About nine million taxpayers receive a tax return automatically. An employee who pays tax through PAYE and who does not fall within any of the following categories should not receive a tax return.
You should receive a tax return in April if you are:
- A company director
- In partnership
- An employee with more complicated tax affairs (e.g. one with a company car)
- An employee who receives income in addition to your salary (e.g. freelance consultant)
- Higher rate taxpayer with savings or investment income that needs to be taxed at the higher rate
- A taxpayer who receives untaxed income
It is your responsibility to ask for a tax return if you have income or profits to declare, even if the Inland Revenue is not aware of them and has not sent you a return. This will include any freelance consulting work you do.
You must notify the Inland Revenue within six months of the end of the tax year (i.e. by 5 October) if:
- You received any untaxed income during the tax year
- You need to pay tax at a higher rate on income (such as interest or dividends) that has been taxed at a lower rate
- You sold assets (e.g. land, investments or a business) and may need to pay capital gains tax
If you only want your tax allowances adjusted, or want to reclaim tax on savings or investments, you should be able to do this without completing a tax return.
Alternatively, if you believe you are being charged too much tax through PAYE, you can address this during a tax year or submit a return at the end of the tax year.
When do I need to send the tax return to the Inland Revenue?
If you believe that the Inland Revenue owes you a tax rebate, you can submit a claim for up to six years after the date.
If the situation is likely to be the other way around you have two choices:
- Your tax return must be sent back by 30 September if you want the Inland Revenue to calculate your tax bill for you
- You must send back your completed tax return by 31 January at the latest
What if it is late?
If you are likely to owe the Inland Revenue tax and fail to submit your tax return by 31 January, you will automatically be fined £100. You will be fined a further £100 if the tax return is still outstanding on 31 July.
What does the Tax Return look like?
Tax Returns now vary in length, as they are tailored to each individual's circumstances. The Inland Revenue will only send you the forms which it thinks you need. About 90 per cent of tax returns will be 12 pages or less.
Everyone must fill in the main eight-page tax return. This covers:
- Income from savings and investments
- Tax allowances and tax relief
- State benefits
- Maintenance payments
You must also fill in supplementary pages covering any other types of income and gains which apply to you. You will need to request and complete the supplementary pages on Employment (two pages), which you can download from the Inland Revenue site here.
Where do I get the information to complete the form?
If you are an employee, you can get most of the information required from documents given to you by your employer. These include the following important forms:
- P60 Certificate of Pay, showing how much income tax and National Insurance you have paid during the tax year. Your employer should give this to you by 31 May following the end of the tax year on 5 April
- P11D if you receive any employee benefits or expenses, your employer should give this to you by 6 July
- P45 if you left employment during the tax year
If you are self-employed you will need details of income and expenses during your last accounting year. If you have savings and investments you will need:
- Bank and building society passbooks and statements. Ask for a 'certificate of tax deducted' for each account that pays interest net of tax
- Annual investment statements from unit trust and investment trust companies. ISAs and PEP investments do not need to be declared on your tax return
- Share dividend tax vouchers
If you contribute to a personal pension plan (this is not the one supplied by your employer), you will need your annual contribution statement from your plan provider.
Read through the tax return and guidance notes as soon as possible after you receive them. Use this to check what paperwork you need and arrange to get duplicates of any documents you are missing. Allow several weeks for this information to arrive.
How do I complete the return?
You have done the difficult part already. Once you have collected the information, completing the return is easy.
- Check the figures carefully
- Sign it! This is one of the most common mistakes
- Include all the paperwork that you have been asked for, particularly the Employment Supplementary Sheets
Then what happens?
Wait for the Inland Revenue to raise any query with you. It will usually contact you within 30 to 60 days of receiving the forms.
The Inland Revenue will randomly select a small percentage of tax returns for enquiry. You must be notified within 12 months of the fixed filing date if the Inland Revenue plans to inquire into your return, provided that your return was submitted on time.
When is the tax due?
There are now only two tax payment due dates in the year: 31 January and 31 July. If you are an employee, you only need to make one payment, by 31 January (nine months after the end of the tax year). This payment is for any extra tax you owe, after taking into account the tax already deducted from your salary under PAYE.
If you owe less than £1,000 and submit your return by 30 September, the tax is usually collected from your salary under PAYE by instalments.
If you are self-employed, you are usually required to make two payments 'on account' based on your profits for the previous year.
The first, by 31 January, has to be paid before the end of the tax year. The second, by 31 July, is after the end of the tax year. Any outstanding tax must then be paid by the following 31 January. Interest will be charged on any tax paid late.
A five per cent surcharge will be charged on tax remaining unpaid after 28 February. A further surcharge will be made if the tax is still not paid after 31 July.
If you can't pay, you may be able to avoid surcharges by coming to an agreement with the Inland Revenue to pay off your bill in instalments.
Half of all taxpayers complete their returns without professional help. Professionals are used in complex affairs where there is a lot of tax at stake.
For straightforward matters they can be easily done without professional help. Provided you have the correct information, it should take no longer than an afternoon.
Make the most of free advice from the Inland Revenue. The Inland Revenue website has hundreds of leaflets and guides to read or download.
Use the Guidance Notes sent with your tax return
Ring the tax office listed at the top of the first page of your tax return for advice. Call the helpline on 0845 9000 444, open weekdays, evenings and weekends. Request or download the free Inland Revenue help sheets.
Always keep your records safe
You must keep detailed financial records to support the information provided in your tax return. The self-employed and those who let property must keep records for five years after the fixed filing date.
Other taxpayers are required to keep documents for 22 months after the end of the tax year to which the information relates. If you fail to keep adequate records, you can be fined up to £3,000.
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