Tax Self-Assessment: Top Tips for a Last-Minute Return

Landlords making self-assessment tax returns may already be starting to sweat - the deadline is midnight on January 31.

Overall - landlords and others combined - some 12m people are expected to complete a tax return this year, but by early this month some 5.7m were still outstanding.

Last year the taxman waived penalties for anyone filing by 28 February, but this year HNRC hasn’t offered the same leniency; if you’re rushing to complete your tax return, there are a dozen useful tips to help you avoid common mistakes and cut your tax bill, provided by Sarah Coles, personal finance analyst at business consultancy Hargreaves Lansdown.

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Putting off your tax return to the last minute is popular enough to qualify as a national pastime -  ahead of fishing and just behind knitting. 

If you’re one of the millions of people putting it off, there are some steps you can take to make the process less painful. And by avoiding errors, they may even save you some cash. 

Even if you’ve already completed your return, they could pay off, because you have until the deadline to log back in and make changes.

- Check you have access to the system first: Make sure you have your Unique Taxpayer Reference number and can access the Government Gateway right now. If you haven’t registered for self-assessment, do it now, because your UTR will take up to ten days to reach you by post. If you’ve not registered for the Gateway yet, it will take up to ten days for your activation code to get to you. If you’ve forgotten or lost any of these things, you can recover them, but you don’t want to be doing this at the 11^th hour.

- Cut the corners you’re allowed. If you work from home or use your own car for work, and don’t have time to calculate your actual usage, instead of working out your expenses, you can use flat rates for both.

- Claim for everything you can. This isn’t one of the corners you can cut. Collect together all your receipts and invoices, and use the list on the government website to check you haven’t missed anything https://www.gov.uk/expenses-if-youre-self-employed.

- Estimate if you need to. If you’ve left it too late, and there’s some paperwork outstanding, you can submit an estimated return, and update it when the paperwork arrives.  You will need to complete the section on the form to show estimates have been used.

- Don’t overlook Covid support. If you received a payment from the Self-Employment Income Support Scheme or Coronavirus Job Retention Scheme – or any other Covid support in 2021/22, you’ll need to declare it

- Don’t rush the pensions bit. This is a common area for mistakes to happen. Higher rate taxpayers need to check if they have to claim for additional higher rate relief on their pensions. They also need to make sure they enter the gross value of contributions. This isn’t just a total of all the money paid in: it’s everything they paid in, plus tax relief at 20% on top.

- Squeeze the value from charity donations. Ticking a box to claim Gift Aid means the charity can reclaim 20% tax on your donation from the taxman, but if you’re a higher rate or additional rate taxpayer, you can reclaim the rest of the tax on your donation through your tax return.

- Do your tax return even if you can’t afford the bill. You can do the return now and arrange to pay in instalments – through a time-to-pay arrangement.

- Don’t forget to pay. You’d be surprised how many people are so focused on the admin that they forget this bit. It’s also important to think about your payment method. The payment can clear on the same day if you pay by debit or credit card, but will sometimes take a day to go through. If you pay by BACS or direct debit it can take up to three days.

- Change previous years’ returns: If you’ve stumbled across something you should have been claiming for in previous years, you can amend returns going back four years.

- Go back and check it. Make sure you’ve completed every relevant section and input all the details. If you’re unsure of something, check the rules on the HMRC website. Even when you’re feeling the pressure, a few minutes now will save an awful lot of worry later.

- While, you’re there, consider what your tax return has revealed about your finances: If you spent ages digging out details of dividends or profits on share sales, or you ended up paying tax on either of them, consider using an ISA to protect your investments and avoid you ever having to bother with them on a tax return again. It’ll also protect you from the cuts in the capital gains tax and dividend allowances in April.    

* Sarah Coles is personal finance analyst at Hargreaves Lansdown *

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