5 top tax return tips

Is there a better trigger for procrastination than completing your online tax return?


Sorting out tax paperwork is hardly the most joyous of tasks. But put it off for too long and you’ll be clobbered by financial penalties that could run into hundreds, or even thousands, of pounds. With the self-assessment tax return deadline looming, here's 5 quick-fire tips on getting the job done well before the deadline – and a warning of the pain that will follow if you don’t…

1. Start it - now!

An obvious one to kick off with.  The deadline for submitting your return online for the tax year which ended April 5, 2014, is January 31, 2015 - so doing it now is not doing it early!.

HMRC has already received 6.74 million returns (interestingly 1.4 million of which were still on paper) but A LOT of people put the job off until the last minute. HMRC reported its busiest on the actual January 31 deadline last year, when it received 569,847 returns! And with that kind of traffic of course, you can't rely on its website to run smoothly.

2. Give yourself time if filing online for the first time

If this is the first time you’ve filed your tax return online, you'll need to register to use HMRC’s online services - and this takes time.

During the registration process, you’ll be asked for your 10-digit Unique Taxpayer Reference which you'll have received when you first registered for self-assessment. It’ll also be on any letters or payslips you’ve received from HMRC.

Once you’ve registered to use HMRC’s online services, you won’t be able to use them right away. You’ll have to wait for an ‘activation code’ to arrive in the post first, which will take a least seven days. Only once you’ve got this will you be able to file your return online.

So clearly, it’s no use starting the process on January 31.

3. Get your papers in order

There are lots of different bits of paperwork you’ll need to gather together before you can file in your return.

If you’re self-employed, you’ll need:

  • Your accounts for the year
  • Invoices
  • Receipts for any expenses associated with your job
  • Common expenses you can claim for include accountancy and professional fees, travel expenses, stationery, postage, phone and internet costs

If you’re employed, you’ll need:

  • Your P60 form from your employer which states your earning for the year
  • Your P11D form, also from your employer, which shows your company benefits for the year
  • Payslips and details of any share options

If you’re an investor, you’ll need:

  • Any dividend vouchers
  • Annual tax statements from banks and building societies

If you own a property you rent out, you’ll need;

  • Rent records
  • Details and receipts for any costs such as furniture 
  • Records of allowable expenses such as buildings and contents insurance, agency fees, mortgage interest and energy bills

4. Be aware of potential fines

Fail to submit your tax return online by the January 31 deadline and you’ll be slapped with an automatic £100 fine – even if you don’t owe any tax.

But the penalties don’t end there.

“Fail to submit your tax return online by the January 31 deadline and you’ll be slapped with an automatic £100 fine – even if you don’t owe any tax...”

Once your return is late by three months, you’ll start being charged £10 daily penalties. These will be made for 90 days.

If you STILL haven’t submitted your return after this, which means it’ll now be six months late, you’ll face a further penalty of 5% of your tax bill, or £300, whichever is higher.

You’ll have racked up total fines over this period of at least £1,300 - enough to wipe out that summer holiday you were hoping to go on.

Yet another penalty of £300 or 5% of tax due is payable once the return is 12 months’ late.
There are also penalties for late payment of any tax owed ON TOP OF all the fines outlined above.

You need to pay any tax you owe by January 31, unless you make payments ‘on account’ which means you’ll make two payments a year to cover your tax bills, one by January 31 and one by July 31.

Miss the January 31 deadline and you’ll have to pay 5% of the tax owed 30 days’ after the January 31 deadline, PLUS another 5% of the tax owed if the tax still hasn’t been paid by July 31.

5. Ask for help

If you’re struggling with your return and need some advice, visit hmrc.gov.uk/sa or call the self-assessment helpline on 0845 9000 444.

If you’re still none the wiser, then your best bet is to enlist the help of a qualified accountant to do your return for you. But make sure they are a chartered certified accountant, fully qualified, insured and regulated.

You might begrudge paying for the services of a professional, but if you can't trust yourself to file your tax return correctly and on time, it will be a lot less painful and probably cheaper.

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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