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Tax return made easy - things to remember when completing Self Assessment

16 January 2018

The deadline for 2016/17 tax returns is only two weeks away. Those who are self-employed, receive rental or savings income over certain limits, or who have made capital gains over the annual exemption of £11,100 for 2016/17 will need to complete their self-assessment by the end of the month. People who receive child benefit and where the higher earner in the couple has income of over £50,000 are also affected.

Patricia Mock, tax director at Deloitte, said:
“Over 11 million people need to file Self Assessment tax returns each year. Any return filed after the 31 January 2018 deadline - without a reasonable excuse - will mean a penalty of £100 even if there is no tax to pay. According to HMRC many people used the Christmas break to deal with this, with over 15,000 returns being filed between Christmas Eve and Boxing Day and nearly 19,000 on New Year’s Eve. For those who preferred to do other things over the festive period, time is rapidly running out and they should start to complete their tax return as soon as possible, especially as it may take time to get the necessary information.

“Access to online self-assessment records is now through the digital tax account, and taxpayers should find that their pension and employment details for the tax year are already pre-populated on the online return system. However, although the intention is that more information will be added automatically, this is not the case at the moment and so taxpayers will still need to find information for other sources of income and deductions, such as gift aid and pension contributions. When logging on, taxpayers should also be prepared for HMRC’s two-stage verification process where an access code is sent to a mobile phone, alongside some additional identity verification questions.”

Here are some important points to remember when filing your tax return with HMRC:

  • It’s up to taxpayers to register for self-assessment, and file a return. The deadline for filing a paper tax return for 2016/17 passed on 31 October 2017, so returns now need to be filed electronically by 31 January 2018 if you want to avoid a penalty. If you are not already registered for self-assessment it can take up to 10 days for your user ID and password to arrive in the post.
  • Once registered, you should check whether you are able to use HMRC’s free software to complete your tax return as there are a few more complicated situations (for example those receiving trust income or living abroad) where commercial software may be needed.
  • Make sure you have all of the relevant documentation: pensioners and employees should find details of their income on their digital tax account, but may want to check these from their P60s, and P11Ds for employees 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. The self-employed and landlords will need records of their revenue and outgoings.
  • Gather details of any professional subscriptions that you paid in the year, which were not reimbursed by your employer. If the organisation is on HMRC’s approved list, your subscription should be deductible from your employment income.
  • If you have made 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 income over £150,000 so check that you have dealt with this correctly on your tax return if you are affected. 
  • If you receive bank interest during the year that 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; the relief is given when the tax is calculated. Similar rules apply for dividends, where the dividend allowance is £5,000. Those with low earned income and pension receipts combined with savings income may also be entitled to the £0-5,000 exempt band. 
  • If you have a lodger in your home and claim rent-a-room relief: the relief has been increased to £7,500 from 2016/17.
  • 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.
  • 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.
  • 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. 
  • If you have outstanding student loans and you are self-employed, you may be required to make repayments via your tax return.
  • 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. Penalties for inaccuracies in tax returns are much harsher if HMRC spot them first, so it’s best to make sure that all bases have been covered. 
  • 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. HMRC will charge penalties if the original return is considered to have been filed ‘carelessly’.
  • Even if you can’t finalise your tax return yet it’s a good idea to check roughly how much tax you are likely to need to pay by 31 January so that you can ensure your finances are in order. Any amounts paid late will attract interest charges - currently 3%. If payment is still outstanding after 30 days, a 5% late payment penalty may be charged. HMRC have announced that the ability to pay tax by credit card is withdrawn from 13 January.
  • In some rare cases it may not be possible to file online as the HMRC calculation will not deal correctly with some unusual combinations of income. Those affected will need to file paper returns, but should not be charged a penalty if they have a reasonable excuse for the late filing of the paper return. 
  • Finally for those who filed 2015/16 returns, remember that the deadline to amend these is 31 January 2018, so if any provisional figures were included, or any mistakes were made, these should be corrected by this date.

Ends

Note to editors

About Deloitte

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Deloitte LLP is a subsidiary of Deloitte NWE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.

The information contained in this press release is correct at the time of going to press.

For more information, please visit www.deloitte.co.uk.

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