2012-12-07 00:00:00Accounting and TaxEnglishThe self assessment tax return date is 31st January, so the time to act is right now. What do you need to do? Read this guide from...https://quickbooks.intuit.com/uk/resources/uk_qrc/uploads/2012/12/Bookkeeping-Tips-to-Get-You-Ready-to-File-Taxes-Featured.jpgSelf Assessment tax returnSelf Assessment tax return – the time for action is NOW

Self Assessment tax return – the time for action is NOW

3 min read

This article was first published in 2012 – whilst some of the information may still be relevant, some may no longer apply.  If you wish to be up to date with your self assessment tax return, please visit our HMRC Self Assessment page

The deadline for filing your self assessment tax return is 31 January and if this is looming large in your life, here are some thoughts on how to manage the process to get everything done on time.

Figures from HMRC show that in January 2012, just over one million taxpayers failed to get their self assessment tax return in on time and were automatically fined £100.  Over 445,000 left filing their tax return to the very last minute, with HMRC receiving one return every six seconds between 4pm and 5pm on 31 January.

Whilst last minute is better than late, it can still bring problems. You’re more likely to make mistakes for one thing and you won’t have time to collect any additional information if you realise something is missing. In addition, you’ll have no idea how much tax you need to pay until you submit.

I strongly urge you to act now so that your online self assessment is done and dusted well before 31 January.

Self assessment tax return – Getting started

HMRC lists the following common reasons for needing to complete a tax return:

  1. You are self-employed
  2. Your income exceeds £100,000
  3. You are a company director
  4. You have income from savings, investment or property

If any of these apply to you and you do not currently submit a tax return then visit the HMRC website, complete Form SA1 and perhaps call HMRC on 0845 900 0444 to get started.

Self assessment tax return – Getting organised

Whether you are new to tax returns or a seasoned veteran, the key to everything is being organised about collecting data.

The common sources of data are:

  • Salary and benefits in kind (P60 and P11d)
  • Dividends (dividend certificate from the company you have shares in)
  • Bank interest (certificate of interest and tax paid by your bank)
  • Self-employed income (accounts of your business)
  • Property income (accounts of the property)
  • Pension contributions (your bank statement, statement from pension provider)
  • Charitable donations (your bank statement)

If you don’t have any of this data yet, better to request it now rather than at the very end of January!

Self assessment tax return – Getting finished

There are two further steps once you have all of the data.

  1. Calculating the income that is taxable
  2. Feeding the income data into HMRC’s online system

You can do both yourself and submit your tax return online or you can ask an accountant, which is much easier – particularly for the first year. Using accounting software such as QuickBooks makes tracking your income and expenses much easier so you or your accountant can file your tax return much faster.

You can expect your accountant to know the rules and make sure that if there are tax breaks to be had then they are claimed.

Also, with the deadline approaching fast, the accountant will be ready to file your tax return online which will save you an extra piece of work and stress.

Don’t forget – you need to register to file online. If you haven’t already, make sure you do this urgently to avoid delays.

Self assessment tax return – Paying tax

The first time you submit a tax return, you have to pay any tax by 31 January after the end of the tax year.

Extra tax is usually payable because you have income from dividends, self-employment or property which is not taxed at source like PAYE. And here lies a nasty surprise. You not only have to pay any tax due for the previous year but you have to pay a further 50% as a payment on account for the next year. So, effectively you pay 150% of the tax. You make a second payment on account by 31 July and once you are in the payment on account system everything settles down with regular January and July payments. However, the first year can be a nasty surprise, so watch out!

Time is now short and it may be that your best plan is to gather your data, appoint an accountant and make sure you have the money set aside to pay all of your tax.

If it’s a stressful process, you should also think about how you can get organised for next year – more on that after 31 January!

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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