Self-assessment tax return
Tax return queries
By Joe Elvin
Article 7 of 10
Tax return queries
Here is a selection of the most common tax-return queries handled by our team of money experts.
In our video, we explain how to use the Which? tax calculator - work out how much tax you need to pay for the upcoming year and submit your return direct to HMRC.
If you're a Which? member and you would like a personalised answer to your own tax-return query, our Money Helpline is here to guide you.
The Which? Money Helpline is a free service for all Which? members, providing one-to-one help and guidance on any personal finance matters over the telephone. If you're not a Which? member, and you'd like to speak to one of our money experts, you can subscribe for a £1 trial to Which?.
Your tax-return queries
Q. I have some shares from Holland. How should I declare my earnings from these?
Our experts say: If you’ve already been taxed in one country, you may be eligible for relief from double taxation. This prevents you paying two lots of tax on the same income.
In your case, the UK has a double taxation agreement with the Netherlands, which states that both countries can collect tax on dividends, normally up to a maximum of 10%. But you get a credit for the tax already deducted in the Netherlands.
Most foreign dividends are treated in the same way. Usually, you must report foreign dividends in the ‘Foreign’ section of a tax return. But any foreign dividends worth less than £300 on which tax has already been paid can be included as UK dividends on your tax return.
Find out more: dividend tax - learn how these profits are taxed
Q. Although I’m not liable for income tax, HMRC is trying to fine me for not filing a tax return. Why is this?
Our experts say: Once that letter from HMRC turns up on your doormat, you have a legal obligation to file a tax return – regardless of whether you are actually liable for any tax.
If you filled out a return last year and had to pay tax, it’s likely you will get one this year – as HMRC assumes you’ve continued to earn untaxed income or gains. It’s then up to you to prove your income, or rather lack of it, using the return.
Late filing can result in fines: £100 for missing the deadline, and £10 per day for a maximum of 90 days.
Find out more: who should submit a tax return? - a full rundown
Q. I’m struggling with estimating next year’s income. If my actual income proves to be higher than that estimated in the previous year’s return, what action should I take?
Our experts say: Those with business or property income must make payments on account. Your tax bill is then settled the following January (ie January 2018 for the 2016-17 tax year). If you have overpaid, you’ll get a refund plus interest. If you’ve underpaid, you’ll have to pay some extra.
You can apply to have your payments on account reduced. However, if this turns out to be less than you owe, you’ll have to pay interest of 3% on the amount by which you reduced your payments.
Find out more: tax rebates: how to claim - all the information you need
Q. Is it necessary to declare pension income as a gross or net amount?
Our experts say: You must declare the gross amount of the income you receive from both state and private pensions. Non-state pensions are usually taxed through PAYE, so you’ll also be asked to enter any tax that’s already been deducted.
Q. I have copies of tax returns covering the past eight years. When can I safely destroy these without fear of HMRC asking for information?
Our experts say: If you're self-employed, you must keep accounts and records of your business dealings for at least five years following the relevant tax year.
So, for 2016-17, records must be kept until 31 January 2023 or you could be fined £3,000. You might want to keep them for 20 years as this is the time limit for an HMRC investigation if it suspects fraud.
Find out more: tax returns - the comprehensive guide
Q. I've spotted mistakes on my tax return? Is there anything I can do?
Our experts say: If the error is down to HM Revenue and Customs, you can generally claim a full rebate for the money lost. Complain to the person dealing with your case.
If you're unhappy with them, put a complaint in writing to the customer relations or complaints manager. You can also refer your complaint to the tax office director, before asking the independent adjudicator to look at it.
If you've paid too much tax because of your own mistake – such as not claiming an allowance you're entitled to – you can correct you tax return within the first year of filing it. You can still reclaim overpayments within four years of the end of the tax year for which you're claiming.
Find out more: late tax returns and penalties for mistakes - our list of errors to avoid
- Last updated: April 2017
- Updated by: Gareth Shaw