Self Assessment tax return tips

With the Self Assessment tax return filing deadline looming fast, here are some practical hints and tips to help you when completing and submitting your tax return.

Don’t delay

Although completing your tax return is never going to be the most exciting job on your to-do list, don’t leave it to the last minute as this only makes the process more stressful. The Government Gateway portal can become very slow when lots of people are accessing it, and problems can occur. In addition, filing a tax return under pressure can lead to mistakes and/or omitting important information.

Be prepared

Always check you have everything you need before you start your tax return. It can be very frustrating when you are ready and focused to complete your tax return, only to find halfway through that you do not have all the information required. This can lead to delays and last minute panics, again making it more likely you will make mistakes.

Claim all allowances and reliefs

There are many reliefs and allowances available to taxpayers, and keeping abreast of them all can be a challenge. The most common reliefs individuals are entitled to include:

• Pension contributions.
• Charitable donations.
• Business expenses for self-employed individuals.
• Trading and rental allowance.

If you are unsure of what allowances you are entitled to, seek professional help.

Common pitfalls

The tax code is becoming increasingly complex, giving rise to restrictions and the claw-back of some reliefs and allowances. The most common pitfalls include:

• Omitting the High-Income Child Benefit Charge (which claws back child benefit received on a sliding scale from the highest earner whose income exceeds £50,000).
• Omitting the income contingent student loan (for those with income other than employment).
• Incorrectly calculating the loan interest restriction and/or including capital repayments as a deductible expense from rental property income.

Again, if you are unsure whether a restriction applies to you, please seek professional advice.

Paying your tax

The earlier you file your tax return, the more time you have to arrange payment of your tax liability. In addition, if you find yourself in the payment on account regime for the first time, you may have to find a further 50% of your previous year’s tax bill by 31 January 2023 and another 50% by 31 July 2023, so the amount you have to pay may be higher than you expected.

If you are finding it difficult to pay your tax, and if your liability is less than £30,000, you can arrange a payment plan relatively easily online with HM Revenue & Customs (HMRC). This is as long as you do not have any other payments plans or debts with HMRC, your tax returns are up to date, and it’s less than 60 days after the payment deadline.

Payments on account

If you are in the payments on account regime, it is possible to reduce these payments where you anticipate your tax liability for the current year will be less than the previous year’s. You can make the reduction in your tax return, although care is needed as interest will be charged where payments are reduced too far.

Check all the details are correct

Check, and double check, all of your details and ensure that you have accounted for everything. HMRC receive a lot of information directly from third parties, so if you have omitted anything or made any mistakes, they may open an enquiry. Penalties for inaccuracies in tax returns are often much harsher if HMRC spot them first and they will charge penalties if the original return is considered to have been filed ‘carelessly’.

Penalties

If you find you do not have all the information you need to complete your tax return, it is often better to file an ’estimated’ tax return to avoid the initial £100 late filing penalty. However, don’t forget to update your tax return with the correct figures as soon as they are available.

Don’t forget to pay your tax and ensure it is paid at least within 30 days of the payment deadline to avoid a 5% surcharge. If you are struggling to pay, it is better to let HMRC know as early as possible and certainly before the payment due date, otherwise HMRC may not agree a payment plan.

So long as any payment plan is agreed within 30 days of the payment deadline, any late payment penalties will be suspended. However, if the payment plan is not followed, the penalties will fall back into charge.

Interest will run from the due date until date of payment regardless.

Retain documentation

Don’t throw out documentation relating to your tax return as there is a legal requirement to retain it. Time limits are longer for those taxpayers carrying out a trade or business. For all other taxpayers, records must be kept until the later of:

• The first anniversary of 31 January following the end of the tax year of assessment (for 2021-22 tax returns records should be retained until at least 31 January 2024);
• The enquiry window closes; or
• If an enquiry is underway, until the enquiry is closed.

For taxpayers who are self-employed, in partnership or who have income from property, records must be kept until the later of:

• The fifth anniversary of 31 January following the end of the tax year of assessment (for 2021-22 tax returns records should be retained until at least 31 January 2028);
• The sixth anniversary of the end of the accounting period;
• The date on which the enquiry window closes; or
• If an enquiry is underway, until the enquiry is closed.

Seek professional help

If there is anything you are unsure of when completing your tax return, don’t delay and seek professional help. We help many taxpayers meet their filing obligations every year, particularly those with complex tax affairs such as non-residents, non-domiciled taxpayers, business owners with complex structures, landlords with multiple properties and trusts to name a few.

If you would like any advice on your tax return, or have any queries relating to the points raised here, please get in touch with your usual Saffery contact, or speak to Suzanne Wasson.

You may also be interested to listen to our podcast which covers this topic.