Are you one of the thousands of people who will be filing your tax return this month? Before you do, read these top tips.
There's little more than three weeks remaining before the 31 January deadline for submitting your self-assessment tax return and paying any tax you owe HM Revenue & Customs (HMRC). So, with the cut-off date fast approaching, here's how to make sure you're on time.
If you're a higher-rate taxpayer, self-employed, own a buy-to-let property or have a complex tax position, it's likely you'll be among the 9 million people issued with a tax return for the tax year ending 5 April 2007.
Perhaps you put that tax return to one side to be dealt with at a later date. If you did, that date has now arrived. There's still just enough time but you must act quickly. Anyone missing that all-important deadline will be stung by a £100 penalty, and that's just for starters.
Even worse, if you haven't settled up your tax bill within 28 days following the deadline you'll have to pay a 5% surcharge and a further 5% on any tax which is still unpaid after 6 months.
Thankfully, you can now submit your return more promptly online. Last year almost 2.9 million people chose to file their returns electronically. To do that now your first step is to register and request an `activation PIN' from the HMRC website no later than 22 January*. It can take up to 7 days to get a PIN so the sooner you do this the better.
Filing online is a secure way to submit your tax return and you'll receive an immediate acknowledgment once it has been sent so you can rest assured it has arrived safely. Your return can be saved on the system allowing you to complete it in stages if required. (Returns can be saved until the end of March. After this time they will be removed in preparation for the new tax year.)
What's more, software available on the HMRC website will automatically calculate your tax liability for you making a really tedious task a whole lot less painful. And if you're entitled to a rebate you should receive it more quickly this way too.
When it comes to completing your tax return, whether you're an early bird or a last minute Larry, here are seven simple steps to follow:
HMRC's Top Tips For Tax Returns
- First of all, collect together all the tax records and paperwork you'll need. That's right; it's time to dig out the bank statements and payslips. You'll need details relating to any earnings you have received during the tax year, plus any capital gains that have been realised as well as other sources of income including investments, savings, pensions, property and so on. Don't forget details of anything you can claim for such as pension contributions, charitable donations or expenses if you work from home as a self-employed person.
- Next decide whether you want to file a paper or electronic return.
- Then decide which date you want to submit your return by. Here's a quick rundown of your options:
30 September - this is deadline for paper returns if you would like the revenue to calculate your tax liability for you. They will then let you know the amount you owe by the 31 January deadline.
If you want the revenue to include any underpayment of less than £2000 in your PAYE tax code number, then your return must also be received by 30 September.
30 December - if you file your return online by this date and you owe less than £2000, the revenue may be to collect it through your PAYE tax code number.
31 January - this is the deadline for both paper and online self-assessment tax returns.
- If you decide to submit a paper return make sure you have all the pages you need. If you need additional pages, telephone the Self Assessment Orderline on 0845 9000 444, fax your order on 0845 9000 604, order online at the Self Assessment Orderline or download the forms you need.
- Complete your tax return using the Tax Return Guide for advice.
- If you need help or have any questions, contact your tax office or call the self-assessment helpline (0845 9000 444).
- Before you submit your return, check it. Make sure you have completed everything you need to and have attached any supplementary pages. If you're filing a paper return, don't forget to sign it and date it.
You could lose out by leaving your tax return late. There's no time for correcting any mistakes you may have submitted or for getting help if you run into difficulty. If you're the eleventh-hour type, try to complete the return sooner rather than later next time. Don't forget, just because you send your return in before the deadline, it doesn't mean you have to pay the tax you owe any earlier.
*To file your tax return online register here through the HMRC website. You'll need your Unique Taxpayer Reference (UTR) which can be found on your tax return (form SA100) and your National Insurance Number or postcode.
More: Five Tops Ways To Avoid Tax.