Millions of taxpayers are running out of time to submit their 2018-19 self-assessment tax return and avoid a fine.
Tax returns for declaring income earned in 2018-19 are due by midnight tonight (31 January 2020).
Anyone who’s self-employed or earns an income from sources other than their main job – including property, a pension or savings interest – might have to file a return.
This year, an estimated 11.7 million people are in this position. But last week HMRC revealed that only 8.5 million taxpayers had completed a return, meaning more than three million could be cutting it fine.
Filing even one minute after midnight could land you with an automatic £100 fine – even if you don’t owe any tax.
Here, Which? provides some tips to help you file your tax return quickly and avoid paying a penalty.
1. Gather the right paperwork
One of the most time-consuming jobs when completing a tax return is making sure you have all the information you need to hand.
Of course, the best way to cut down the time on this task is to keep your records organised throughout the year. But it’s not a lost cause even if you haven’t quite managed that.
You might be able to quickly gather most of the information you need through your emails and other online sources such as your personal tax account.
Here’s a checklist of the information you might need:
- Employment income – you will need to state the income you received from your main employment during the 2018-19 tax year. You can find this figure on your P60. You can use a P45 for any jobs you have left during the year.
- Self-employment income – you will need a summary of your business income and expenses for the 2018-19 tax year.
- Rental income – if you rent out one or more properties, you’ll need to gather a summary of income and expenses, including things such as agent fees, rental payments and invoices for repairs and improvements made in the 2018-19 tax year.
- Savings and dividend income – you will need to summarise the interest you received from all your savings and dividends. You may need to pay tax on any savings interest that exceeds your personal savings allowance or income that exceeds the dividend allowance.
- Capital gains – if you sold an asset, such as a rental property or shares in 2018-19, you’ll need to detail how much you got for disposing of the asset, in case you’re liable for capital gains tax.
2. Estimate missing figures
If the paperwork to confirm certain figures hasn’t come through yet, you’re unlikely to get it in time to file.
But rather than missing the deadline waiting for the documents to come through, you can estimate the figures and submit your return.
When you receive the correct information, you can then submit an amendment through the HMRC portal on your tax software.
The estimated numbers should be your best guess. HMRC can fine you if you provide information that is wildly different or you’ve deliberately misled it.
3. Don’t panic over lost receipts
Try to find all your receipts before you sit down to do your return, but don’t panic if you can’t find them all.
If you’ve lost a receipt, you may still be able to claim if you have other evidence, such as bank or credit card statements, or the physical item and a record of where you bought it.
Some things can also be claimed at a flat rate – such as mileage costs, working from home, or living at your business premises – so you won’t need receipts for every transaction.
- Find out more: tax-deductible expenses
4. Brush up on 2018-19 allowances
Get your head around 2018-19 rates, thresholds, reliefs and allowances that apply to you, as these can dramatically change your tax bill.
The dividend allowance, for example, was cut from £5,000 in 2017-18 to £2,000 in 2018-19 – which means that your bill could be significantly higher even if you received the same amount.
Use our range of guides to brush up on the key rules:
- Tax-free income and allowances – what you can earn before paying tax
- Tax-deductible expense – how to claim your business costs
- Self-employed capital allowances – how investments in your business are taxed
- Capital gains tax thresholds and rates – find out your tax-free allowance
- Tax on property and rental income – everything landlords need to know
- Personal savings allowance and tax on savings interest – check how much savings interest you can earn tax-free
- Dividend tax explained – check the new thresholds for 2018-19
5. Check for the latest guidance
As well as familiarising yourself with rates, allowances and thresholds, try to get up to speed with the latest guidance for particularly tricky aspects of a return.
The guidance on how to declare the loan charge on your tax return, for example, has been updated following a review of the controversial policy.
6. Decide how to pay your bill
It’s not just your tax return that’s due at midnight; you’ll also need to settle your tax bill for 2018-19.
Some taxpayers will have paid most of it already and could be entitled to a refund.
But if your tax tots up to more than £1,000, you’ll be asked to pay an instalment towards the 2019-20 bill on top of what you owe for 2018-19 – which is likely to be half of that year’s total.
HMRC no longer accepts credit cards as payment, so this will limit your options if you haven’t budgeted enough.
If you can’t pay, contact HMRC as soon as possible. It might be able to offer you a plan to spread out repayments or offer a later deadline – although it’s likely you’ll have to pay interest.
- Find out more: how to pay your self-assessment tax bill
7. Streamline the process with an online tool
You can submit your self-assessment tax return online through the HMRC tool, or through an online tax calculator.
The advantage of using a tax calculator is that you’ll be given helpful jargon-free tips along the way and told what information to enter and how it affects your total bill.
The Which? tax calculator allows you to calculate your return and submit directly to HMRC up until midnight for a small fee.