A Guide to Self Assessement Tax Returns
January 31st is the deadline for submitting a self assessment tax return. Mitchell Charlesworth’s tax experts have put together the following guide for those individuals who still need to submit a tax return to HMRC.
Tax Returns Deadlines
Firstly and most importantly, if you have to send in a Self Assessment tax return and make payments then your online tax return must reach HMRC by midnight on 31 January.
So, for the 2017-18 tax year, the deadline for online returns is midnight on 31 January 2019.
There are very few exceptions to this rule. By way of example, if HMRC sends you a letter telling you to complete a tax return after 31 October, then the deadline may be later. In this instance, the letter will tell you the deadline - it is usually 3 months from the date of the letter.
There's also an earlier deadline of 30 December if you want HMRC to collect any tax you owe through your tax code. You can ask for this if you owe less than £3,000.
Should you choose to send a paper tax return, it must reach HMRC by midnight on 31 October. There are limited exceptions to this rule, including sending a Self Assessment return for a registered pension scheme or non-resident company. Should this be the case then the deadline is 31 January as you can only send paper returns for these scenarios.
Do I need to complete a tax return?
Self assessment tax returns are for individuals who don’t have straightforward tax affairs. That is, you are self-employed or have income above a certain level. Those individuals who have straightforward tax arrangements will simply pay tax already through PAYE (Pay as You Earn).
The most common reasons that people need to fill in tax returns:
- You are self-employed (or a partner in a partnership)
- Your annual income is more than £100,000
- You have income from savings, investment or property:
- £10,000 or more from taxed savings and investments
- £2,500 or more from untaxed savings and investments
- £10,000 or more from property (before deducting allowable expenses)
- £2,500 or more from property (after deducting allowable expenses)
- You have income from trusts, settlements and estates
- You are a trustee
- You have capital gains tax to pay
- You need to claim reliefs or expenses
- You or your partner receive Child Benefit and your income is over £50,000:
The High Income Child Benefit tax charge was introduced on 7 January 2013 and may mean you need to complete a Self Assessment tax return. Please contact us if you would like further clarification around this.
Registering for self assessment
Before completing your first tax return you need to register for Self Assessment. Once registered, HMRC will set up the right records for you that will ensure you pay the right amount of tax and National Insurance.
When should you register?
The latest date to register is 5 October after the end of the tax year for which you need a tax return. The tax year runs from 6 April to 5 April, i.e. if you need to pay tax on income made in the 17-18 tax year, you must inform HMRC by 5 October 2018.
The following information is required to register:
1. Contact details
2. Company contact details (if you have started self-employment)
3. National Insurance number
4. The date your circumstances changed
5. Your 10-digit Unique Taxpayer Reference (if you have previously completed a tax return)
Further information can be found here: www.gov.uk/log-in-file-self-assessment-tax-return.
If you have previously submitted a tax return online in the previous year, HMRC will not send you a paper tax return. If you have opted to receive digital communications then you will be prompted by email to check your self assessment online account for your Notice to File letter.
What records should you keep?
In order to complete a Self Assessment tax return as an employee, pensioner or company director then you will need retain the following:
1. Income from employment documents
- your P45 - if you leave your job, part 1A of this form shows your pay and tax to the date you left
- your P60 - if you're in a job on 5 April, this shows your pay and tax details for the tax year
- form P11D - this shows details of your expenses and benefits, such as a company car or health insurance
- certificates for Taxed Award Schemes
- information about redundancy or termination payments
You should also keep records of other income or benefits from your employment not covered in the list above, for example: benefits in kind, for example meal vouchers you receive in connection with your employment from someone other than your employer
2. Records of any expenses
As a self employed individual, you may have to pay expenses. Under self assessment you may be able to claim for all or some of these expenses to reduce your tax liability. You should therefore retain details of your expenses for inclusion.
3. Capital Gains Tax records
The records that must be kept will depend on your circumstances. We recommend that you keep records of any asset you have owned for the eventuality that you make a gain or loss when you sell, give away, transfer or exchange it.
4. Income from property
You should keep details of any income and rents you have received from property and also records of any expenses you have incurred letting out the property.
5. Pension records
You should keep any records relating your pension, including your P60, form P160 (part 1A), and any other details of a pension (including State Pension) and the tax deducted from it.
6. Benefits records
Relating to Statutory Sick Pay, Statutory Maternity, Paternity or Adoption Pay, social security benefits and Jobseeker's Allowance.
7. Interest, dividends or other income from UK savings, investments or trusts
- bank and building society statements or passbooks
- statements of interest and other income you've received from your savings and investments
- tax deduction certificates supplied by your bank
- dividend vouchers received from UK companies
- other vouchers such as scrip dividend vouchers
- unit trust tax vouchers
- life insurance chargeable event certificates
- details of income you receive from a trust
- details of exceptional amounts you've received, for example an inheritance or other windfall
- letters and all other paperwork relating to your savings and investments
8. Foreign income or gains
You should keep all dividend vouchers, tax certificates and personal financial records including:
- records of overseas earned income, for example from employment, self-employment or property letting
- receipts for any expenses you wish to claim
- dividend certificates from overseas companies
- certificates or other records of tax paid - either in the UK or overseas
9. Income from employee share schemes or share-related benefits
You should keep information on all share schemes or share-related benefits including:
- information about what you paid for your shares and the relevant dates
- copies of share option certificates and exercise notices
- letters about changes to your options
- details of benefits you've received as an employee shareholder
Penalties – What happens if you miss the tax return deadline:
Should you miss the tax return deadline, then you should still strive to submit tax return as soon as possible. The table below shows the penalties you'll have to pay if your tax return is late. If a Partnership tax return is late, each partner will have to pay the penalties shown below:
- 6 months late
- 12 months late
- 12 months late and the tax payer is found to be deliberately withholding information
- 5% of tax due or £300, whichever is greater
- 5% of tax due or £300, whichever is greater, unless the taxpayer is found to be deliberately withholding information that would allow HMRC to assess the tax due
- Deliberate and concealed withholding 100% of tax due or £300 if greater
- Deliberate but not concealed withholding of information – 70% of tax due or £300 if greater
In serious cases you may be asked to pay up to 100% of the tax due instead. In some cases the penalties can be even higher than this.
These are as well as the penalties above.
Penalties – What happens if you cannot pay the tax you owe:
It is important that you pay your tax liability on time otherwise you will have to pay a penalty after 30 days and the longer you delay, the more you'll have to pay.
If, once you have calculated your amount of tax due, you find that you cannot pay in full on time. If so, you may consider:
- Approaching your bank to see if they will support you through the short term difficulty
- Looking at your outgoings to trim any non-essential expenditure
- Approaching people that owe you money to see if they can pay you more quickly
If you are still unable to pay, you should contact HMRC’s Business Payment Support Service Helpline on Telephone 0300 200 3835 as soon as possible.
HMRC may allow you time to pay. However, if you delay contacting HMRC until after the due date, you will be charged interest and you may also be charged a penalty or a surcharge.
What counts as a ‘Reasonable Excuse’ to miss the Filing Deadline?
If you fail to file your tax return on time without a ‘reasonable excuse’, then you could be liable for a late filing penalty. However, if you believe that you have a reasonable excuse then you may be exempt from paying this penalty.A 'reasonable excuse' is when some unforeseeable or unusual event beyond your control has prevented you from filing your return on time.
HMRC lists the following as reasonable excuses for filing late tax returns:
- a failure in the HMRC computer system
- your computer breaks down just before or during the preparation of your online return
- a serious illness, disability or serious mental health condition renders you incapable of filing your tax return
- you registered for HMRC Online Services but didn't get your Activation Code in time
- a fire, flood or theft prevented you from completing your tax return
- postal delays that you couldn’t have predicted
- delays related to a disability you have
Each case will be examined on its merit and HMRC will still expect you to have done everything in your power to submit your return on time.
HMRC will not accept the following as a reasonable excuse:
- You found the online system too complicated
- You left everything to your accountant to do and they let you down
- You forgot about the deadline (even if you didn’t get a reminder from HMRC)
- You failed to re-submit your return on time once a problem with the IT system was put right
- You registered for HMRC Online Services after the filing deadline
If you think you have a reasonable excuse for filing late, then you should contact HMRC immediately, especially if you have been charged a late filing penalty and need to appeal against it.
More details about appealing can be found here.
More details on all of the information above can also be found on HMRC’s website.
The details above have been published in line with the Crown Copyright regulations.
For more information, or to find out how our tax team can help you meet your tax responsibilities, please contact our specialist tax partner:
Written January 2019.