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

Millions of people are due to file a tax return to HMRC as the self-assessment deadline approaches.

Untaxed earnings need to be declared and any tax due paid by 31 January, and while six million have "beaten the Self Assessment clock" as of the start of the new year, said HMRC, almost 5.7 million people were still due to file as of the start of the month.

If you still haven’t submitted a return, you "must act soon", warned Money Saving Expert, as those who miss the deadline face fines of at least £100.

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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.

Who has to file a tax return?

Increasing numbers of people may have to file a tax return, said The Daily Telegraph, due to "years of frozen tax thresholds and slashed tax-free allowances" meaning more of your income faces being taxed including earnings from second jobs, savings and investments.

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

Parents receiving child benefit are also often caught out, said the Financial Times, with high earners often charged "unexpected penalties" due to the 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:

HMRC has also warned that anyone earning more than £1,000 from selling items online or renting out a property needs to declare that income. While the tax law has not changed, digital platforms will need to make annual reports to the taxman about individuals who sell goods or services through them.

In addition, cryptocurrency investors "may be unaware of the tax treatment" of profits, said Money Week.

Those who are unsure about whether they need to pay tax can check on the government's website.

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 Money Saving Expert, as it can take up to 10 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. 

Callers are facing "hour-long call wait times to get through, and many complain that their letters are going unanswered", said This Is Money, as the tax office suffers a "customer service meltdown".

However, the stress can be avoided 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 Just Giving or through a regular donation", added This Is Money, 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?

If you have an unaffordable tax bill, “don’t panic”, said The Guardian. HMRC offers options for those who are in financial difficulty, so "burying your head in the sand and racking up fines is not the answer".

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.