Getting your tax return information in order can help you to avoid any potential fines later on
Every year, many thousands of people miss the deadline for submitting their self-assessment tax return, and are fined as a result. If your tax return is up to three months late, you'll face a £100 fine, plus extra penalties in some cases.
So what is self-assessment, who needs to do it, and what are the challenges people face when submitting their return?
What is self-assessment?
Self-assessment is a system HMRC uses to collect income tax. “If you're a full-time employee then tax is usually deducted automatically from wages, pensions and savings,” says Helen Morrissey, Personal Finance Specialist at Royal London. “However, the self-employed and people with income from other sources must report this in a tax return.”
Who needs it?
The GOV.UK website outlines who will need to fill out a self-assessment tax form. These include:
- Self-employed people.
- People with income from savings and investments of more than £10,000 before tax.
- People who have made a profit from selling things like shares or a second home, and have incurred a capital gains tax liability.
- People whose income (or their partner’s) was over £50,000, and one of them claimed Child Benefit.
What do you have to do?
You can send your self-assessment tax return either online or by filling out a paper form. If completing the form online, you'll need to submit your tax return via the Government Gateway service. To do this you'll have to enrol for the service with HMRC and receive your Unique Tax Reference (UTR).
Activating your account can take up to 10 working days and it can take a further 10 working days to receive your UTR. “Many people don't realise this and try and set up their account at the last minute, meaning they miss the deadline,” says Helen.
The information you need
While you're waiting for your activation and UTR it's a good idea to gather the information you'll need to fill out your form.
If you're self-employed you'll need any invoices and receipts for work you carried out during this time, as well as bank statements and interest certificates.
If you're claiming due to Child Benefit issues, then copies of either your or your partner’s P60 will give you important information needed to fill out the form. Paperwork for any investments will also be useful.
“If the situation is relatively straightforward, for instance, someone doing occasional freelance work, then filling in the form should only take a matter of hours,” says Helen. If you have any questions, contact the HMRC helpline on:
0300 200 3310
If you feel like you need more support, it might be worth getting an accountant to help you file your tax return.
More on managing your finances
How to boost your pension pot
It can be hard to save enough for retirement when you're buying a home and raising a family, but it’s never too late to give your pension pot a boost
Getting your children to save
They may not thank you for it now, but one of the best things you can give your children is good financial know-how
Prioritising your debts
Whether it’s your mortgage or paying off a credit card, debts can make you feel like burying your head in the sand. But prioritising can help you to manage what and how much you owe
What type of cover is best for you?
Life insurance can help to protect you and your family should the unthinkable happen. But are you clued up when it comes to the type of cover you need?
Why is making a will important?
If you don’t make plans on how you want to distribute your wealth once you’re gone, you may leave a host of problems behind
Are you paying too much tax?
Making sure you're on the right tax code will help you to avoid losing too much of your hard-earned money