Filling in your self-assessment tax form
- Keep an eye out for the deadline so you don’t miss it
- Have the relevant documentation – P60s for pensioners, P11Ds for employees, investment records and revenue/outgoings records for the self-employed
- Check charitable donations/trading and property receipts to find out if they offer any tax relief
- Double check all your details before submitting
Deloitte's David Hicks offers 12 practical tips to ensure your self-assessment tax return is filed correctly and promptly.
Over 11 million people need to file self-assessment tax returns each year. Any return filed after the deadline - without a reasonable excuse - will mean a penalty of £100, even if there is no tax to pay. Here are 12 useful tips to consider when completing your return that will avoid any nasty fines.
1. Once you've registered, check whether you are able to use HMRC’s free software to complete your tax return as there are some complicated situations (for example, those receiving trust income or living abroad) where commercial software may be needed.
2. Make sure you have all of the relevant documentation: Pensioners should find details of their income on their digital tax account but may want to compare them with their P60s. Similarly, employees will need to check P11Ds, giving details of any benefits in kind. You’ll also need details of any investment income outside an ISA, as these are not yet reflected on your digital tax account. Self-employed and landlords will need records of their revenue and outgoings.
3. Gather details of any professional subscriptions that you paid in the year that were not reimbursed by your employer. If the organisation is on HMRC’s approved list, your subscription should be deductible from your employment income.
4. If you have made personal pension contributions in the year, details will need to be provided on the return. Higher and additional rate taxpayers will receive additional tax relief through Self-Assessment. Remember that relief is restricted for those with income over £150,000.
5. If you receive bank interest during the year, tax is no longer deducted from this income at source, so you may have further tax to pay. Although there is a personal savings allowance of £1,000 for basic rate taxpayers, (£500 for higher rate and nil for additional rate taxpayers) the full amount of income must be included on the return as the relief is given when the tax is calculated. Similar rules apply for dividends, where the dividend allowance is £5,000. Those with low earned income and pension receipts which are combined with savings income may also be entitled to the £0-5,000 exempt band.
6. Do you have trading or property receipts but low expenses? New £1,000 trading and property allowances were available in 2017/18 in lieu of expense deductions. Trading and/or property receipts (excluding lodgers) of up to £1,000 each can potentially be received tax-free. If you have a lodger in your home, you can claim rent-a-room relief, the relief is now £7,500.
7. Remember to check your charitable donations under the gift aid scheme. Like personal pension contributions, Gift Aid donations may attract additional relief if you are liable to higher or additional rate tax.
8. Calculating rental profits: individuals are generally allowed to use the cash basis rather than accruals basis in calculating rental profits from 2017/18 onwards (i.e. recognising receipts and expenses based on payment dates, rather than the periods that they relate to). Where the switch is made, care is needed to ensure that no receipts or payments are double-counted or missed from your tax returns altogether.
9. Have you been married or separated during the year? Income from jointly-owned assets, such as rental profits, can sometimes be treated differently depending on whether the owners are married.
10. If you or your partner claim child benefit and your income is over £50,000 you may need to include a claw-back in your tax return.
11. If you have outstanding student loans and you are self-employed, you may be required to make repayments via your tax return.
12. 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 anything has been omitted, an enquiry may well be opened. Penalties for inaccuracies in tax returns are much harsher if HMRC spot them first and they will charge penalties if the original return is considered to have been filed ‘carelessly’. You can use provisional figures in your tax return if the final figure is not available, but it is important to provide the final figure as soon as possible.