Everything you need to know about self-assessment tax returns

Have you submitted your tax return yet? If your answer is no, our guess is that either you haven’t had the time yet or you are unsure about something.

The deadline to both file and pay your return online always falls on 31 January (if you are doing it via post the deadline is 31 October). If you are struggling to meet the deadline, we would recommend reaching out to an accountant (like us) to sort it for you. Yes, this will cost money, but you will avoid having to pay fines for not filing and non-payment.

Technically speaking to avoid fines for not filing you could file a blank return. However, we don’t usually recommend doing this, as when you do (finally) get around to updating your tax return, HMRC may decide to fine you for potentially trying to deceive them. At the end of the day, it is your responsibility to make sure you take all necessary steps to make sure everything is accurate.

Like blank returns, there’s a lot of uncertainty when it comes to self-assessment tax returns. Questions such as, how do I pay? What do you do if you can’t afford your return? Does mortgage tax relief still exist?

Seeing as there’s a lot of uncertainty around the subject, we thought it would wise to compile a list of frequently asked questions and answers about returns and put them into a handy blog.

Starting off with a question we get asked quite a few times…

Who needs to do self-assessment?

We’ve actually done a previous blog which answers this very question going into detail, called ‘do I have to file a tax return?’

How do you actually pay your self-assessment tax return?

There’s many different ways that you can pay your self assessment tax return, both online and offline.

Make sure you pay before the deadline (as you don’t want to end up with a penalty), and how much time you need to leave for payment to reach HMRC depends on how you pay.

Same or next day options:

• Online or telephone banking
• CHAPS
• Debit or corporate credit card online
• At your bank or building society – you will need a paying-in slip from the HMRC.

Options that take up to 3 working days

• BACS
• Direct Debit (providing you have a card set up with the HMRC)
• By cheque through the post

Options that take up to 5 working days

• Direct Debit (it will take longer if you need to set up a card with the HMRC)

Don’t be caught out if the deadline falls on a weekend or bank holiday. Make sure your payment goes through on the last working day.

Also, be mindful that online payment services may be slower at peak times, so always good to check and get ahead of people eg don’t leave it until the last minute like most do.

We have gone into more detail about payment options on a previous post.

Tax return payment hack –not many people know this but you can take your tax return to your bank or building society and they will pay it for you.

Post office is no longer an option – you used to be able to pay at the Post Office, but this is no longer an option.

How do you pay if you don’t have a paying-in slip or UTR?

Without paying-in slip:

If you don’t have a paying-in slip you can print one off from gov.uk, which you can then use to pay via post.

If you are using this option, you won’t be able to use it at your bank or building society.

Without UTR:

Double check that you definitely don’t have a unique tax reference (UTR), if you have paid a self-assessment tax return before, chances are you will have one.

Ways to check:

• Logging into your government gateway account
• Calling HMRC and requesting your UTR – they won’t be able to give your UTR over the phone because of security reasons, they will have to send it through the post

If you find that you don’t have a UTR, you will need to register with the HMRC. Another alternative option is to submit a paper return by post (deadline is always 31 October, so this may not be an option). Make sure to include a letter with income and calculations, national insurance number and a SA1 or CWF1.

Can you pay with a credit card?

No, you do not have the option to pay your tax return by credit card. The UK banned paying with a credit card back in 2019 because of new EU rules. These rules made it illegal for businesses to pass on the 1.5% fees that banks charge to process each credit card payment.

Do you declare child benefit on tax return?

The answer to this is it depends. Does yours or your partner’s income exceed £50,000 before tax? If the answer is yes, you will have to pay some (or all) of your child benefit in the form of Extra Income Tax.

You will still get paid the full amount of benefit (paid either weekly or monthly) but whoever has the higher income will have to repay the portion of benefit you’re no longer entitled to.

You should include this information on your return so that HMRC can calculate how much Extra Income Tax you will need to pay.

Does child benefit stop automatically at 18?

When you child reaches 16, child benefit technically finishes on 31 August, when they get their own registered National Insurance Number. However, you are still entitled to the benefit after they turn 16, if they stay in education or training that has been ‘approved’.

How much tax do you pay on rental income?

Rental profits are taxed in the same way your income is taxed depending on the tax band you fall into.

Bear in mind though that the income you receive from rental property will be added to any other income you earn. This could mean that you end up being in the higher tax bracket.

What expenses can you claim for rental property?

To reduce tax bills, landlords do have the option to claim expenses related to running the property or necessary maintenance, as a general rule of thumb.

Does the rent you charge include services such as water, council tax etc? If yes, that rent needs to be added to your income, however, you can claim these costs as an expense.

Can you deduct mortgage payments from rental income?

From April 2017, the government has been gradually phasing out tax relief on mortgage interest. By April next year (2020), you won’t have the option to deduct any mortgage expenses from rental income in order to reduce your tax bill.

Instead of relief, you will be given a tax-credit which will be based on 20% of your mortgage interest payments.

Each year the relief has been reducing:

• 2018-19 tax year – you can claim 50% of your mortgage tax relief
• 2019-20 tax year – you can claim 25% of your mortgage tax relief

Can’t afford to pay your self-assessment tax return?

If you can’t afford to pay your self assessment tax return, first things first, as soon as you can notify HMRC to avoid a penalty for late payment.

You may have the option to set up a payment plan to pay what you owe in instalments. To set up plans you will need a Government Gateway user ID and password. If you don’t have an ID, you can set one up when you do your payment plan.

If you have received a payment demand because you have missed your payment date call the HMRC office that sent the letter, again, as soon as possible.

If you are worried about not being able to pay before the deadline, you can always call the Business Payment Support Service. The name can be a little deceiving, this support is not just for businesses, anyone can use this service.

Telephone: 0300 200 3835

Opening hours:

Monday to Friday: 8am – 8pm

Saturday and Sunday: 8am – 4pm

What are the deadlines for self-assessment returns?

The tax year starts on April 6 and ends the following year on April 5. You must send your tax returns and any money you owe to HMRC by the following deadlines.

• October 5: To register for self-assessment if you are self-employed or a sole trader, not self-employed or registering a partner or partnership
• October 31 (midnight): Paper tax returns
• January 31 (midnight): Online tax returns
• January 31 (midnight): Pay the tax you owe

What are the fines related to late payment?

You’ll get slightly more than a slapped wrist. If you miss the deadline for filing your tax return, or for paying your bill, then you will be liable for a penalty. The HMRC fines for late tax returns are:

• One day late – £100 for one day after the deadline
• Up to three months late – £10 for each additional day (which is capped at 90 days), on top of £100 initial fine, meaning a maximum fine of £1,200
• Six months late – It will be either £300 or five per cent of the tax due, whichever is higher, as well as the penalties listed above
• 12 months late – An additional £300 fine, or five per cent of the tax due, on top of above penalties.

Are there other fines to be aware of?

Yes. It is your responsibility to ensure that you keep your address up to date with HMRC. If letters about your tax return get sent to an old address because you haven’t updated your details, and this means you miss the deadline, unfortunately you will receive a fine. You can’t get out of paying the fine because address details are incorrect.

How can I reduce by personal tax bill?

It just so happens that we have also written another blog which goes into detail about ways that you can reduce your tax bill.

Can you claim on expenses if you work from home?

If you work from home on a regular basis, you may be able to claim tax relief for some bills that you have to pay.

You can only claim for expenses which are related to working eg business telephone calls. You can claim for the extra cost of gas/electricity but only for your work area eg home office.

Do you have more self-assessment questions?

For more information about self-assessment including the cycle and information needed check out this blog.

Want to talk to us about your tax return?

We’ve tried to answer as many questions as possible, however, if there is something else or you would like to talk about your tax return, we are all ears.

Either phone the office on 0333 200 0714 or fill in your details below and one of the team will be in touch: