While the vast majority of self-assessment taxpayers submit their tax returns online each year, there are still 6% – at least 500,000 people – that use paper tax returns. And for those people, the 31 October deadline is looming.
If you usually submit a paper tax return, you may not have received the blank self-assessment forms as you would have done in previous years; HMRC will have sent a ‘notice to file’ instead.
This doesn’t mean you no longer have to submit a tax return and it doesn’t mean paper returns are no longer available – rather, it’s a measure HMRC introduced earlier this year to encourage people to file online where possible. You can download and print paper tax returns, or call HMRC to request one is sent to you.
Regardless of whether you’ve been financially affected by the coronavirus crisis this year, everyone still has to submit a tax return as usual – but there may be help available if you’ll struggle to pay your tax bill due to the effects of COVID-19.
If you’ve been leaving it to the last minute, it’s time to get going. Here are seven tips to make the process as quick and easy as possible.
1. Organise your invoices, receipts and other documents
Getting all of your paperwork together will save you having to stop and hunt around for it while you’re trying to fill out your forms – not to mention cutting down on time and stress.
Documents you’re likely to need could include:
- Bank and building society statements
- Pension statements
- Letting agreements
- Contracts for the sale of assets.
You’ll need to keep these documents after you’ve submitted your return in case HMRC requests to see them; it has the power to visit your premises and inspect your books at any time.
There’s no specific way you need to keep your paperwork, but HMRC can issue a fine if your records aren’t deemed to be accurate, legible and complete.
2. Make sure you have the right forms
Many people will only need to fill out the main SA100 form. This will ask for all types of income you’ve received during the 2019-20 tax year and details of any tax reliefs you may qualify for.
However, if you have a more complicated financial situation, there are many other supplementary forms that you’ll need to fill in along with the SA100.
Our guide on paper tax returns has the full list of supplementary pages and who needs to submit them.
As with the main form, you can either download and print the supplementary pages you need or contact HMRC and ask for them to be posted to you. However, as the deadline is now so close it’s probably too late for that option.
3. Calculate your expenses
You can reduce your tax bill by offsetting things you’ve had to buy or pay for to enable you to carry out your work, against your profit.
We’ve previously reported that up to a third of self-assessment taxpayers could be getting their expenses wrong and possibly paying more tax than they need to.
People commonly forget to include payments for fuel, mobile phone costs, car insurance and the use of a home office.
You can also claim expenses for things such as bills, travel and accommodation on business trips, and the cost of equipment including laptops, stationery and tools.
These expenses must be solely for business use; if you work from home and claim for things such as household bills, you’ll only be able to claim the proportion of the bill that was used for work.
- Find out more: tax-deductible expenses
4. Double-check your details
One of the most common, and most preventable, reasons for getting a fine from HMRC is submitting inaccurate ‘careless’ tax returns.
This is why it’s never good to leave your tax return to the last minute; the earlier you make a start, the more time you’ll have to double and even triple-check that you’ve got the correct figures and information.
HMRC’s penalty system for incorrect information looks at whether someone has taken ‘reasonable care’ to fill out the forms correctly and whether it seems as though someone is being deliberately misleading.
The penalty will vary depending on how it views your tax return:
- No penalty You’ve taken reasonable care to fill out your tax return
- 0-30% of the tax you owe You’ve made careless mistakes
- 20-70% of the tax you owe You’ve deliberately underestimated your tax
- 30-100% of the tax you owe You’ve deliberately underestimated your tax and attempted to conceal it.
If you’re still waiting on some figures to be confirmed, you can include estimates – just make sure you tick the box to say the figures you’ve included are provisional. Then you can submit an amendment once you have the correct information.
Don’t be late in submitting your return because you’re waiting on figures as you could incur a late-payment fine.
- Find out more: how to fill in a self-assessment tax return
5. Don’t miss the deadline
You must get your paper tax return to HMRC by midnight on 31 October; if it’s even just a day late you may get a £100 fine, so you must make sure there is enough time for your paperwork to go through the post.
The later your tax return arrives, the more fines you’ll incur:
- One day late £100 for one day after the deadline
- Up to three months late £100 initial fine, plus £10 for each additional day (capped at 90 days)
- Six months late £300 or 5% of the tax you owe (whichever is bigger), on top of the penalties above
- 12 months late £300 or 5% of the tax you owe (whichever is bigger), on top of the penalties above. In some cases, you may be fined an extra 100% of the tax you owe.
There are a few ‘reasonable excuses’ that HMRC will accept for filing late, which is defined as being ‘something unexpected and outside your control that stopped you from meeting a tax obligation’.
Excuses it will accept include:
- The recent death of a partner
- An unexpected hospital stay
- An issue with HMRC’s services
HMRC says it considers late filing excuses on a case-by-case basis.
- Find out more: late tax returns and penalties for mistakes
6. If you think you might be late, file online instead
With the deadline fast approaching, if it’s looking like your return won’t reach HMRC by 31 October, you might be better off filing your tax return online instead.
This has a number of advantages – first, you’ll instantly get much more time to sort your self-assessment as online returns aren’t due until 31 January 2021.
To do this, you’ll need to register online.
It’s not possible to make up for sending a late paper return by filing an online return as well – even if the online return is sent before the deadline. That’s because HMRC will only count the return it receives first – so if your paper return is late, you’ll get a late fine.
- The Which? tax calculator can help you file your tax return online. This handy tool is jargon-free and submits your information directly to HMRC.
7. Plan for your tax payment
While paper tax returns are due by 31 October, the tax you owe for 2019-20 doesn’t have to be paid until 31 January 2021. In some cases, this tax could be deferred until 31 January 2022 if your income has been affected by the coronavirus pandemic.
As part of the government’s Winter Economy Plan – a financial package of measures covering November 2020 to April 2021 – those who pay tax by self-assessment can defer the tax due on 31 January 2021 for up to 12 months via Time to Pay scheme.
This means you can pay the tax in smaller instalments – but note it must all be paid by 31 January 2022 and you’ll also be charged 2.6% interest on any tax that’s still owed after 31 January 2021.
If you don’t use the Time to Pay scheme, your tax is due on 31 January 2021 as usual.
There are separate penalties for being late to pay your tax bill. First, for each day the tax is late you’ll be charged 3.25% interest on top of what you owe, with the following additional penalties if it’s paid more than 30 days late:
- After 30 days A charge equal to 5% of the outstanding tax
- After six months A further 5% charge
- After 12 months An additional 5% charge.
If you’re employed and pay tax by PAYE, it may be possible to add your self-assessment tax. To do this, you must owe less than £3,000. If you want to pay tax as a lump sum instead, you must mark this option on your return.