Everything you need to know about Self Assessment tax return as the deadline approaches

You have until January 31.

For the almost 12 million people who fill in a Self Assessment tax return each year, January 31 is an important deadline.

This is the day by which you must both file the return itself and pay any tax owed to the HMRC or risk a series of heavy and escalating penalties.

If you still haven’t filled in your form, but think you need to do so, or if you’re wondering about how to pay the tax owed, this guide should help you to ensure that you get your return in on time and are able to access a payment scheme if needed.

Don’t delay getting started ‘If you’re worried about affording your tax bill, it’s tempting to put your tax return off altogether, but it’s essential you get cracking and hit the deadline,’ says Sarah Coles at Hargreaves Lansdown.

Those who prevaricate, she warns, may miss the chance to set up an arrangement to pay their tax in installments, and will be hit by an initial late filing penalty of £100, which escalates as time passes.

The first step is to check you can access the HMRC system to fill in the form – something you should check as soon as possible, since if you don’t have the details you may need to get them posted to you.

In order to use the system, you will need your Unique Taxpayer Reference Number and your password.

If you don’t know them there are ways to retrieve them on the HMRC website, and you can usually receive them online if you still have access to the email you signed up with. If not, getting a new reference number can take up to ten days in the post.

If you haven’t filed online before, it can take ten days to receive a Unique Taxpayer Number and activation code in two separate letters. You can register here.

Jamie Morrison, head of private client at accountancy firm HW Fisher, says it is particularly important to get started quickly if you think you might need help, especially since the deadline is a Sunday this year and HMRC helplines are closed at weekends.

‘Allow time to speak to an adviser if you need,’ he says.

Gather your paperwork

The amount of paperwork you need to fill in a tax return will depend on whether you are employed or self-employed, and what your sources of income are.

‘Gathering paperwork takes longer than you think,’ says Jamie at HW Fisher. He says that if you are employed you will need a number of forms from your employer.

‘This includes your P60, which will confirm the total tax you have paid on your income. You will also need a record of benefits and expenses, which can be found on your P11D or P9D forms. If you have left a job in the last tax year, you will also need a P45 from your previous employer.’

If you are self-employed, the process is slightly more complicated. If you work as a director of a limited company, you will need to include salary and dividends received through the company on your personal tax return, as well as filling in a company one, so you will need these details.

If you are a sole trader you will need to declare business earnings and expenses on your self-assessment form. You will also need details of any money you pay into pensions, any income you receive from property rentals or investments, and any interest from savings. If you give money to charity, have these details available, too.

Claim everything you can

Once you’ve filled in the easy parts of your tax form, such as your national insurance number, employment status and the information from your P60 or your company accounts, it is time to ensure you are not paying too much.

If you are a higher rate taxpayer, one of the most important things to check is whether you are entitled to claim higher rate pension tax relief.

In many cases, your pension provider will be adding back only 20% basic rate tax onto your pension contributions, when you are entitled to 40% if you pay higher rate tax.

This applies to private pensions, and some workplace pensions too, depending on how they are run.

Sarah, at Hargreaves Lansdowne, says that workplace pensions run through a trust or though salary sacrifice give 40% tax relief automatically, but other types only give 20% and the rest must be reclaimed on your tax return.

‘If you don’t know how your scheme is run, ask your HR department,’ she advises.

‘This is a major area of confusion, which means an awful lot of higher rate taxpayers have no idea whether or not they’re getting 40% relief. This could be costing them hundreds – or even thousands.’

If you pay tax at a higher rate, you should also ensure you claim Gift Aid on any charitable giving.

Financial planner Sean McCann at NFU Mutual explains that the amounts you claim can add up. 

‘If you’ve given to charity via gift aid and you pay higher rate tax, you can claim back additional tax relief through your tax return. As an example, if you donate £100 via gift aid, the charity will claim an additional £25, to make the total gift £125. If you pay 40%, you can reclaim £25,’ he says.

Even if you’ve just sponsored some friends to do a challenge, such as a walk, the donations can be added to your tax return to reclaim higher rate tax.

There are other expenses you can claim, too, such as the cost of professional subscription.

‘If you need to be a member of a professional organisation to do your job, and your employer hasn’t paid the subscription for you, you may be able to claim tax relief on the cost. There is a long list of approved professional organisations on HMRC’s website,’ explains Sean, at NFU.

If you are self-employed or working from home, there are many other expenses you can claim.

There’s a list on the government website of allowable expenses here.

If in doubt, estimate and correct later If you are approaching the deadline and still waiting for paperwork, don’t file late. Instead, estimate a likely figure for the missing section, and amend it later, after filing.

If you file your returns online you are able to do this by signing into your account and following the steps outlined here, before filing the return again. You can do this for the last four years’ worth of tax returns if you think you have missed claiming any expenses.

Be careful with Child Benefit

If you claim Child Benefit as a family, it is important to make sure you record this correctly on your tax form. That is because if anyone in your household has an income of over £50,000 and there is a Child Benefit claimant in the house you have to start paying it back.

For every £100 of income you have over £50,000 you pay one per cent of the child benefit. Once your income reaches £60,000 you repay the full amount.

‘You can become subject to the charge if you moved in with someone who is claiming child benefit, even if they’re not your children,’ warns Sean, at NFU.

‘Be warned, you can be fined if you’re income is over £50,000 and you don’t pay the tax due. HMRC has collected £18.9million in fines from people who failed to pay the High Income Child Benefit Tax Charge since its introduction,’ he adds.

The higher earner in the household should ensure the Child Benefit is recorded on their form so that it is claimed back as part of the tax bill.

Amend your payment on account if you need to.

Many taxpayers who fill in a return pay what is known as a ‘payment on account’ twice a year. These payments are usually half your previous year’s tax bill and one is due by midnight on January 31 and the other midnight on July 31.

You usually have to make these payments unless your last Self Assessment tax bill was less than £1,000 or you’ve already paid more than 80Q% of all the tax you owe.

This year, however, the government allowed taxpayers to defer their July 31 payment on account to January 31 automatically, without paying interest, but this becomes due at the end of this month along with the January payment.

Sarah, at Hargreaves Lansdowne, says that you can reduce the payment on account on your tax form if your income has changed dramatically because of coronavirus.

‘It’s an option you can select on your tax return, and at this stage it’s a more sensible approach than relying on a postal request,’ she says.

There is more detail on how to do this, and a postal form to fill in if you prefer.

However, it is worth noting that if you reduce your payment on account and it then turns out you’ve underpaid, you’ll have to pay interest on the outstanding amount, which can increase your tax bill.

Submit, even if you can’t pay

Once you’ve filled in every part of your form, you should submit it – even if you don’t think you can pay your tax bill.

Victoria Todd, Head of the Low Incomes Tax Reform Group (LITRG), advises double-checking.

‘You may complete your tax return and print off a draft return and tax calculation but not realise that you also need to submit the return as the last step of the online process. You should get a submission receipt from HMRC once the process is completed if you have used HMRC’s online filing system correctly,’ she says.

Make some arrangements if you can’t pay.

Finally, once you’ve submitted your tax return, it is time to face up to the best way to pay the bill.

Victoria, Head of the Low Incomes Tax Reform Group, explains that, having filed on time, you can apply to HMRC to pay your tax bill in installments over a maximum of 12 months.

You will have to pay interest on your tax bill at 2.6%, but can arrange this online, as long as your returns are up to date and it is 60 days or fewer after the submission deadline. You must also owe less than £30,000 to use the online service.

‘If you do not qualify for this or need longer to pay, you should get in touch with HMRC as soon as possible,’ she says. In this instance, you will need to call HMRC’s helpline at 0300 200 3310.

Appeal if there’s a coronavirus crisis

HMRC has said that it will be ‘lenient’ if people file late for coronavirus-related reasons, so if you or a family member (or even your accountant) is unwell, you will be able to use the appeal process if your filing is late and you receive a £100 penalty.

There’s some suggestion that issues such as the need to home school will result in leniency.

However, Nimesh Shah, at accountancy firm Blick Rothenberg, says taxpayers shouldn’t assume every coronavirus excuse will be accepted.

‘The £100 late filing penalty is modest, but people should think very carefully before deciding to file their tax return late.

‘HMRC are suggesting late filers who receive the automatic £100 fine can appeal it and it will be dismissed,’ he continues. ‘However, it will take time to appeal and it is never guaranteed that HMRC will accept it.

‘In addition, HMRC will inevitably be inundated with appeals so it could be several months before the penalty is reversed.’

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