John M Taylor&Co, Chartered Accountants&Business Advisors, 9 Glasgow Road, Paisley

Guide to Self Assessment for Individuals

The key behind UK self assessment lies in the title. It is the responsibility of the individual to ensure that their Tax Return is submitted to HM Revenue & Customs on time and that it is completed correctly. It is also the responsibility of the taxpayer to ensure that any tax liability due by them is paid to HM Revenue & Customs on time and that the correct amount is paid over. It is not sufficient to assume that HM Revenue & Customs will tell you to complete a Tax Return and that they will tell you what needs to be completed and how much to pay.

Tax Returns

Self Assessment taxpayers are required to complete a Self Assessment Tax Return each year and these are generally issued on or around 6 April each year. The Tax Return consists of a main form along with various relevant supplementary pages. Your tax office will decide which supplementary pages are relevant to you on the basis of the information they hold on file but it is often the case that additional pages will be required. These can be obtained by telephoning your tax office or downloading them from the HMRC website.

Your 2006/07 Tax Return must be lodged with HMRC on or before 31 January 2008 if you are calculating the tax yourself. Alternatively if you wish HMRC to calculate your tax liability for you then you should ensure that your Tax Return is completed and submitted on or before 30 September 2007.

If you were not previously a Self Assessment taxpayer but now believe that you should be you should inform your tax office by 5 October at the latest. If you are unsure whether or not a Tax Return is required the HMRC website lists the criteria for those who must complete a Tax Return. To view this page please click here.

Late Tax Returns

If you fail to submit your Tax Return on time there is an automatic late filing penalty of £100. This will be followed by a further late filing penalty of £100 if your Tax Return is still not submitted within six months of the deadline. In addition to this interest will be charged on any amount unpaid at the 31 January filing deadline and a 5% surcharge will be automatically applied if that liability is not paid at 28 February and another 5% surcharge if it is still unpaid six months after the due date.

Determinations

If you fail to complete your Self Assessment Tax Return by the due date HMRC will normally estimate to the best of their ability your likely tax liability for the tax year in question. This can happen anytime within five years of the filing date. When a determination is issued the tax liability stated is automatically payable but once the Self Assessment Tax Return has been submitted the amounts stated will be superceded by the correct figures.

Due dates for Tax payments

Payments in respect of income tax (and Class 4 National Insurance Contributions) for a particular tax year are due at 31 January following the end of the tax year. Where the balancing payment due at 31 January is greater than £500 and the amount is greater than 20% of your total tax liability for that tax year (including any tax deducted at source) you will also be required to make payments on account for the following tax year. These payments to account are automatically set at 50% of the previous year's liability but can be reduced where you have reason to believe that your underpayment in the following tax year will be lower. If you reduce your payments to account too far interest will be charge on the difference between the actual amounts due and the amount paid. Such payments to account are due at 31 January and 31 July each year.

For example if your balancing payment for 2006/07 due at 31 January 2008 is £1,200 then you will also be expected to make a payment to account of £600 at that date in respect of your anticipated 2007/08 tax liability. This will be followed by a further payment to account of £600 due at 31 July 2008. Once your final 2007/08 tax liability has been ascertained any overpayment will either be refunded or set against your payment to account for the following tax year.

Record keeping, investigations and amendments

From the filing date of your Tax Return you have one year in which you can make an amendment to your Tax Return is you realise that it is incorrect. HMRC also have one year from the filing date of the Tax Return to enquire into it if they wish. Every year HMRC select a percentage of Tax Returns to enquire into to check that they are complete. These Tax Returns are usually selected on a random basis although in some cases HMRC may have reason to believe that particular Tax Returns are incorrect. All records relating to your Tax Return must be retained for a period of at least one year from the date of filing. If you have rental or trading income you must retain all records for a period of at least five years from the date of filing of your Tax Return.

Employees within Self Assessment

Self Assessment for employees is usually fairly straightforward as the majority of any tax liability will have been collected through PAYE. For this reason most employees are not required to complete a Tax Return. However, issues can often arise where employees have benefits in kind provided by their employer. In this situation PAYE is often collected based on estimated benefits in kind and the position can only be reviewed once the actual benefit in kind figures are made available to the HMRC. In most cases any underpayments will be less than £2,000 and the underpayment can be collected by an adjustment to the employee's PAYE Coding notice for the next available tax year. However, this option is only possible if the Tax Return is filed by 30 September. After this date any tax liability must be paid direct at 31 January following the end of the relevant tax year; payments to account may also be payable if the relevant amount is greater than £500.

To enable employees to complete their Tax Returns by 30 September each year HMRC have set deadlines for the provision of information to employees by their employer. For example Employers must let their employees have Form P60 by 31 May following the end of the tax year. Form P11D showing any benefits in kind must be provided to employees by 6 July following the end of the tax year.

Self Assessment Calendar

Date	Event
30 September 2007	Tax Return for 2006/07 to be submitted if you wish HMRC to calculate your tax position. Filing date if you wish any tax underpayment to be collected through an adjustment to your PAYE Coding notice (subject to maximum of £2,000) [Paper Tax Returns].
30 December 2007	Tax Return to be filed online if you wish any tax underpayment to be collected through an adjustment to your PAYE Coding notice (subject to maximum of £2,000) .
31 January 2008	Filing date for 2006/07 Self Assessment Tax Returns. Payment of 2006/07 Self Assessment Balancing payment due. Payment of 2006/07 Capital Gains Tax liability due. Payment of 1st Payment on account for 2007/08 due.
28 February 2008	1st 5% surcharge applied on any 2006/07 balancing payment remaining unpaid .
31 July 2008	Second Payment to account for 2007/08 due.
30 September 2008	Tax Return for 2007/08 to be submitted if you wish HMRC to calculate your tax position. Filing date if you wish any tax underpayment to be collected through an adjustment to your PAYE Coding notice (subject to maximum of £2,000) [Paper Tax Returns].
31 October 2008	2nd 5% surcharge applied on any 2006/07 balancing payment remaining unpaid. Deadline for filing of paper Tax Returns (new for 2007/08).
30 December 2008	Tax Return to be filed online if you wish any tax underpayment to be collected through an adjustment to your PAYE Coding notice (subject to maximum of £2,000) .
31 January 2009	Filing date for 2007/08 Self Assessment Tax Returns (Online filing) Payment of 2007/08 Self Assessment Balancing payment due. Payment of 2007/08 Capital Gains Tax liability due. Payment of 1st Payment on account for 2008/09 due.
28 February 2009	1st 5% surcharge applied on any 2006/07 balancing payment remaining unpaid .
31 July 2009	Second payment on account for 2008/09 due. Second surcharge of 5% on any 2007/08 balancing payment remaining unpaid.

We hope you have found this guide useful. If you would like some further advice or would like assistance with the completion of your Self Assessment Tax Return please contact us.

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