Page last updated at 23:25 GMT, Tuesday, 17 January 2006

Managing the self assessment deadline

Money Talk
By John Whiting
Tax partner, PricewaterhouseCoopers

HM Revenue & Customs office
Get your return to the Revenue by 31 January
The 31 January self assessment deadline is almost upon us, yet more than a third of the 9.8m people who received tax returns for 2004/05 have yet to file them.

Last year almost a million returns were late, leading to automatic 100 late filing penalty notices, so how best to complete this unavoidable task on time?

Getting started

Preparation is crucial. Make sure you have the core return and the right supplementary pages (ie employment - and one for each employment - property income, capital gains etc).

If you are missing any pages, you can download them from the HM Revenue & Customs (HMRC) website.

Then assemble your own paperwork - all relevant records such as P11Ds, pension contribution records, GiftAid payments etc.

When you start, treat the return like an exam in which you have to get 100%.

Read through all the questions carefully and don't rush it.

Mistakes can lead to the Revenue rejecting your form.

Filing electronically

If you want to use this system, don't leave it until the last minute.

You need to register on the site first, and this can take several days.

HMRC's e-filing system is much more robust and reliable than it was.

It can also cope with most people's circumstances and has the great benefit of calculating your tax bill automatically.

Don't panic

Treat filling in your tax return as you would an exam paper, but as an open book exam.

Tax return
Treat the filling in of the forms as an exam

If you get stuck, consult guidance material such as the helpful notes that come with the tax return or of course a qualified tax adviser, (although bear in mind that tax advisers tend to be rather busy as the 31 January deadline approaches.)

If you don't have all the details for an item, use a "best estimate".

Write in the figure and explain why you've had to do this and any relevant information in the 'white space' - do not try and annotate the actual box on the return.

Avoiding mistakes

With the pressure of the approaching deadline, it's very easy to start making mistakes.

Do not fall into these classic traps:

  • Mixing up interest received gross with interest that has had tax deducted at source, as is the case with most bank and building society interest.

  • Trying to enter ISA/PEP income. These investments are tax-free.

  • For both dividends and interest, not making sure that the cash received plus tax deducted/tax credit equals the gross amount.

  • Forgetting that some benefits are taxable. Taxable benefits include the state pension and Jobseekers allowance, but others, such as child benefit are not.

  • Your own personal pension contributions need to be recorded, using the gross figure of such premiums, to ensure you get tax relief. Don't try to log ordinary contributions to your employer's pension fund though.

  • Throughout all of this, don't record pence - you are allowed to round down.

  • And finally, don't forget to sign and date your return - people still do.

The biggest mistake of all

Don't lose sight of 31 January payment deadline.

You must pay your final amount of tax for 2004/05 by this date and, in many cases, make a first payment on account for 2005/06.

At this stage you may find it difficult to calculate the tax you owe accurately (even with the tax calculation guide supplied!) so this is another time for estimating.

You may decide to be generous in your guesstimate - overpayments will come back to you in due course.

If you do this it is important to complete the details under question 19, which tells HMRC how you would like any over payment refunded to you.

Is the deadline really 31 January?

Tax returns need to be received by HMRC by Tuesday 31 January to avoid the late filing penalty, but in practice this means if the return is in HMRC's letterbox when they open for business first thing on Wednesday 1 February, you will have met the deadline.

It is possible to hand deliver your return to a local HMRC office, though you won't get a receipt for your return nowadays - so you may need to think about how to prove your delivery in case there is a subsequent dispute.

Returns received during the next 24 hours are technically late but incur no late filing penalty, although interest at 6.5% on outstanding tax will have started to run.

Returns received from Thursday 2 February are late and will be liable for the late filing penalty unless there is a 'reasonable excuse' - something that is difficult to establish as people have had nine or ten months to complete their returns.

If this experience hasn't been the best start to your new year, bear in mind that if you get your 2005/06 return in by 30 September 2006, HMRC will calculate for you the correct amount of tax you need to pay.

And finally - congratulations, it is over for another year.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.

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