Top tips for filing your self-assessment tax return

HMRC are expecting 12.2 million taxpayers to submit self-assessment tax returns online by the 31 January deadline. Have you done yours yet?

Believe it or not, self-assessment internet filing is celebrating its 21^st birthday this year. The majority of taxpayers do file their returns online - filing on paper by the 31 October deadline is a method that’s only used by just 4% of taxpayers. Some 63,500 conscientious taxpayers even filed their return on 6 April 2021, the first day of the new tax year, getting it over and done with as soon as possible.

For anyone still waiting to file their return, the deadline is fast-approaching - Monday 31 January 2022 at 11.59pm - and there’s no reason to delay! Even though you can save your online form as you go, and go back to it when you want, many people still leave filing their online return to the last day, and in some cases, the last hour.

HMRC have announced that they will waive late filing and late payment penalties for self-assessment taxpayers for one month, but the deadline to file and pay remains 31 January 2022. The penalty waiver may mean that you’ll not receive the £100 late filing penalty if you file your self-assessment online by 28 February 2022, but that’s still not a good reason to put off the inevitable!

I recommend you still aim for the 31 January deadline and, to help you, here are my 12 top tips for filing your tax return with HMRC.

Top tips

1. Make sure you have all of the relevant documentation: pensioners should find details of their income on their digital tax account, but may want to check these from their P60s. Similarly, employees will need to check P11Ds, giving details of any benefits in kind. You’ll also need details of any investment income outside an ISA, as these are not yet reflected on your digital tax account. Self-employed and landlords will need records of their revenue and outgoings.
2. Your 2020/21 tax return covers earnings and payments during the pandemic. This means you’ll need to declare if you received any grants or payments from the COVID-19 support schemes up to 5 April 2021 on your self-assessment, as these are taxable, including
   • the Self-Employment Income Support Scheme
   • the Coronavirus Job Retention Scheme (if you are an employer)
   • other COVID-19 grants and support payments such as self-isolation payments, local authority grants and those for the Eat Out to Help Out scheme
     
     You can find out more on which grants and payments you need to report on HMRC’s guidance page.
     
3. If you were employed and you had to work from home during 2020/21, you are allowed to claim expenses of £6 per week for household expenses without providing receipts. Any week will count provided you had to work from home for all or part of it. For a higher rate taxpayer, this would typically save about £120 in income tax. If your actual expenses were higher, it is possible to claim the higher amount but you need to be able to provide receipts and justify the split between personal and work elements. Also remember to gather details of any professional subscriptions that you paid in the year that were not reimbursed by your employer. If the organisation is on HMRC’s approved list, your subscription should be deductible from your employment income.
   
4. If you have made personal pension contributions in the year, details will need to be provided on the return. Higher and additional rate taxpayers will receive additional tax relief through Self-Assessment. Remember that relief is restricted for those with an adjusted income over £240,000 and a threshold income over £200,000.
5. If you receive bank interest during the year, tax is no longer deducted from this income at source, so you may have further tax to pay. Although there is a personal savings allowance of £1,000 for basic rate taxpayers, (£500 for higher rate and nil for additional rate taxpayers) the full amount of income must be included on the return as the relief is given when the tax is calculated. Similar rules apply for dividends, where the dividend allowance is £2,000. Those with low earned income and pension receipts which are combined with savings income may also be entitled to the £0-5,000 exempt band.
6. Do you have trading or property receipts but low expenses? There are trading and property allowances available in lieu of expense deductions which means that trading and/or property receipts (excluding lodgers) of up to £1,000 each can potentially be received tax-free. If you have a lodger in your home, the rent-a-room scheme lets you earn up to £7,500 per year tax free.
7. Remember to check your charitable donations under the gift aid scheme. Like personal pension contributions, gift aid donations may attract additional relief if you are liable to higher or additional rate tax.
8. Calculating rental profits: individuals are generally allowed to use the cash basis rather than accruals basis in calculating rental profits, i.e. recognising receipts and expenses based on payment dates, rather than the periods that they relate to. You need to take care to ensure that no receipts or payments are double-counted or missed from your tax returns altogether. You should note that, from 6 April 2020, income tax relief on all residential property finance costs is restricted to the basic rate of income tax.
9. Have you got married or separated during the year? Income from jointly owned assets, such as rental profits, can sometimes be treated differently depending on whether the owners are married.
10. If you or your partner claim child benefit and your income is over £50,000 you may need to include a claw-back in your tax return.
11. If you have outstanding student loans and you are self-employed, you may be required to make repayments via your tax return.
12. Beware of scams. HMRC is urging people to be alert for suspicious SMS text messages, calls or emails as the department sees high numbers of fraudsters contacting people claiming to be from HMRC at this time of year – they say nearly 800,000 tax-related scams were reported to them in the last 12 months.

One last thing. Before you file, you should check, and double check, all of your details and ensure that you have accounted for everything. HMRC receive a lot of information directly from third parties, so if anything has been omitted, an enquiry may well be opened.

Note that penalties for inaccuracies in tax returns are much harsher if HMRC spot them first and they will charge penalties if the original return is considered to have been filed ‘carelessly’. You can use provisional figures in your tax return if the final figure is not available, but it is important to provide the final figure as soon as possible.