UK Self Assessment Planning Tips

The Self Assessment forms may seem complicated however this should not put you off from actually completing the return. The form consists of a ‘core’ section that applies to all tax payers, beyond that you only need to complete the relevant schedules that apply to the specific income you may receive in the tax year.

When does the Tax Return have to be in?

By completing the form you should work out your own tax liability which should be paid by the 31 January each year. This relates to the tax owed in respect of periods 6 April to 5 April for the year before. For example, for the tax year 6 April 2005 to 5 April 2006 known as the 2005/2006 tax year, the return has to be filed by 31 January 2007.

However if you manage to file your return no later than 30 September following the end of the tax year, the Revenue will calculate the amount of tax due before it becomes payable by 31 January. For the 2005/2006 tax year the date would have been 30 September 2006 for tax payable on 31 January 2007.

Planning point: Submit your return before the 30 September to ensure your tax is calculated for you before the due date of 31 January.

Penalties and Charges for Late Returns and Payment of Tax

If you do not file your self assessment return by 31 January deadline a £100 fixed penalty is payable. If the return has still not been filed six months later a further £100 fixed penalty is levied. The Revenue can also apply to the Commissioner of Taxes and apply daily penalties of up to £60 per day.

If tax is still outstanding after 31 January interest is chargeable at the prevailing rate.

In addition to interest, surcharges are also imposed. These being 5% surcharge on any tax that is unpaid by 28 February, and a further 5% surcharge on any tax still outstanding by 31 July (being six months after the date tax fell due on 31 January)

Planning point: If you find it difficult to pay your tax by 31 January, then ensure you pay it no later than 28 February to avoid the 5% surcharge. If you cannot pay the whole amount then, then try and pay as much tax as possible again before 31 July before the second 5% surcharge.

The Use of Estimated Figures

Sometimes final figures may not be available before the filing deadline of 31 January, being ten months after the end of the tax year, therefore it may be necessary to estimate these amounts.

A return is not generally rejected if estimated figures are used, but it is useful to provide adequate information in the “other information” boxes of the tax return. An omission of adequate information regarding these estimates may cause an enquiry to be opened. A penalty may also be chargeable if the Revenue believes that final figures could have been obtained before the filing deadline.

Planning Point: If you do not know your final figures, i.e. lost paperwork, awaiting further information, still file your return using estimated figures to avoid penalties. If the Revenue do not query your return thirteen months after the filing date it will be difficult for them to go back and re-look into your estimated figures.