A Guide to Completing Your Self Assessment Filing your Self Assessment Tax Return online
A Guide to Completing Your Self Assessment Contents 3 What is Self Assessment? 4 Do I need to file a Self Assessment? 5 Try our CitizenTax app 6 Key dates to remember 8 Registering for Self Assessment Online Self Assessment Paper Self Assessment Your UTR Number Business partnerships 10 Information you ll need 11 Keeping accurate records Expenses you can claim Documents to have 13 Completing your tax return online What s not included in Payments on Account? I have no more tax to pay, should I submit my tax return? 14 Paying your tax bill Penalties 15 What if I miss the deadline? Help and contacts 16 Remember CitizenSafe at Registration 17 Self Assessment Checklist and Tips 2
What is Self Assessment? Self Assessment tax returns is the system that HM Revenue & Customs (HMRC) uses to collect Income Tax from people who have not paid it through PAYE or other means. If your only income comes from wages, a pension or interest on savings, then you won t need to complete a Self Assessment tax return because the tax on these has already been deducted automatically. When you receive income from other sources (for example, if you are self employed, received 2,500 or more untaxed income through renting out a property, or savings & investments), you ll need to fill in a Self Assessment form that declares all of your income and expenses during the previous tax year that ended on 5 April. Did you know? Each year, the Self Assessment deadline applies to the tax year that ended the previous year. For example, for the Self Assessment deadline of 31 January 2018, your tax return will cover the tax year 6 April 2016 to 5 April 2017. 3
? Do I need to file a Self Assessment? If you answer Yes to any of the following questions, you need complete a Self Assessment tax return:. Are you self employed? Have you received more than 2,500 or more in untaxed income? Was your savings or investment income more than 10,000 before tax? Have you made a profit from selling shares, a second home or some other asset and need to pay Capital Gains Tax? Are you the director of a Limited or other company? Did you or your partner receive over 50,000 during the year and one of you claimed Child Benefit? Did you receive income from abroad? Did you live abroad and still receive income from the UK? Did you receive share dividends as a higher rate taxpayer? Was your total income more than 100,000? Are you a trustee of a registered pension scheme or other trust, a minister of religion or Lloyds insurance underwriter? Did you receive a P800 form from HMRC indicating that you hadn t paid enough tax last year? 4
Try our CitizenTax app If you are unsure whether you need to fill out a Self Assessment tax return, you can download our CitizenTax app and answer a few quick questions to find out. The app is available through itunes or GooglePlay. There is no need to register any information and the app is not connected to HMRC (so you do not need a Unique Taxpayer Reference to use it). 5
Key dates to remember If you are filing your tax return for the first time or you've misplaced your activation code, you will need to register in advance this can take 10 working days to arrive by post - or you can use the online GOV.UK Verify service with CitizenSafe, which takes 15-20 minutes to register and then just a few seconds to login thereafter. 5 April The tax year ends. Your Self Assessment for the tax year that has just finished will need to be submitted in the upcoming January (10 months away) 6 April The start of a new tax year and the date from which you need to start organising your information for the subsequent Self Assessment deadline (22 months away) 5 October This is the last date that you can register for Self Assessment for the tax year that ended 5 April of the same year. After this date, your return will have to be submitted on paper or by an accountant. 31 October If you want to submit a paper Self Assessment (SA-100), your post will need to reach the HMRC office by midnight (or you have an extra 3 months breathing space to complete your Self Assessment online). 31 January Midnight is the deadline for submitting your Self Assessment online. You ll also need to pay the closing balance of the previous years tax and make the first payment on account for the Self Assessment you just submitted. You might be fined if you submit your Self Assessment or pay your taxes late. Knowing where all these dates line up each year can be a bit confusing - to see an example of tax years and Self Assessment deadlines, please see the next page. Although you have more time to submit online, there are some good reasons for filing your Self Assessment as early as you can: 1. You will know how much tax you owe, allowing you more time to find the money owed at the end of January. If you can t pay on time, you ll then face fines and interest penalties, meaning you owe even more! 2. If you ve overpaid, filing your tax return early will put you at the front of the queue when HMRC start issuing refunds. 6
Key dates to remember An example: The time line between tax years and Self Assessment is not the simplest to understand. To summarise, you submit your tax return 10 months after the end of each tax year, while your Payments on Account are in advance of the tax return you are yet to submit, and these are estimated based on the previous years return. So within any 12 months period, there could be tasks relating to three different tax years - which can be confusing. This example should help clarify the whens and whats of Self Assessment: Tax Year 6 April 2015 to 5 April 2016 Tax Year 6 April 2016 to 5 April 2017 Tax Year 6 April 2017 to 5 April 2018 31 January 2017 2015-2016 Online tax return deadline 2015-2016 Pay the closing balance 2016-2017 Make first Payment on Account 5 April 2017 2016-2017 End of Tax year. 6 April 2017 2017-2018 Start of new Tax Year. 31 July 2017 2016-2017 Make the second Payment 5 October 2017 2016-2017 Register for Self Assessment 31 October 2017 2016-2017 Paper Self Assessment deadline 31 January 2018 2016-2016 Online tax return deadline 2016-2017 Pay the closing balance 2017-2018 Make first Payment on Account 7
Registering for Self Assessment Online Self Assessment First time users have two options for registering: 1. Register for GOV.UK Verify a Government certified identity provider, like with CitizenSafe and start your Self Assessment online. After you complete the identification process, which takes about 15-20 minutes - after this, logging in will take a few seconds. 2. Register through Government Gateway ID and wait until you receive an activation code to your online account. This will take 10 working days in the UK, or 21 working days if you are abroad. In case you've misplaced your name, ID or password, or your activation code expired (which happens 28 days after is was sent to you), you will have to register again as a new user and request a new code to be sent to you by post. The new GOV.UK Verify service enables you to register once and then you can use the same login for multiple GOV.UK services. The new login with Verify will gradually replace Government Gateway. Once you have your GOV.UK Verify login from CitizenSafe, you can go ahead and register for Self Assessment with HMRC. To do that, you'll need your National Insurance (NI) number and basic details for your business (registered address, company number, etc.). You can get started online by clicking the button below. Sign up with GOV.UK Verify 8
Registering for Self Assessment Paper Self Assessment If you want to register by post or phone, you will need to download the relevant form, complete it and send it to HMRC by 5 October. There are different forms for different kinds of taxpayer, but most people need a SA-1 form. This tells HMRC that you need to submit a Self Assessment Tax Return. Once they clear you to do so (and this can take up to four weeks), you re then ready to fill in the main Self Assessment form, a SA-100, (you can download all your Self Assessment forms from GOV.UK). Remember, this needs to reach your HMRC tax office by midnight 31 October if you re not submitting online. Your UTR Number Once you ve register for Self Assessment, you will receive your UTR (Unique Taxpayer Reference) number. Make sure you keep this ten-digit number safe because it s the key that unlocks all your future tax returns. If you lose it, you ll need to register all over again! Business partnerships If your business is a partnership, then you ll need to ensure that you are registered as a partner in the business. To do this, you need to provide the address and postcode of the business, the partnership UTR and the company registration number (if you ve registered with Companies House). Did you know? In 2016, 10.39 million (92%) Self Assessment tax returns were completed before the 31 January deadline. Of those, 9.24 million (89%) were submitted online. 9
Information you ll need The key records are your bank statements - from these you can work out what income you received from where and what you paid out - For most people, that s a whole day s work! Putting all these into a spreadsheet will allow you to organise the different amounts and work out the subtotals (you can download your bank data directly into a spreadsheet). The key amounts you need to work out are: Self-employment income: The totals for all your invoices and business expenses. Employment income: if you have a second job in addition to being self employed, or employment income in addition to untaxed income, you ll need your P60 'End of Year Certificate' Dividends: If you re running your own limited company, how much did it pay you in salary and how much in dividends? For the latter, you will need to reference all the dividend voucher numbers. Partnership income: Any income received through a Partnership. Each partner must submit their own Self Assessment, and the nominated partner must also submit a tax return for the partnership. Interest: How much you paid in interest on loans or credit cards, as well as what you received in interest on savings (so keep your bank/building society statements). Rental income: You ll need details of all the income you received in rent (it might be a good idea to have that paid into a separate bank account). Foreign income: Keep the details of any monies you received from overseas. Pension contributions: Your may get tax-relief on your contributions to a private pension fund, including a workplace, stakeholder or overseas pension. State Benefits: If you receive a pension or any other State Benefits, you ll need the year s total of payments received and the tax that was deducted. Charitable Giving: Details of any Gift Aid you re claiming on charity donations. Payment on Account: Payments towards last year s tax bill will count against your income this year. Redundancy or Unemployment benefit: Details of any redundancy payments or unemployment benefit you received after leaving a job during the last tax year as well as your P45. Employee benefits: If you received employee perks from your job (such as healthcare), you ll have been given a P11D form that totals those benefits for the year. Keep this safe for your Self Assessment. Capital Gains: If you ve made any profits disposing of things like rental property or shares, you ll need to declare these. 10
Keeping accurate records The basic rule of thumb here is to keep everything and file it so that you can find it again you ll be more likely to make the submission deadline if everything you need is easy to find. You might find that the more information you can keep online or on your PC, the easier you ll be able to find it to work out the totals for your tax returns. Keep track of income and expenses You ll need to keep accurate records of your income and outgoings, receipts for any business purchases or sales of assets, and details of any other sources of untaxed income like rental income or investments. One way to do this is to have separate bank accounts for different things, for example a business account that you use only for invoiced receipts and business related spending. Keep a digital record Using a DIY accounting package like SAGE or Quicken will also help you to keep track of tax as you go. Alternatively, record all your income and bills on your own spreadsheet as you go through the year. You can use the same spreadsheet to keep notes of any key documents you received. And if this seems like double Dutch or too much work, then maybe that s a sign it s time to find yourself an accountant! Did you know? If you re self-employed, you ll need to keep your business income and costs records for at least 5 years after the Self Assessment deadline. HMRC can charge you a penalty if your records aren t accurate, complete and readable. 11
Keeping accurate records Expenses you can claim Claiming expenses can be tricky. If the company pays you back for your expenses, then these are not allowable for tax relief and must instead be recorded as benefits that will be taxed as part of your salary. Travel expenses: Only for business travel, not personal. This does not cover travel to a permanent workplace, which is considered to be anywhere that you expect to spend more than 40% of your working time. Business use of home: When your billable work is carried out at your home, the company can pay you up to 4 per week towards variable costs without HMRC requiring receipts. You can claim more than this, but you ll need to show receipts for these costs. You cannot claim for any fixed costs that you would pay whether you worked at home or not (such as rent or council tax). If you purchase equipment for working at home (such a new computer), you can claim Capital Allowances on these in your Self Assessment - so keep the receipts! Mileage for travel in your own vehicle: The company can pay you mileage at HMRC s approved rates, and this does not get included in your P11D. If the company pays you less than the approved rates, you can receive tax relief on the difference - if they pay more, then that should be included in your P11D. Company car and fuel: If the car is available for private use (whether you actually use it privately or not), then these are taxable benefits that should be in your P11D form. Documents to have When filling in your Self Assessment, you ll need to refer to a lot of additional documents, so it s best to keep these together, and ensure you have a digital copy. P60 End of Year Certificate, P11D Expenses and Benefits and expenses that you weren t paid back for P45 Details of Employee Leaving P2 PAYE Coding Notice Bank interest certificates (personal and joint accounts, but not ISAs or Ltd company accounts) Details of shares, dividends and other income 12
Completing your tax return online When the last bauble has come off the Christmas tree and the last pine needle has been swept off the carpet, this should be your cue that it s time to start completing your Self Assessment tax return, if you haven't already. Hopefully by now, you ll have already organised all the information you ll need, otherwise now is definitely the time to start going through the paperwork and bank statements. Save and return online If you re filing online, you can use your Self Assessment account with HMRC as your guide, filling it in bit-by-bit. The online system can save your progress for you, meaning you can go away, find out any extra information you need and come back to fill in the fields that are still blank. If there s anything you re not sure about, you can do more reading, consult an adviser or use the HMRC helpline. All the fields and sections can be changed or edited right up to the time you finally click on the Submit button. So take your time and get it right! Remember the old carpenter s adage: Measure twice, cut once. So when you re sure its time to click Submit, just go through all the fields one more time and double check Better safe than sorry! Finally, when it s done, don t forget the Save and Print options to keep the completed return for your records - and pat yourself on the back for having completed another year of Self Assessment! 13
Paying your tax bill Your bill will include your remaining balance from last year, which is called your Balancing Payment - when this is more than 1,000, your bill will also include a Paymenton Account, which is advance payments towards your bill for next year. There are two Payments on Account each year, and are half the previous bills amount - these are due by midnight on 31 January and 31 July of each year. In the following year, if you still have tax to pay after your second Payments on Account, then the Balancing Payment must also be made by the next Self Assessment deadline by midnight 31 January along side the next year s first Payment on Account. This can happen if, for example, you had a greater income than the previous year and so your tax bill was not covered by the estimated Payments on Account. If you know you re tax bill will be lower than last year, you can ask HMRC to reduce your payments on account. If you ve overpaid, HMRC will send you a refund - but if you ve underpaid, you ll be charged interest. What s not included in Payments on Account? Payments on Account do not include anything you owe for Capital Gains or Student Loans these will be included in your Balancing Payment at the end of January. I have no more tax to pay, should I submit my tax return? If you have received a tax return form from HMRC, or have been contacted to submit online, then you must complete it even if you have no more tax to pay. You can contact HMRC and request that they withdraw the tax return request, and if HMRC are satisfied that you have paid all the tax you owe, they may agree to this, but if they do not agree to withdraw it, and you do not submit your tax return by the deadline, then you will be subject to the late payment penalty and all subsequent fines until you do submit it. 14
What if I miss the deadline? Well, you won t go to prison if you fail to file by midnight on 31 January but it is going to cost you. For a start, you re probably going to receive an immediate 100 fine... unless you have pretty good excuse (unlike the (sur)real excuses HMRC have received). Penalties If you still haven t filed it your tax return by the end of April, you ll be looking at further fines of 10 per day for the next 90 days which is up to an additional 900! After that, if your return is still outstanding, they ll whack on another 300 or 5% of the tax you owe, whichever is the greater taking your penalties up to at least 1,300, on top of any taxes you may still need to pay. You ll get a repeat dose of 300 after every additional 12 months, that you continue to not submit that year s tax return. However, if you miss the deadline and you have a genuine and valid reason, then there is an appeals process. If you re thinking of trying to conceal information, then we have one word of advice: DON'T! If you re found out (since HMRC can access all your accounts), then that could double your tax bill at a stroke! Did you know? Out of the 10.39 million tax returns submitted on time in 2016, 823,000 (8%) were submitted last minute on 30 & 31 January. Another 870,000 (8.4%) were not received on time, each one potentially owing HMRC at least 100 in penalty charges. 15
Remember CitizenSafe at Registration When you first use GOV.UK Verify, you ll have a list of companies to choose from, all of whom offer an identity verification service. We re not the most well known name on the list and unless you ve had to have your identity checked online for something else, there s probably no reason why you would know about us - that s because verifying identities is the only thing we do! Years of experience have made us particularly good at identity verification and we pride ourselves in being able to offer you the quickest and simplest verification process possible when it comes to registering for Self Assessment, with no unnecessary questions or confusing forms. Help and contacts Another nice thing about using the Online Self Assessment system is that it also acts as your own personal tax adviser, with each section full of helpful guides, links to further information and click-on tooltips. There s also an HMRC Self Assessment Helpline: 0300 200 3310 although it does tend to get very busy in January. Visit GOV.UK to find out more about the new Verify portal You can find out more about GOV.UK Verify on the GOV.UK website it contains tips and advice to help you with your life online and will be updated as soon as new services become available through Verify. 16
Self Assessment Checklist and Tips Checklist Check that you need to file a Self Assessment (try our CitizenTax app if you re unsure) Ensure that you are registered for Self Assessment by 5 October (if you haven t registered before) Have your National Insurance number and UTR to hand Organise all records of income and dividends Salary Rental income and related expenses Other income (State Benefits, trusts, settlements) Gather all records of outgoings Company expenses Company benefits Professional subscriptions Collect all records of Claims for Relief Qualifying loans and mortgages Gift aid donations Pension premiums Seed Investments or Venture Capital Trust Investments Find or request all bank interest certificates Locate all details for Capital Gains Assets acquired or sold Sales of company shares Have details of your Student Loan to hand Make sure you have your spousal details (year or marriage, name, maiden name, date of birth and National Insurance number) Register with CitizenSafe and let us verify that you are who you say you are Once verified, log in to your Personal Tax Account with HMRC Complete all necessary sections of your Self Assessment online Double-check (and triple-check) you tax return before you submit it! Make your Balancing Payment and first Payment on Account Congratulations - you ve completed your Self Assessment for another year Tips Don t call HMRC unless you really have to! A lot of information in available online If you find your Self Assessment overwhelming, get yourself an accountant Be organised! Don t spend hours searching for documents... again. Are you self-employed and working from home? Check what expenses you can claim! Check the allowances for the tax year of your Self Assessment 17