Self-assessment tax returns: what you need to know about getting your tax bill right

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Millions of people are needed Tax return filing By 31 January, outline the money they have earned and what they owe to HM Revenue and Customs (HMRC). Getting it right is critical – no one wants to pay more tax than is actually necessary.

What do you need to do to file your tax return correctly? What can you do if you make a mistake? Here is everything you need to do to file Self Assessment Tax Return.

Do I need to file Self Assessment Tax Return?

Around 12 million people are expected to file self-assessment tax returns each year. While this is seen mainly as something the self-employed must do, many people with regular jobs need to file a tax return.

It mostly comes down to whether you receive some form of income that is not taxed at source. As a result, along with the self-employed, those who earn income from renting out property or who earn large sums of money from investments (which are not Held at ISA) return should also be filed.

Even those who have to pay capital gains tax after selling a property or earning a profit from abroad.

Other examples include people earning more than £50,000 who need to pay back some of the child benefit they received and higher or extra tax payers who want extra tax relief on their pension contributions.

96% of people who file their tax return choose to do so online, while 4% submit a paper return.

Registration for filing Self Assessment Tax Return

To file a self-assessment tax return, you must register with HMRC. This should be done by October 5 of the following tax year.

You can do this Online via the website, after which you will be sent a personalized taxpayer reference by post. You will also be posted with implementation details for the Government Gateway platform; Gateway is used for online tax return filing.

This process can take up to three weeks, so it is best to start the registration process as soon as possible.

Filing your self assessment tax return and paying your tax bill

If you’re doing it online, you have until January 31 to file your self-assessment tax return and pay your tax bill.

This deadline is for the previous tax year. So you have till 31 January 2023 to file your tax return and pay your bill for the tax year 2021-2022.

Those who file their tax return on paper must do so Send by October 31st – The deadline for payment of any tax is still January 31.

HMRC points out that these payments can take a few days, so it’s best to make payments before that deadline.

Once you’ve completed your tax return and HMRC have told you how much tax you owe, you can Pay later to an HMRC bank account through your online banking service or by using your debit card or corporate credit card. You can pay at your bank or the society’s local branch or send a check to HMRC.

You can no longer pay at the post office.

Penalties for late tax returns

Late filing of your tax return and late payment of your bill will result in a £100 penalty.

This penalty will be increased if you are more than three months late. Interest will also have to be paid on the money owed.

HMRC will accept some excuses if you want to appeal against a late tax penalty, whether it’s the death of a close relative, a spell in hospital or your computer crashes.

Correcting mistakes in your Self Assessment Tax return

If you’ve made a mistake on your tax return, you can correct it yourself within 72 hours. If you file your return online you can do this through the gateway platform, while those sending their return through post can download and fill the new form. The word “Amendment” should be written on each page.

After this date, you must write to HMRC to outline the errors you made. You should make it clear why you think the wrong tax was paid and how much you owe or should be refunded.

Refunds can be made up to four years after the end of a tax year.

Payment on account

Self-employed people have to make two payments into the account every year. HMRC works out an estimate of what your tax bill will be based on previous tax years, and splits this into two payments on account.

So on January 31st, not only will you have paid your tax bill for the 2021-2022 tax year, but you will also have to make your first payment on account for the 2022-2023 tax year. The second payment on account should be made by 31st July.

Once your tax return is complete, you can see how accurate the payments were. If you paid too much, you can get a refund, while if you didn’t pay enough, you can pay it down to the required amount.

If you believe your income will decrease, you can request a reduction in the payments on your account, so you’ll be responsible for a smaller tax bill.

Expenses if you are self-employed

You can claim certain expenses when filing your self-assessment tax return, which will reduce the size of your tax bill.

This may include office expenses for stationery or computer equipment, or travel expenses such as train fares.

Essentially, these must be expenses incurred as a result of doing your job – for example, you can’t claim a laptop that you actually use for leisure purposes.

If you work from home, you can also claim a portion of certain household expenses, such as your energy bill. You can’t deduct the entire bill—instead you have to figure out what portion of your energy use is a result of your work.

An easier option is the Simplified Expenses Scheme, which allows the self-employed to claim a flat rate. This is determined by the number of hours they work from home each month and ranges from £10 to £26 a month. Work from home at least 25 hours per month.

High income child benefit payments

One reason some people file a self-assessment tax return is so they can pay child benefit payments on higher incomes.

The charge is levied against people earning more than £50,000 a year and acts as a phasing back of child benefit paid to such high earners.

For every £100 of earnings between £50,000 and £60,000, 1% of the child benefit you received must be paid back. Once you earn £60,000, the payment means paying back all the child benefit you received.

The higher-earning partner is responsible for paying the higher-earning child benefit payments, even if they are not receiving child benefit payments.

Paying your Self Assessment Tax bill

There are a few different payment options for paying your tax bill.

Many taxpayers choose to pay the entire bill in one lump sum, but there are several ways you can do that. A one-time payment can be made using a debit card, for example, you can also use a corporate debit or credit card to pay the bill.

Instead you can choose to pay over the phone or online by bank transfer or through your bank or by setting up a society branch. There is also the option of paying by check, though the additional time pressures involved here need to be kept in mind. You must post the check on time to not only arrive with the tax preparer before the tax deadline, but also to make the payment.

Some taxpayers who cannot pay the bill in full can set up a ‘time to pay’ arrangement. For some this can be done online, but in other cases you may need to discuss your requirements with HMRC staff in person. As the name suggests, time to pay allows you to pay the bill over a longer period of time in installments.

After paying for essentials such as food and utility bills, HMRC will look at your financial arrangements to find out how much money you have left each month. It can calculate what you can pay for the bill.

For some taxpayers, the bill can be paid by their tax code. This isn’t an option for everyone – you can only do this if you owe less than £3,000 and already pay tax as you earn (PAYE), for example you work in some capacity rather than being fully self-employed. You have to submit paper tax return by October 31st or online tax return by December 30th.

Finally, setting up a ‘Budget Payment Plan’ can make regular payments towards next year’s tax bill. With such a plan, you make payments on a weekly or monthly basis, which are transferred to your next bill.

That means you can get a refund or make a payment when you actually file your tax return.

It is important to note down your UTR in all your self assessment tax refunds. You should include this as a reference, for example when paying online or by writing on the back of a cheque. This means HMRC can easily work out which tax bill the money should go to.



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