Self assessment time for your tax return

Your self-assessment tax return clock is ticking. If the shorter evenings are leaving you time on your hands and you're in 'back to school' mode, now is the time to take a deep breath, and tackle the job you have been putting off since April!

Self assessment returns for 2004/05 received by Friday 30 September 2005 will have the tax due calculated by HM Revenue & Customs (HMRC) and, if under £2,000, that payment may be spread through 2006/07 via your tax code. Almost a third of all taxpayers, about nine million out of thirty million people are sent a self assessment return each year, normally in April. This year some 1.5m people were sent a new four-page short tax return.

Those who need to complete a self assessment return include: the self employed and those with freelance earnings; those with income that hasn't been taxed at source, such as buy-to-let rents; company directors; those with complex tax affairs, which can include high incomes or multiple sources, including pensioners with more than one pension

If you fall into one of those categories (or think you might) and you haven't been sent a tax return to fill in, you can't heave a sigh of relief and forget about it. It's not up to the taxman to make sure you pay tax, it's up to you.

For example, the taxman is to clamp down on people selling on eBay if they cannot prove that they are making a one-off transaction and not trading. "Some people are sailing pretty close to the wind," said Geraint Jones, at accountants Blick Rothenberg. "We know that the taxman is about to get tough on people who are not just making one off transactions. It is obvious that many people are making a business out of trading on line and now they are going to pay the price."

He added, "If people don't declare what they have sold then they could be liable to fines, back tax and having their financial affairs gone through with a ' fine tooth comb'."

So, if you haven't received a self assessment tax return but your circumstances have changed so that you now receive income not taxed at source, such as rental income, you should contact your local tax office by 5 October to request a return.

Being organised now can save you time and energy in January. Leave it until then and you will have to complete your self assessment in full and work out yourself how much you owe. It can also save you money.

Simon Rees, tax senior manager, PricewaterhouseCoopers, points out, Anyone who received the new four-page short return has to submit it by 30 September or face the prospect of filling in the larger 12 page form." PricewaterhouseCoopers offers the following guide to making a success of your tax return:

• If it's a paper return, check you've got all the correct pages
• Get together all the paperwork you will need, such as payslips, P45, P60, P11D, or business accounts if self employed
• Make sure interest and dividend amounts add up - i.e. cash + tax = gross
• Don't try and enter ISAs, PEPs or ordinary pension contributions to an employer's scheme
• Do enter pensions received (including state pension) and personal pension contributions
• Don't use pence - round pounds will do
• Sign and send your completed form in by 30 September 2005, keeping a photocopy

If you don't make the 30 September deadline, all is not lost. You can file your tax return on-line up to 30 December and still qualify for an HMRC-calculated tax bill and coding out of a modest balance. The final deadline for returns for 2004/05 is 31 January - penalties will apply after this date.

15 July 2008 © Moneyextra.com

back

Moneyextra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.