You can file your Self Assessment tax return as soon as the tax year ends on 5 April and at any point up to the 31 January deadline. But many taxpayers still leave it until the last minute and January is a very busy time for accountants. Whether you are super-organised or panicking about getting your figures together in time, here’s all you need to know about tax returns.
A tax return is a document that is sent to HMRC to provide information about a taxpayer’s income. Depending on your situation, it might include details of money earned from self-employment, pension income or funds received from interest on savings, for example.
HMRC use the information provided on your tax return to calculate the amount you must pay in tax. As well as filing your return, you must also pay any money you owe by the 31 January deadline. If you miss the deadline you may have to pay a penalty.
Who needs to complete a tax return?
You should complete a Self Assessment tax return if, in the last tax year:
• You were self-employed as a sole trader with income above £1,000. Remember, you can deduct any allowable expenses from your income so you only pay tax on the profits you have made.
• You received £2,500 or more in untaxed income. This could be money you received in tips, for example, or from renting out a property. Read our recent story Property Problems: Should you be classed as a landlord? to check if this applies to you.
• Your income from savings or investments was £10,000 or more.
• You made a profit from selling chargeable assets, such as shares or a second home in which case you may be liable for Capital Gains Tax.
• You were a director of a company and received pay and/or taxable benefits.
The full list of who needs to complete a tax return can be viewed here.
Who doesn’t need to file a tax return?
If your only source of income is your wages or a pension, you usually wouldn’t need to file a tax return.
The Queen is not required to file a tax return just as she not legally obliged to pay income tax. However, she has been paying income tax and capital gains tax voluntarily since 1992.
When should you file your tax return?
You can do this at any time from the start of the new tax year on 6 April. The deadline for filing a paper tax return is 31 October and if you submit your return online you have until 31 January. That’s an extra three months to gather together all the information you need.
Filing your tax return online might not be your average Christmas Day activity but, according to HMRC, 2,590 people did just that. A total of 16,278 filled theirs in between Christmas Eve and Boxing Day.
The benefits of submitting your tax return online
90% of people now complete their tax returns online. All RfM Accountants offices provide a tax return service, so you never need to worry whether you have done it correctly.
As well as the longer deadline, you also benefit from being able to see immediately how much tax you owe, and if you have overpaid tax in the previous year and are due a repayment, this will be paid more quickly by HMRC.
Keeping good records makes it much easier to submit your tax return. If you are a small business, contractor or freelancer, using a cloud accounting package such as Xero for your bookkeeping makes it easy for you (or your accountants) to lay your hands on the figures you need. Ask your RfM accountant for more information.
You cannot pay any tax you owe by credit card
HMRC stopped accepting credit card payments from 13 January 2018 and Transcash payments through the Post Office also ended in December 2017. Therefore, you will need to pay any tax you owe with a debit card or cheque. You can read more about the announcement here.
HMRC have heard them all…
Each year, HMRC publishes a selection of the ‘best’ excuses they hear from taxpayers for missing the Self Assessment deadline. Here are some of our favourites:
- My tax return was on my yacht, which caught fire.
- A wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed.
- My wife helps me with my tax return, but she had a headache for ten days.
Needless to say, HMRC weren’t convinced by any of the above. However, you may be able to avoid a penalty if you have a genuine reason for being late.
HMRC says, “There will always be help and support available for those who have a genuine excuse for not submitting their return on time. If you think you might miss the 31 January deadline, get in touch with us now – the earlier we’re contacted, the better.”