Self Assessment tax returns conjure up all sorts of thoughts and images in one’s head. Deadlines, forms, penalties, tax bills.
In this self assessment survival guide we will highlight some top tips for keeping on top of yourself assessment filing, make the process smooth and manageable and help keep surprises in the form of unexpected tax bills to a minimum.
Your self assessment tax return is the fundamental document HMRC uses to calculate the tax you owe (or the tax refund they owe you). This makes it a crucial document in your financial management.
Dependant on how you make your living and what other savings and investments you have will dictate the need for you to complete a self assessment tax return.
Self assessment tax returns usually need to be completed if:
- You are self employed.
- You are a company director and derive income from your company.
- You are employed with a second income of any type.
- You own buy to let properties.
- You are a high net worth individual with different investments and business interests.
- You are an older person with different sources of income – pension, property, investments, etc.
The deadlines around the self assessment tax return are well known and widely published, and it is critical, if you want to avoid paying penalties that the deadlines are adhered to:
If you file your self assessment tax return on paper via the post, the deadline is 31st October of each year (that follows the end of the previous tax year).
Filing your return electronically will give you a little more time, you need to have your online return completed and submitted by 31st January (that follows the end of the previous tax year).
It is also important to stress that any tax owed also needs to be paid by the 31st January. To avoid surprises use these dates and guidelines to work back from but always make sure you have your returns completed way in advance of the deadlines.
There are two main ways to get your tax return completed:
- Use an experienced accountant.
If you have simple financial affairs, you may be able to file the self assessment return yourself. If you have more complicated financial affairs (multiple sources of income, investments, buy to let property, etc.), our recommendation would be to seek the services of an experienced accountant.
Regardless of your preferred route to get your return completed, there are a few basic items that need to be collated. Keeping these items filed in sensible places as you receive them will allow for a more organised approach to completing your return and will in turn improve accuracy and eliminate guesswork.
As early as you can after the end of the financial year (5th April) start to gather the following documentation and keep in a single file that is kept safe and is easily accessible:
- Your P60 from your employer or pension company
- Your P11D
- Tax certificates from your bank and/or building society
- Investment portfolio tax pack (this usually includes all of your tax certificates)
- Buy to let income and expenditure
- Self employment accounts
- Dividend certificates for company shareholders
- Details of any payments on account made during the year
- Anywhere you derive income from should have associated documentation to back it up.
Not all of this information will be available immediately as the tax year ends. In the months that follow the 5th April, you should be able to gather most of the above information either via statements you have been sent or via online accounts/downloads.
You also need to have to hand any documentation that would depict a change in circumstances:
- Change of tax code
- Change in circumstances (marriage, loss of income, failed investments),
By June or July you should have most of the information to hand in your ‘self assessment file’. If you are using an accountant now is the time to book an initial appointment with them to talk them through all of the financial statements we have highlighted above.
If you are going down the DIY route it may at this time be worth starting to collate the information you have gathered and start to summarise either electronically using a spreadsheet or on a simple one page of paper. Summarise the information according to type of income, so you end up with a simple matrix that looks similar to this
|Self Employment (Profit after expenses)||£20,000|
|Buy To Let (Profit after expenses)||£6,000|
This will help you keep a one page summary of your affairs and will help you when it becomes time to start completing your self assessment tax return.
The next step is to start drafting your return. We strongly recommend that you do this online. You can start the process of completing your return online, save your progress and come back at a later date, without submitting to HMRC. Only when you are ready and happy with the content of the return should you finalise the document and submit it to HMRC. Completing your tax return online also has the added advantage of completing all the tax calculations for you.
To file your return online, you will need a Government Gateway online account. This needs to be applied for in advance – for more information on Government Gateways accounts, please see this information from the gov.uk website: http://www.gateway.gov.uk/. Your Government Gateway online account can be used for multiple services from the UK Government, so it is worth reading and applying if you think it appropriate for your needs.
Assuming you have your online account ready and all of your documentation referenced above it is now time to start the process of completing your tax return form.
It is worth mentioning the tax return form has a ‘code’ of SA100 – this is the main tax return form. Dependant on your personal situation, you may need to complete some of the extra sections of the form for specific types of income, in addition to the main SA100:
- SA101: Additional Information
- SA102: Employment
- SA102M: Ministers of Religion
- SA102MP: Parliament
- SA102MLA: Northern Ireland Legislative Assembly
- SA102MSP: Scottish Parliament
- SA102WAM: The National Assembly for Wales
- SA103S: Self-employment (Short)
- SA103F: Self-employment (Full)
- SA103L: Lloyd’s underwriters
- SA104S: Partnership (Short)
- SA104F: Partnership (Full)
- SA105: UK Property
- SA106: Foreign
- SA107: Trusts etc
- SA108: Capital Gains Summary
- SA109: Residence, remittance basis, etc
- SA110: Tax Calculation Summary
Don’t be put off by all of the supplementary sections, you only need to complete the sections that are relevant to you.
If you are choosing the paper route for completion of your return you can download copies for printing from the HMRC website at https://www.gov.uk/government/publications/self-assessment-tax-return-sa100
So by now you should have all the hard work complete. You have gathered all of your financial information in one file, you have access to your online tax return or you have downloaded paper copies. Now comes the easy part. Simply work through the tax return and complete all the sections you can. If you have all of your information to hand it should be a relatively straightforward process, assuming you do not have too complex financial affairs.
If you do need help there are couple of options available to you:
We would suggest getting the help of an accountant if you are at all unsure of certain aspects. Yes they will charge you for the help but their charge is usually offset in terms of the time they save you and tax they may be able to save you. HMRC will not be able to advise you on the specifics of your income or tax liability, they will only give general guidance.
Even when you are happy with your tax return and you have calculated your tax liability, take a few days before submitting it to HMRC (assuming you are not approaching the deadlines). Take this time to cross check everything. When you are ready, submit the completed return to HMRC online or via the post.
Then start to plan how you will pay your tax liability. There are a two main options open to you:
If you are paid via PAYE and your tax liability is less than £3000 you can choose for the tax to be collected via PAYE and your payroll. To utilise this option you need to file your tax return with HMRC and let them know this is your preferred option of payment of tax owed by 30 December.
Pay in full your tax liability by the 31/01.
If you have completed a self assessment tax return previously and owed tax, then you will also have paid ‘payments on account’ in the previous year. This is just HMRC estimating your next year’s tax liability and spreading across the year in two payments. So if this applies to you, you can deduct your payments on account that have paid during the tax year in question from what you owe. The balance still needs to be paid to HMRC by 31/01.
Assuming the completion of your return went smoothly, there are no mistakes spotted and you pay all the tax owed by the due dates, that will be the self assessment process completed until the next year.
HMRC will send you a statement via post detailing your liabilities to confirm everything.
Common mistakes and pitfalls to avoid
As accountants we see a lot of common mistakes made in the completion of self assessment tax returns:
- Incorrect tax code – many people do not cross check their tax code.If your tax code is incorrect, you could be paying too much or too little tax. Always cross check your tax code to ensure it is correct for your personal circumstances.
- Being clear on income from more than one employment – people that have second jobs often have slightly more complex tax affairs. Employers may deduct tax at source for one income and not the other. It is worth cross-checking and detailing income and tax paid from all forms of employment and seeking help from an accountant if needed.
- Buy To Let – we see many landlords that do not claim for all the expenses that are allowable against buy to let income
- Self employed – claim for all allowable expenses against profits – things like tools and equipment can be offset against taxable profits. This area can get complex, so we advise seeking the advice of a professional accountant.
Income tax and self assessment can be a difficult area, especially if you have more complex financial affairs. We do recommend working with an accountant on your self assessment return and tax affairs. Not only can they take the headache of preparation away from you, but they will also save you time and possibly money in the process.
Most accountants will offer self assessment tax return completion and filing for a fixed fee, so it is worth shopping around a little. We recommend choosing an accountant you are comfortable with and is local to you, so meetings are easily arranged.
Accountants will need all of the documentation relating to your income as we detailed earlier on in this article, so even if you do engage professional help, you will always need to collate documentation relating to your financial affairs.
Regardless of your method of completing your self assessment tax return (DIY, or via an accountant) – these are a summary of our top tips to make the process painless and straightforward:
- Collate documentation relating to your financial affairs for the tax year in one place – keep a ‘self assessment file’ and add all necessary paperwork to that file as you receive it.
- Begin the process as early as possible. This will help you plan for any tax liability you may have and will mean no last minute panics.
- If you are working with an accountant give them time – most accountants will require at least six weeks to complete a draft copy of your return and then will need one or two meetings before submission to HMRC – make sure you give your accountant enough time to help you.
- Plan for payment of your tax liability. If you start the self assessment process early, you can better plan for the tax payment that may be due. You can allocate funds over months towards paying the tax bill which will always be a little easier than having a surprise bill that you need to pay at the end of January.
- Avoid penalties – submit your self assessment on time and pay the tax due on time.
- Get any tax refunds due paid directly into your bank account. It is quicker than waiting for a cheque and the money goes straight into your account without the hassle of paying in cheques etc.
We have prepared an overview Self Assessment Tax Calendar below to help you plan the completion and filing of your self assessment tax return. Use this as a guide, but please regularly cross check with HMRC as dates may change:
Deadline to advise HMRC that you need to register for Self-Assessment if applicable
Deadline for filing Paper Self Assessment Tax Return with HMRC if you want HMRC to calculate your tax liability.
Deadline for filing self assessment tax return with HMRC if you want any tax collected through PAYE/Payroll (under £3,000)
The balance of any tax owed to HMRC for the previous tax year must be paid.
1st payment on account due to HMRC if applicable.
End of tax year
2nd payment on account due to HMRC if applicable.
We hope this self assessment survival guide has proved useful. If you need any help or advice, please do feel free to give us a call. We have an experienced team well versed in self assessment tax returns for all types of individuals. We are always happy to help.