Some advice to help you get your tax return filed on time (you only have till 31st January)
First published on 05 January 2023 by Alastair
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There are only a few weeks before the deadline for filing your tax return for the 2021-22 tax year. For most of us (12m last year) this is done online and, believe it or not, over 3,000 people took time off from the festivities on Christmas Day to submit their return. Despite that, last year, over four million of us had still not filed their return a week before the deadline of 31st January. With HMRC not exactly up to speed recently, what with lots of them WFH and not answering the phones as quickly as we’d like, it’s even more important than ever to make sure you get your tax return done on time. For a start, it avoids the fines that automatically come your way if you don’t…
With that in mind, here’s our checklist of some of the key things* to be aware of and which can be missed out if you’re in a hurry.
- Preparation is vital.
This is perhaps obvious, but the biggest problem many people have is that they rush everything at the last minute and then find they’ve missed out something important – leading to a fine or, worse, an investigation by the tax authorities. Make sure that before you even log on to HMRC, your paperwork is ready. As well as information about your untaxed income (from self-employment, investments, property etc.), make sure you have your 10-digit Unique Taxpayer Reference (UTR) and your National Insurance number. You’ll also need your latest pension statement and details of income that you’ve already paid tax on - this might be a P60 or P45 if you’ve moved from employment to self-employment.
- If you have children, check your spouse’s child benefit claim. Be aware that if your income is over £50,000 a year you need to find out if your spouse is claiming child benefit - and they are obliged to answer. Some 190,000 taxpayers have already been caught out by their failure to do so and declare this on their personal self-assessment return.
- If you have a state pension (lots of people carry on working after the receive their state pension), remember to declare it as income. Also, remember it’s not the amount you actually receive in the tax year that has to be entered, but your pension entitlement. This is 52 times the weekly amount, reduced in the year you start drawing it.
- If you are making contributions to a personal pension scheme, don’t forget to claim any extra pension relief. This will be at an amount reduced by basic-rate income tax, with the fund able to recover the difference from HMRC. Be aware that higher and additional rate taxpayers are entitled to an additional 20pc or 25pc respectively from the gross amount, so don’t forget that either! However (there is always a ‘however’ with HMRC), things can get complicated when the total of personal and employer contributions exceed the annual allowance threshold. Usually, this is £40,000, but can be reduced to a minimum of £10,000 where incomes are above £200,000. There are also complex “carry forward” rules which can reduce the charge: if you’re unsure about this you can always try and contact HMRC or, alternatively, you can use the HMRC’s online “pension annual allowance calculator” (but it would probably be quicker to contact us….!).
- Do you have any other income? For example, from trusts or estates? Check – you may even be due a repayment!
- Declare your capital gains as well as your income. For example, if you have sold any assets during the tax year and made gains in excess of the capital gains allowance, you must report those on your tax return. There is an exception for land and property sales: for these, you’ll need to file a separate return and report it to HMRC within 60 days. Note that following changes announced in the Autumn Statement, this is going to be more difficult in the future because the CGT allowance is going to be cut from its current level of £12,300 to £6,000 in 2023 and then further cut to £3,000 in 2024 (which means much smaller gains will start becoming liable).
- If you are a sole trader (or have a small side-line that earns you more than £1,000 a year), make sure you use all the available expenses and allowances. Allowable business expenses include: office costs – think stationery, phone bills, even a new chair so long as it’s only used for work; travel expenses – trains, buses, petrol (mileage) etc.; heating and lighting your office/premises; any advertising and marketing; business insurance and marketing; stock, raw materials, etc.; If you’re running your business from home, you can claim a proportion of heating, mortgage interest or rent, electricity and council tax. You can find calculators for these online, or (this is easier!) you can use HMRC’s simplified calculation which uses flat rates. In any event, for all of these, you need to keep a record of all the running costs of your business throughout the tax year. Oh, and be aware that separate rules apply for limited companies (again, if you’re unsure, contact us).
- Finally… check, then check again. Does it all make sense? Can you reconcile any underpayment with additional income received and not factored into your PAYE coding?
- The penalty for filing your tax return late is £100, more if it’s over three months late. Interest could be charged on late payments too, so don’t leave it to the last minute. Another advantage in filing on time is that since 2008, HMRC is (in most cases) only entitled to open an inquiry into your return within 12 months of it being filed. But if you file late, HMRC then has more time to make an inquiry as they then have an extended deadline to the next quarter day (for example 30th April or 31st July) after the first anniversary of the day on which the return was made.
Finally, while I know you’re probably reading this because you haven’t done your return yet, do remember that you can complete your tax return as soon as the tax year ends in (last) April. Moreover, you can pay any tax due, whenever you want, so long as you meet the 31st January deadline. Perhaps it might be better to do this earlier next year? Or, especially in you have a business and you’re finding it too much to do on your own, then that’s what we’re here for – so please do get in touch.
Vivian Linstrom, M&S Accountancy and Taxation
* this is not an exhaustive list – if you’re in any doubt, check with your tax adviser or HMRC.
