Returning a tax self assessment has always been somewhat of a hurdle for everybody after the holidays.
Things to do
All tax return forms must be back to the HMRC no later than January 31st. Late returns incur a penalty of 100 and interest is charged on any tax unpaid. Payments outstanding by the end of February may incur a 5% surcharge and an additional 5% if over six months late. Don't allow you to be faced with a hefty penalty; pay your self assessment tax dues by October 31 or by January 31.
With the availability of the Internet, you can now set up an online tax return to HMRC; they will give you an ID and password to use. You have to wait at least 7 days for your ID and password to be given.
Any new income or capital gains must be declared to HMRC regardless whether they send a form or not; it's your duty as citizen of the U.K.
Collate records: end of year pay form (P60), benefits statement (P11D), tax certificates from bank/building society accounts, dividends, lettings income and expenses, private pension contributions and self-employed earnings.
Things to remember
If you have failed to declare an income by mistake, inform HMRC; there's a great chance you be given some pardon on the penalties, or, if you're lucky enough, the penalties may even be dismissed.
Faulty accounting or incorrect figures are costly in a tax inquiry. That's why hiring a competent accountant is important; he or she can answer all HMRC questions for you. Instruct your account to redo an accounting period if HMRC tells you have an underpaid tax; don't pay immediately.
HMRC will require you to keep your tax return records for 22 months after each accounting year. For a business, or those with income from property lettings, the requirement is 5 years and 10 months. There is a 3,000 fine (each tax year) if records have not been retained.
Avoid tax schemes reliant on non-declaration of income or capital gains as these would amount to illegal tax evasion. To save you from trouble, gain
personal tax advice in London only from reputable accountants that have a prominent office and good recommendations.
Check that you have answered all the relevant questions, signed the return, and have not made any mistakes. Incorrectly completed returns can be rejected by HMRC.
When completing the return:
- Enter the correct amounts for bank/building society interest and tax deductions
- State exactly the gross income, tax deductions, net cash, etc.
Non-cash dividends such as shares are entered differently
PEPs and ISAs are non taxable, so don't enter them as income
- Personal pension payments is also entered for as relief, but workplace schemes are not
