Scared of Self-Assessment? You don’t need to be as we are here to help. Read on to find out what you need to know.
It is a fundamental part of the self assessment system that responsibility lies with you, the taxpayer, to file Returns and pay the right amount of tax, at the right time – you must not wait for HM Revenue & Customs (HMRC) to ask. We remind our clients so they have plenty of time to get their information together and we are always here to assist.
Tax returns
Tax returns covering income for the year ending 5 April 2016 will be issued on or after 6 April 2016, and will consist of a main tax form and supplementary pages. Your tax office will send out what they think are the relevant supplementary pages. If you need other supplementary pages you will have to ask for them. The completed full return has to be submitted to HMRC by the ‘filing date’, which is 31 October 2016 for paper returns, and 31 January 2017 for online returns.
You should note that your return must be completed as far as the total income on which tax has to be paid. Figures must be given for every item, even if only estimates. It is not possible to enter question marks or leave the tax inspector to decide whether an item is taxable or not. The only section that can be left for the tax office to complete is the actual calculation of the tax due on your total income.
If you have taxable income or capital gains for 2015-16 and have not received a tax return, you must advise your tax office by 5 October 2016 at the latest.
HMRC has made it known that it will cancel any outstanding returns and associated penalties where taxpayers call them and explain why they do not need to be in the self assessment system.
Amendments, enquiries, and record keeping
You have one year from the filing date to make any amendments to the return. HMRC may correct obvious errors or mistakes within nine months of receipt of the return.
Within a period of one year from the date the tax return is submitted, HMRC have a right to make enquiries to check that the tax return has been correctly completed. No reason for the enquiry need be given.
All records relating to the return should be kept during this one-year period. If trading or rental income is involved, all records should be kept for a further four years.
Payment of tax
Payments on account of income tax (and Class 2 and Class 4 national insurance contributions) for a particular tax year will be due on 31 January in the tax year and 31 July following the end of the tax year. These payments will be based on one half of the total income tax liability (less any tax deducted at source) for the previous tax year. You have the right to reduce payments on account if you believe the income tax for the current year will be lower than that for the previous year. However, you may be charged interest if the reduction is more than it should be. Payments on account will not be required where each payment works out at less than £500.
Late payment penalties and interest
The penalties for paying tax late are:
- 30 days late – Individuals will be charged an initial late payment penalty of 5% of the tax unpaid at that date
- Six months late – Individuals will be charged a further late payment penalty of 5% of the tax that is still unpaid
- 12 months late – Individuals will be charged a further late payment penalty of 5% of the tax that is still unpaid. The above penalties are levied on top of the interest that HMRC will charge on all outstanding amounts, including unpaid penalties, until payment is received.
Information deadlines
So that employees can complete their tax returns properly, information deadlines are imposed on employers:
- Forms P60 must be provided to employees by 31 May following the end of the tax year
- Copies of forms P11D must be provided to relevant employees by 6 July following the end of the tax year
- Form P45 has a part for the employee to retain
Key dates
Please note that the following dates relate to actions to be taken during the 2016-17 tax year.
6 April 2016 - tax return for 2015-16 or notice to complete a return will be issued
31 July 2016 - second payment on account of 2015-16 income tax and Classes 2 and 4 NICs
31 October 2016 - deadline for filing 2015-16 paper tax returns
30 December 2016 - tax return to be filed online if you want a tax underpayment of less than £3,000 collected via your 2017-18 PAYE code
31 January 2017 - online tax return for 2015-16 to be submitted
- payment of balance of income tax and Classes 2 and 4 NICs for 2015-16
- payment of capital gains tax for 2015-16
- first payment on account of 2016-17 income tax and Classes 2 and 4 NICs (normally half the total 2015-16 liability, adjusted for tax deducted at source)
Still confused? Don’t be. We are just a phone call away. Call McDade Roberts on 01772 717110 and we will happily help you feel in control of your next self assessment tax return.