Self-assessment tax return: top tips for submitting your form

Today is a big day in terms of taxation – 31 January marks the deadline to submit a self-assessment tax return and pay any outstanding tax owed to HM Revenue and Customs (HMRC). 

More than 12.2 million people are expected to complete a tax return for the 2020-2021 tax year. And of those, four million were yet to complete their paperwork, HMRC said last week. 

Normally, penalties would be applied for late submissions. However, due to pressure caused by the Covid-19 pandemic, millions of people have been given “financial breathing space” after HMRC “effectively extended” the tax self-assessment deadline by a month to 28 February, The Guardian said. 

With penalties for late tax returns and late payments now waived for one month, HMRC explained that the changes mean: 

• Anyone who cannot file their return by the 31 January deadline will not receive a late filing penalty if they file by 28 February 
• Anyone who cannot pay their tax liabilities by the 31 January deadline will not receive a late payment penalty if they pay their tax in full, or set up a time to pay arrangement, by 1 April

“We know some customers may struggle to meet the Self Assessment deadline on 31 January which is why we have waived penalties for one month, giving them extra time to meet their obligations,” said Myrtle Lloyd, HMRC’s director general for customer services. 

• 31 January: self-assessment deadline (filing and payment)
• 1 February: interest accrues on any outstanding tax bills
• 28 February: last date to file any late online tax returns to avoid a late filing penalty
• 1 April: last date to pay any outstanding tax or make a Time to Pay arrangement, to avoid a late payment penalty
• 1 April: last date to set up a self-serve Time to Pay arrangement online

Here’s how to make the process of filling out your self-assessment form easier. There is also advice on what you need to declare and how to reduce your tax bill.

The deadline for filling out a paper tax return has already passed (31 October) so you will have to fill out your return online. That means you will need a log-in to the HMRC website. If you have done this before, you will already be registered. But, if you haven’t registered before you need to do it fast. It takes up to ten working days to receive your activation code in the post and you cannot file your tax return without it.

Before trying to fill out your form make sure you have all the paperwork you need to hand. This includes: a P60 form from your employer showing your income and the tax you have paid on it; a P45 if you have left a job within the tax year; a P11D or P9D detailing benefits and expenses; plus details of interest on bank or building society accounts, dividends from investments and any other income you receive.

If you want to hold on to your sanity, avoid calling the taxman. Research from the Public Accounts Committee found that HMRC answered only 50% of phone calls in the first half of 2015. Over a third of those people whose calls were answered had to wait more than five minutes for someone to pick up. Avoid that stress by looking online for the answers to your queries. HMRC’s website should be able to answer most of your questions. It has videos explaining everything from how to register to working out your expenses.

The most stress-free way to file a tax return is to have somebody else do it for you. An accountant can deal with sifting through your paperwork, make sure nothing has been missed and you can relax knowing your taxes are in the hands of an expert. Accountant fees usually range from £200 to £400 + VAT but in many cases they are able to make savings to your final tax bill that will go some way towards paying off their fee.

If you’ve spent hours hunting the house for essential paperwork, fretting about long-forgotten savings accounts or worrying how you are actually going to pay the final bill, take steps now to avoid the same stress next year. Put those lessons into practice now to make life easier next year.

Create a spreadsheet to detail your income and expenses and update it weekly or monthly. Keep files full of bank statements, bills and important forms so you can find them easily. Finally, open a specific savings account for your taxes and regularly deposit a portion of your income so you’ll have enough money to pay your tax bill.

That account could end up delivering an unexpected perk if there is money left over.

You must fill out a tax return if you are: self-employed and work alone as a sole trader; are a partner in a business, or are a company director (unless it’s an unpaid position for a non-profit organisation or charity). You also need to fill one out if you are employed and pay taxes through PAYE but earn self-employed income too.

There are other circumstances where you may have to fill out a self-assessment form. For example, if you are a higher rate taxpayer you’ll need to fill out a tax return to claim back additional tax relief on your pension contributions. If you or your partner earn more than £50,000 a year and claim child benefit you have to fill out a self-assessment form to pay some of the benefit back.

If you aren’t sure if you need to fill out a form you can check here.

You have to report everything you’ve earned over the tax year from 6 April 2020 to 5 April 2021. This includes income from employment, self-employment, property and interest and gains on your savings and investments. Even if all your savings and investments are in tax-free Isas you still have to declare them, despite the fact no tax should be due.

If you are self-employed or a sole trader you will have to pay Class 2 National Insurance (NI) contributions of £3.05 per week if you earned more than £6,515 in 2020-21. If you earned more than £9,569, you will also need to pay Class 4 NI contributions of 9% on profits between £9,569 and £50,270 2% on profits more than £50,270. 

Details of National Insurance contributions can be found here.

There are a whole host of ways you can cut your tax bill. The main one is by claiming expenses, as businesses (even if you are just a one-man band) do not have to pay VAT on costs incurred in the day-to-day running of their operations. If you are self-employed you can claim expenses such as a proportion of energy costs if you work from home, stationery and travel costs. You can even expense a portion of your mortgage interest in some cases. The taxman explains what expenses you can claim and how to calculate them here.