Tax Self Assessment Explained
Tax Self Assessment Explained
Tax Self Assessment Explained
Not everyone like completing their tax self assessment forms on time and in correct fashion.
What's involved
Tax returns must reach HMRC by 31 January. Late submission of the self assessment tax form means you'll be penalized worth 100 plus the unpaid tax interest as calculated. Any late payments by the end of February, for example, are penalized: 5% penalty and additional 5% for 6 months late dues. So to avoid paying a fine, you must submit your self assessment tax forms by October 31 or January 31.
You can, however, set up an online tax return with the HMRC, which will give you a log in detail (i.e. ID and password) upon request. There's a one week waiting period for your log in details to be provided.
All citizens are obliged by law to declare capital gains or additional income to the HMRC even if they have not notified you to do so.
Collate records: end of year pay form (P60), benefits statement (P11D), tax certificates from bank/building society accounts, dividends, lettings income and expenses, private pension contributions and self-employed earnings.
Som reminders
Inform HMRC of any undeclared income as the penalties will be significantly decreased or even dismissed than if HMRC made the discovery.
Faulty accounting or incorrect figures are costly in a tax inquiry. Obtain personal income tax advice from an accountant and ask HMRC to put their questions to your accountant. Instruct your account to redo an accounting period if HMRC tells you have an underpaid tax; don't pay immediately.
Be sure to keep your tax return form for 22 months from the end of a fiscal year. If you have income from property lettings, you need to keep your tax return records for 5 years and 10 months. Failing to retain your tax forms will result to a fine of 3,000 per tax year.
Avoid tax schemes reliant on non-declaration of income or capital gains as these would amount to illegal tax evasion. To save you from trouble, gain personal tax advice in London only from reputable accountants that have a prominent office and good recommendations.
Check that you have answered all the relevant questions, signed the return, and have not made any mistakes. Incorrectly completed self-assessment tax returns in London can be rejected by HMRC.
Do the following
- Write the exact amount for bank/building society interest and any deductions
- Write the gross amount, tax rebates, net cash received, etc. For non-cash dividends, enter them into a different box
- PEPs and ISAs do not attract tax and should not be entered as income.
- Only enter personal pension payments to gain tax relief (workplace schemes have already received tax relief through PAYE)
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