The importance of submitting an online self assessment tax return

Tim Humphries, senior tax manager at Menzies accountants gives top tips on filling in the online self-assessment form and explains the importance of submitting a return by 31 January.

You can also check out our full guide on How to complete a self-assessment tax return.

Tips on completing the form: where do people get confused and what mistakes people make?

  • People often miss off items such as student loan repayments and the Higher Income Child Benefit charge as their mind is focusing on tax and not necessarily ancillary items.
  • As bank interest has tax deducted at the source, not everyone thinks to include it on their tax returns as they assume sufficient tax has been paid.
  • It takes around four weeks to register for self-assessment so if you are due to complete a Return for the first time and have not previously registered you really need to do so before Christmas at the absolute latest. Once registered it then takes around seven days to set up an online account with HMRC.
  • If you change jobs part way through the year and receive a payment after your P45 has been issued this payment will not be on your P60 at the end of the year so don’t forget to include it separately.
  • Make sure you collate all the invoices raised and expenses receipts to include on your Return, prior to starting it. It is often easier to summarise everything on a spreadsheet so you have the totals to hand to include on your tax return.
  • If your turnover from your self-employed business is less than the VAT threshold (£85,000 for the 2018/19 tax year) you can use the Cash Basis, which means you only pay tax on money received and claim relief for expenses paid out.
  • HMRC produce toolkits for self-employment and property income to help unrepresented taxpayers get their tax returns right. Search ‘HMRC toolkits’ online for a full list.
  • Don’t leave it to the last minute!  The 31st of January is a Saturday this year so your accountant may not be working that day!

Tips on what you can claim as expenses (that not everyone may be aware of) and the things you should volunteer that people forget: 

  • Professional subscriptions can be deducted from employment income. HMRC provide a list of professional bodies they accept claims for. If your institute isn’t on the list you can still claim it but may need to convince HMRC at a later date that it’s allowable.
  • If you undertake business mileage and your employer reimburses you less than the statutory amount of 45p a mile for the first 10,000 miles and 25p thereafter then you can claim relief for the additional expenses.
  • If you are required to work from home it may be possible to claim for the use of your home against your employment income. HMRC allow a claim of £4 a week without the need to keep records. Any claim in excess of this amount will need to be backed up with household bills.
  • Pension contributions also attract a higher rate and additional rate tax relief. This does not include any contributions from your employer.
  • Making investments into Enterprise Investment Scheme (“EIS”) or Seed EIS qualifying shares will entitle the investor to income tax relief. The relief can be backdated to last year. Such investments made now can also be used to defer, or in the case of SEIS investments reduce your 2013/14 capital gains tax liability.

For those who haven't saved for their tax bill soon to be paid - how much should they save next year and what are the best ways of saving this?

  • If you are earning £100,000 a year as a rule of thumb you should be putting 35% of your income aside. If you are repaying a Student loan it should be 9% higher than this.
  • For those who are self-employed and struggling to find the tax due there are a number of specialist providers out there who are willing to make short-term loans to cover tax liabilities based on the amount, your customers owe you. If HMRC refuse you a payment plan, these lenders can offer a cheaper alternative to maxing out credit cards.

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