to you, as this can make the whole process a little less daunting. The sections are:
SA100 – this is the main section, covering things like pension contributions, benefits, income from dividends and interest
You may also need to fill in the following sections:
SA103 – if you’re self-employed
SA105 – if you receive income from a property
SA108 – if you have capital gains to declare
SA200 – if HMRC sends this short tax return form to you (HMRC doesn’t send it to everyone)
Filling out a tax return is a lengthy process. Tired eyes can lead to mistakes on this important form, so it’s helpful to leave yourself plenty of time. That way, you can save your progress when you’ve had enough for one day and return to it later. You’ll also get the chance to check that all details are correct before you submit it, and you should use this time wisely to carefully double-check all your sums.
If you do make a mistake on your tax return, and you’ve already hit submit, it’s possible to amend it before the filing deadline of the year after. So, if your submission deadline was 31st January 2021, you’d need to make the amendment by 31st January 2022.
Paying your tax bill isn’t always as simple as just making the payment by the deadline listed. Your bill may include more than one payment:
Balancing payment – this is the amount of tax you owe for the previous tax year
Payments on account – if your bill is over £1,000, it will include this additional payment to make towards next year’s bill (this doesn’t apply if you’ve already paid 80% of your bill)
Your payments on account are half of your previous year’s tax bill. You make two of them – one by 31st January and the other by 31st July. If you still have tax left to pay, this will be added to next year’s balancing payment.
Feeling overwhelmed? You’re not alone – tax returns are complicated and time consuming. If you’re worried about getting it wrong, we suggest asking an accountant to take you through the process. Find your expert accountant on Unbiased.
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