Don’t miss the Self-Assessment Tax Return deadline

Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.

Don’t miss the Self-Assessment Tax Return deadline

Did you know that the deadline for self-assessment tax returns is January 31st? Don’t miss out on the opportunity to do more with your money, the end of the tax year may be way off in April, but the actions you take now can help you get the most out of your taxes.

For example, if you pay into a Pension as a higher or additional rate taxpayer, you will need to use your self-assessment tax return to claim back your extra tax relief. You will get tax relief automatically from your pension provider on private pension contributions worth up to 100% of your annual earnings. Your pension provider will claim 20% tax relief (‘relief at source’) and add it to your pension pot,  but as a higher rate taxpayer you are entitled to 40% relief and as an additional rate taxpayer you are entitled to 45% relief. You have to claim the extra 20% as a higher rate taxpayer, and the extra 25% as an additional rate taxpayer.

The benefit of claiming the extra tax relief is clear, this is more money added to your Pension which then has greater potential to grow over time. With this in mind, it is typically worth committing as much of your salary as you can afford into your Pension, as it is an effective way to pay less tax and keep more of your pay.

As a reminder:

  • You are basic rate tax payer (20%) on earnings from £12,501 to £50,000
  • You are a higher rate tax payer (40%) on earnings from £50,001 to £150,000
  • You are an additional rate tax payer (45%) on earnings over £150,000

Shockingly, middle and higher earners lost £360 million in tax relief in 2016. Do not miss out!

You’ll need to complete a self-assessment tax return if you are a higher or additional rate taxpayer, if you are self-employed, or if you generate extra income outside of your salary. If you aren’t sure, it’s worth seeking advice or reading around the subject on HMRC’s website.

As of three weeks ago, 4.8 million Brits were still to complete the tax return. Are you one of the people close to missing the deadline?

The key to getting your self-assessment tax return sent on time is organisation. Get your paperwork in order and take the time to fill in the appropriate information.

Some of the key documents you’ll need are:

  • Your national insurance number
  • A record of untaxed income from the last tax year
  • Proof of any income you’ve been taxed on such as your P60 or P45
  • Details of Pension or charitable contributions
  • Summaries of benefits received from an employer
  • Details of expenses

You might want an accountant to help with your self-assessment tax return. If you do choose to do it yourself, you’ll find all the help you need on HMRC’s website.

If you miss the self-assessment tax return deadline, you could be liable to pay fines and charges on your taxes:

  • A £100 fee is applied if you file more than three months late, followed by an additional £10 a day up to a maximum of 90 days (£900).
  • If you haven’t filed your return after six months, a penalty of 5% of the tax due or £300, whichever is greater, is applied.
  • If you still haven’t filed your return after a year, another 5% or £300 charge, whichever is greater, is applied.
  • There are additional penalties for paying your tax late of 5% of the tax unpaid at 30 days, six months and 12 months.

For future reference, it may be worth setting a reminder to complete the self-assessment tax return at an earlier date. Amazingly, figures showed that on Christmas Day 2018 there were 2,616 returns filed!

Do more with your money, sort your self-assessment tax return today.

With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest. Past performance is not a guide to future performance. Tax rules can change at any time. This blog is not personal financial advice.