Self-assessment tax return: top tips for submitting your form

The deadline for filing a self-assessment tax return for the 2021-22 tax year is fast approaching: 31 January 2023 is the last date to submit relevant forms to HM Revenue and Customs (HMRC) and pay any tax owed.

File late and you could face a £100 fine. While HMRC waived that penalty over the last two years due to the Covid-19 pandemic, “those yet to file shouldn’t bank on the same level of goodwill this year”, warned The Guardian.

A £100 fine could just be the start of your problems, though. You could also incur daily penalties of £10 if your return is up to three months late, a further penalty of 5% of the tax due after six months, and another 5% after 12 months.

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More than 12 million people are expected to file self-assessment returns this year, said HMRC. Around 42,500 people saw in the new year by submitting their return on 31 December and 1 January, but around 5.7 million were cutting it fine, having not yet filed as of the start of this month.

Who has to file a tax return?

Record numbers are expected to file tax returns this year, said the Daily Mail, and “some may not be aware they need to, and will inadvertently miss the deadline”.

Generally, the newspaper said, you do not need to file a tax return if you are employed and all your income is taxed under PAYE; you earned less than £100,000; you are not making any other income that could be taxable; and you are not claiming any reliefs, grants, or expenses from HMRC.

HMRC has a long list of reasons why you may need to file a tax return. They include:

• You were self-employed as a “sole trader” and earned more than £1,000
• You were a partner in a business partnership
• You earned £100,000 or more.

Parents receiving child benefit are also often caught out, said The Sun, as families have to pay a high income charge if you or your partner receives the payments and earns £50,000 or more.

You may also need to send in a tax return if you have any untaxed income, such as:

• Some Covid-19 grant or support payments
• Money from renting out a property
• Tips and commission
• Income from savings, investments, and dividends
• Foreign income.

You can check if you aren’t sure at gov.uk/check-if- you-need-tax-return.

What do I need to declare?

You have to report everything you’ve earned over the tax year from 6 April 2021 to 5 April 2022. This includes income from employment, self-employment, property and interest and gains on your savings and investments. Even if all your savings and investments are in tax-free Isas you still have to declare them, despite the fact no tax should be due. If you are self-employed or a sole trader you will have to pay Class 2 National Insurance (NI) contributions of £3.05 per week if you earned more than £6,515 in 2020-21. If you earned more than £9,569, you will also need to pay Class 4 NI contributions of 9% on profits of between £9,569 and £50,270, and 2% on profits of more than £50,270.

Here are a few tips for making the process of filling out your self-assessment form easier:

Get an online account

The deadline for filing a paper tax return has already passed (31 October) so you will have to complete your return online. You will need a log-in to the HMRC website. If you haven’t done this before, it’s “crucial to register ASAP”, said MoneySavingExpert, as it can take up to ten working days to receive your reference number in the post and you cannot file your tax return without it.

Gather your paperwork

Before trying to fill out your form, make sure you have all the required paperwork. This includes: a P60 form from your employer showing your income and the tax you have paid on it; a P45 if you have left a job within the tax year; a P11D or P9D detailing benefits and expenses; plus details of interest on bank or building society accounts, dividends from investments, and any other income you receive.

Don’t call HMRC

If you want to hold on to your sanity, avoid calling the tax office. Waiting times on HMRC’s self-assessment helpline have “soared from an average of five minutes in 2017 to almost 20 minutes”, said The Times. It can be easier to get through at the weekends, the newspaper said, with an average waiting time of less than five minutes compared with 11 minutes on weekdays over the past five years. Avoid that stress by looking online for the answers to your queries. HMRC’s website has videos explaining everything from how to register to working out your expenses and also has an online live chat service open from 8am to 8pm.

Use an accountant

The most stress-free way to file a tax return is to have somebody else do it for you. An accountant can deal with sifting through your paperwork, make sure nothing has been missed and you can relax knowing your taxes are in the hands of an expert. Amateur mistakes can be costly: HMRC can fine taxpayers for up to 30% of the tax due for “a lack of reasonable care”, such as if you make a mistake on the form that the tax office feels could have been avoided. A professional will typically charge a one-off fee ranging from £150 to £250 or more for complex cases. Broadly speaking, said Unbiased.co.uk, “the higher your income and the more sources of income you have, the higher the fee is likely to be”. In many cases they are able to make savings to your final tax bill that will go some way towards offsetting their fee.

Make use of reliefs

Not knowing the rules on expenses, allowances and tax reliefs “could mean you end up with a tax bill that’s far higher than it needs to be”, Which? warned. The self-assessment form is a chance to claim that money back. You may be able to deduct “legitimate expenses” such as travel and transport, uniforms, and office running costs such as stationery and energy bills. If you donated to charity, “even by supporting a friend via JustGiving or through a regular donation”, said ThisIsMoney, make sure these are included on your tax return as an expense.

Higher rate taxpayers can also claim tax relief on pension contributions through their self-assessment form. Additionally, if you work from home, HMRC lets you claim £6 a week, or £312 per year, as an expense on your self-assessment form. You can also claim the exact amount of extra costs you’ve incurred above the weekly amount, but you will need evidence such as receipts, bills or contracts.

What if you can’t afford the tax bill?

It’s important not to panic, said Forbes, if a tax bill is going to be unaffordable. HMRC offers options for those in financial distress “and it’s better to tackle the issue head on, rather than leave problems to build up and get worse”, said the financial website. HMRC has a Time to Pay scheme that lets people who owe less than £30,000 set up a payment plan. You need to be within 60 days of the payment deadline and able to clear the debt within 12 months, and you cannot owe any other debts to HMRC. If you’ve spent hours searching the house for essential paperwork or are worrying about the final bill, remember for next year that you can send your forms as soon as the new tax year starts each April.

Filing an early tax return could be a great help, said SimplyBusiness, as you can plan your finances, claim back overpaid tax from previous years, plus “you don’t need to pay your bill at the same time so you can still leave that until 31 January” the following year.