5 top tips for your tax return

The 'last chance saloon' online deadline for filing your completed tax return is just around the corner.

12:57 31 January 2013

The 'last chance saloon' online deadline for filing your completed tax return is just around the corner.

 

Whether you are self-employed, or have been requested to fill out a return for some other reason by the powers that be, now is the time to get it done.

Otherwise, you face an immediate fine of £100 - plus further charges the longer you delay.

Miss the deadline by six months, for example, and your penalty could be in excess of £1,300.

Here are five top tips to help you get organised and ensure you steer well clear of a fine.

 

1. Get online

 

The majority of people fill their tax returns in online nowadays.

Figures from HM Revenue & Customs (HMRC) show that 77% of self-assessment returns for the tax year 2010-2011 were filed this way, up from just 23% in 2005-2006.

Online returns calculate your tax automatically as you go along - taking the headache out of working out how much you owe.

However, if you are still to file your return for this tax year, online is also your only choice as the deadline for paper returns passed months ago on October 31, 2012.

And even if you only stand to pay a small amount, you can no longer ask HMRC to do it through your tax code as the deadline for filing returns of this kind passed on December 31, 2012.

You need to sign up for HMRC Online Services before you can send your return online, though.

And that means acting now if you are not already registered as your Activation Code often takes seven working days to arrive in the post.

 

2. Meet the deadline

 

All online tax returns must reach HMRC by midnight on January 31.

The only exception to this rule is if you only received a letter from HMRC telling you to complete a return after October 31, 2012 and giving you three months to do so.

And unless you qualify for an extension this way, missing the deadline will result in an immediate penalty of £100.

This applies even if you have no tax to pay or have already paid the tax you owe.

Other penalties include a £10-a-day charge for anyone whose return is more than three months late - up to a 90-day maximum of £900 to be charged on top of the £100 mentioned above.

Miss the January 31 deadline by six months, meanwhile, and you will also have to pay either a further £300 or 5% of the tax you owe, whichever is higher.

 

3. Have the relevant information to hand

 

To complete your tax return, you will need your Unique Taxpayer Reference number - which you should find on HMRC letters - and either your postcode or National Insurance number (unless you live abroad).

Other details to have to hand include your income, both from employment and from investments such as shares, and the amounts you have spent on things such as pension contributions and stationery, for example.

You can then use these outgoings to reduce the amount of tax you pay overall.

Anita Monteith at accountancy body ICAEW said: "You will need to gather a number of documents in order to complete a self-assessment return.

"These include: details about your employment income such as your P60 and P11D, interest statements from banks and building societies and information on dividends from shares.

"You will also need details about anything you can deduct such as gift aid donations and pension contributions."
 
4. Take time to get it right - and keep a copy

 

You do not need to complete your online tax return in one sitting.

If you run out of time, or need to go away to do some calculations, the system can save your progress to allow completion over a period of time.

And it is worth taking the time to get it right as mistakes could lead to your affairs being investigated by HMRC - which will be much more stressful and time-consuming.

To this end, ICAEW advises anyone who filed a return last year to compare this year's figures with those and to explain any significant changes on the form - in the white space provided for notes.

Once you have finished it is also vital to save a copy of the return, as well as the receipt you receive when you submit it, just in case there are any problems.

And don't forget to keep records of all the information used to complete your tax returns for at least the next two years.

Otherwise, you could face a fine of up to £3,000 should an investigation be launched.

 

5. Don't be afraid to ask for help

 

Tax returns can be confusing, especially if you have never filled one in before.

But don't despair; HMRC's Self Assessment Helpline is there to answer your questions.

It is open Monday to Friday from 8am to 8pm and from 8am to 4pm on Saturdays.

Just call 0845 900 0444 and have your Unique Taxpayer Reference number ready to quote.

 

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