Act now to beat the January 31 tax deadline – or risk a £100 fine
One of the common mistakes we see is taxpayers only reporting income that has not been taxed already, but that is incorrect
If you’re one of the millions of people who needs to complete a self-assessment tax return for the 2021/22 tax year, you’ve got just a few days to get your return in or risk being hit with a fine.
Anyone who doesn’t get their return in by the 31 January deadline will have to pay an instant £100 penalty to HMRC. Fail to file your return for a further three months and you will rack up additional daily penalties of £10 - up to a maximum of £900. You also need to pay any tax you owe by 31 January. If you don’t, you’ll be charged interest on late payments.
Here are some tips to help you get your return completed correctly and back to HMRC in time.
1) Remember to include ALL taxable income
When recording your taxable income, make sure you make a note of everything you’ve brought in during the tax year, including any income you’ve already paid tax on.
Paul Barham, private client tax partner at Mazars commented: “One of the common mistakes we see is taxpayers only reporting income that has not been taxed already, but that is incorrect. All taxable income received must be included on tax returns, even if tax has already been deducted, so the correct tax due on income and gains arising in any tax year can be calculated.
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2) Don’t forget to gather any gift aid payments you made to charity
Donating through Gift Aid means charities can claim an extra 25p for every £1 you give. Graeme Robb, senior technical manager at M&G Wealth, said: If you pay tax above the basic rate, you can claim the difference between the rate you pay and basic rate on your donation.
“If, for example, you donate £100 to charity – it claims Gift Aid to make your donation £125. If you pay 40% tax, you can personally claim back £25.00 (£125 x 20%). You can claim your higher rate relief through your self-assessment tax return.”
3) Submit estimates if you don’t have all the figures you need
If you haven’t been able to gather together all the paperwork you need to complete your return, don’t panic. If you have a rough idea of your numbers, you can include these for now. Simon Roberts, solicitor at DAS Law, said: “If you are still waiting for information to complete a return, it is entirely legitimate to make a reasonable estimate of the income or gain and then amend the return when the information becomes available. There is no penalty for amending a return, though there is a time limit for doing so.”
4) Claim higher rate tax relief on pension contributions
When you pay into your pension for every £80 you pay in, your pension provider will get another £20 direct from HMRC. However, if you’re a higher or additional rate taxpayer paying 40% or 45% income tax you’ll need to claim the extra 20% or 25% tax relief via your tax return.
Sean McCann, chartered financial planner NFU Mutual McCann, said: “Many higher and additional rate taxpayers do not do this, potentially missing out on thousands of pounds in unclaimed tax relief. If you haven’t claimed on previous year’s tax returns, you can go back up to four years and claim any higher rate relief due by contacting HMRC direct.”
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5) Don’t forget to pay your tax bill
Once you’ve filled in your tax return and know how much you owe, make sure you don’t forget to pay it by the 31 January deadline.
Sarah Coles, personal finance analyst at Hargreaves Lansdown said: “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.
If you need any help completing your return, can call HMRC’s self-assessment headline on 0300 2003310.