Self-assessment Tax returns – How to get it right

If you’re reading this, chances are that it’s tax time again and you’re looking for a little guidance on Self Assessment Tax Returns and How to get it right. You’ve come to the right place! We’ve put together all the information you need, on why it’s important to get it right first time, and everything you need before you start. Read on to find out more!

Why is it so important to get it right first time?

Taxes are one of those things that you have to double or maybe even triple check. Not only is it so very easy to make an accounting error in your self-assessment, but those errors mean that you might just have to re-file. You could even face criminal charges if HMRC suspect you might have made them on purpose to dodge your obligations. For a small business, this is bad enough, but if you’re self-employed then it could eat up your time and affect your work.

First things first, submitting your self-assessment tax returns late results in fines. Filing later than the 31st of January lands you a fixed penalty of £100, and if the return is more than three months late, a £10 daily charge of up to £900 will be added on top. Overall, then, if you file at the end of July, then you’ll be handed a bill for £1000 total. Leave it for any longer, and you’ll be fined on a sliding scale starting at £300. Bear in mind that this is regardless of whether you owe £5000 or £5 in taxes.

When should you start?

Paying taxes through self-assessment is a three stage process, so it is quite complicated. The first tax bill is due on January 31st, and the amount that you pay will be exactly half of the total tax bill that you paid the year before. A second instalment, which is the same amount as your first instalment, will be paid on July 31st (after the tax year is over). A final payment for that tax year will be made by January 31st the following year, which will be based on the actual taxable income for the previous tax year.

So, to put it as an example, you make one payment by January 31st, 2018, which is for the tax year 2017-18; another payment by July 31st, 2018, which is for the rest of the tax year 2017-18; and a final payment by January 2019 for anything left over. Whether this system could be improved and made less complex is by the by, since this is just the way it’s done.

But no matter when the deadline date is, you should never, ever leave it until the last possible moment. That’s how you make mistakes and bring on an investigation. You should always start putting together your tax returns long before they’re due so that you have plenty of time to iron out any mistakes. So, now that you know when payments are due, we have to think about what we need to get the ball rolling.

What do you need before you start?

You should probably already know that the first thing you will need to do is to get all of your accounts in order! Put together all your receipts and invoices, your homemade Excel files and so on (or for the lucky ones, contact your tax accountant). You will also need a basic list of information including your National Insurance number, your Unique Taxpayer Reference and your postcode. If relevant, you might also need your P45, P11D, P9D or P2.

Once you’ve got everything together, you can think about the forms you’ll need to fill in. The first form that you will need is the main tax return, which is Form SA100. This can be downloaded from the website, which has all the information you might need on the particulars of each section that you’ll need to fill in. Alternatively, you could file your self-assessment tax return online at the same web address.

If you receive Form SA200 in the post from HMRC, you can fill this instead. It’s much the same, except it’s the shorter version. But you can only fill this in if HMRC directly sends it you- so make sure you’re filling the correct form in. You may also have to fill in one of the several supplementary pages depending on your circumstances, which are for the following types of income:

  • employees or company directors – Form SA102
  • self-employment – Form SA103S or SA103F
  • business partnerships – Form SA104S or SA104F
  • UK property income – Form SA105
  • foreign income or gains – Form SA106
  • capital gains – Form SA108
  • non-UK residents or dual residents – Form SA109

Filling in the forms themselves can be quite a tricky business. Fortunately, there are all sorts of resources out there that you can use to help you with the complicated bits. Your first port of call if there’s something you really don’t understand should be a tax accountant- helping with this sort of thing is the definition of their job, after all. But there are resources online too, like the website, and many more besides. Simply search for- for example- “Adjustments to the tax due” if you don’t quite understand what that means.

How do I submit my tax return?

There are three ways to submit your tax returns. First, you can submit it the old fashioned way, by post. But it’s also possible to submit it online. If you do, you’ll be sent a unique security code through the post just to verify that your address is correct. After that, you can fill in every form online and submit it immediately- no more worrying about whether it will get lost in the post, or not arrive on time. The final option is to provide The Accountancy Solutions with all of the necessary details and let us take care of the rest. Please call our office in Birmingham or London to get free, no obligation advice.