By Stephen Hall, Office Senior Partner, Deloitte North East
Over 11 million people need to file Self Assessment tax returns each year in the UK before the 31 January deadline. Without a reasonable excuse a fine of £100, even if there is no tax to pay, is the penalty they face.
In the North East around 11 per cent of those in work are classed as self-employed, which means that there are approximately 135,000 individuals who need to file their returns or face the consequences.
That’s not including those that receive rental or savings income over certain limits, or who have made capital gains over the annual exemption of £11,100 for 2016/17 and those who receive child benefit, where the higher earner in the couple has income of over £50,000, who are also all affected.
So, with time rapidly running out, here are some important points to remember when filing your online tax return with HMRC
- 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.
- 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.
- 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 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.
- Check and double check all of your details. 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.
- 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.
Stephen Hall is the senior partner in our Newcastle office. He has worked for the firm for over 25 years where he has advised many public and private sector organisations on all aspects of direct tax. Stephen also heads up the Private Client Practice for Yorkshire and the North East. From Durham, Stephen joined the firm from university and has always worked in the North East. Stephen was named Tax Adviser of the Year in the North East Accountancy Awards in 2009 and 2014.