Filling out a self-assessment tax return for the first time can be a little bit daunting at first. Having to wade through receipts, for example, can seem like a lot of hassle. You also want to make sure you send your tax return back in on time as otherwise you could be facing pretty hefty fines.
The deadline for the last tax year was on the 31st January 2014 so now you will be starting to think about your self-assessment tax return for this year. If you have any concerns, just keep reading to find out what exactly needs to be done.
What is a Self-Assessment Tax Return used for?
HM Revenue and Customs’ (HMRC) uses a Self-Assessment system to collect Income Tax that is not covered by PAYE over the tax year. If you are self-employed or earning money from rents or investments above a certain level, the Self-Assessment system will apply to you. This is because your tax is not deducted automatically from wages, pensions and savings.
What will you need?
Make sure you are keeping records such as receipts and bank statements so that you can fill in your tax return properly. If you need any help, you can contact the HMRC or consider getting an accountant to do your return for you.
You will need details of everything you have earned over the tax year which runs from April 6th – April 5th. As well as these records, you will need details of all your deductible expenses. This will help you make sure you are not paying tax unnecessarily.
How much will your bill be?
The amount you owe will be calculated by the HMRC based on what you report. The amount of tax you have to pay will depend on the Income Tax band you’re in. Capital Gains Tax will have a different rate and is for those that do things like sell shares or own a second home.
Key Dates – Deadlines
The current tax year started on 6th April 2014 and finishes 5th April 2015. Take note of the following dates to make sure you get everything in on time.
Penalties and Fines
If you are late with your tax return, you will face fines of £100 plus £10 a day up to a 90 day-maximum of £900. After the 90 days (3 months) you would need to pay a further £300 or 5% of the total due on top of the initial £1,000. After 12 months, another fine of £300 or 5% on top of the previous charges is then issued.
Top Tips for Filling in Your Form
If you are having any issues, do remember that the HMRC can help. Their website is also a great source of information. Your other option is to hire an accountant to help you, just work out whether it is worth the cost. Remember, it really does pay to get your tax return in on time.