Filing tax returns is one of those tasks that we know we need to do, but delay because we view it as inconvenient and not immediately rewarding. Just like we wait until the 11th hour to study for an exam, we can always find something more interesting to do as soon as an opportunity to pay our taxes appears.
And unless we get to grips with it, deadlines will always slip by.
So why do we put off preparing our tax return when the benefits easily outweigh the risks? Psychologists have noted “safety in doing nothing”, “avoiding mistakes by putting off a task” and “uncertainty about how to perform a job” as the primary drivers.
Sound familiar, taxpayers?
Many people are now aware of the deadlines and requirements despite information having been around for a few years - this is in fact the sixth year that 31 October has been the deadline for paper returns. For others, the information might not be so clear. Therefore it is worth re-emphasising what the requirements are and how the self-assessment deadlines demand you to take two actions simultaneously.
The starting point is that there is one set of deadlines for the tax return and another set for the tax payments.
Deadlines for filing tax returns
For a tax return there are two separate deadlines - one for the paper return and the other for electronic filing. For paper filing for the tax year ended 5 April 2013, known as tax year 2012-13, the deadline is at the end of next month, 31 October. And if you miss the 31 October paper filing deadline, then you can only file electronically on 31 January 2014.
There's also an earlier deadline of 30 December if you want HMRC to collect any tax you owe through your tax code. You can ask for this if you owe less than £3,000.
Deadlines for paying your tax
Under the deadlines mentioned above, 31 January 2014 (ie next year) is the payment deadline irrespective of whether you filed by paper or online. This means that the paper filing deadline (31 October 2013) does not coincide with a payment requirement. So for the tax year 2012-13 (ending on 5 April 2013) you must pay any tax you owe by 31 January 2014.
If you tax bill is over £1,000, you may have to make payments on account towards the current year's tax. You usually have to make these payments if the tax due for the previous year was over £1,000. But if more than 80 per cent of this tax has already been collected at source, you won't have to make payments on account. If you do make payments on account, you will make two payments. Each payment is half of the tax due for the previous year.
This is your deadline for making any second payments on account. For example on 31 July 2014, you'd make your second payment on account for the 2013-14 tax year.
As mentioned above, the paper filing deadline is not the end of the line. You have the option to file online and move to the 31 January 2014 electronic filing deadline but you will need to advise HMRC if you had previously registered to submit your return by the paper filing deadline.
How do I prepare?
You can send your tax return online or using paper forms but you must first be registered for Self Assessment. If you are preparing your own tax return this October, set aside some time when you will not be distracted - nothing is worse than starting and then being disturbed and then getting some part of the tax return information wrong. However, before you can fill in your return you'll have to ready the following source material:
- Specific details of self-employment income - plus, receipts and invoices for items you consider deductible from this income
- Details of any freelance income - this is in addition to your employment income
- Your P60 form - enter the precise figure for your income and not just a rounded estimate
- Details of savings income such as bank and building society interest
- Details of any dividends
If you send in a paper tax return, it must reach HMRC by the later of midnight on 31 October after the end of the tax year the return covers or three months after the date of the letter telling you to complete a tax return. You should send your return back in the envelope provided or send it to the Tax Office shown on the front page of the form - you won't get a receipt if you send a paper tax return. If you miss the deadline for paper tax returns, you'll need to send your tax return online instead.
If you have tried filing your tax in the past, but now think perhaps it wasn't the most efficient way, please get in touch with your local tax advisor today. Importantly check the accountant's qualifications and areas of specialism.