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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 2016/17 Tax Return must be lodged with HMRC on or before 31 January 2018 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 31 October 2017.

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 you will be subject to late filing penalties. The exact amount of any penalty depends on how late you are in filing your Tax Return:

Length of delay            Penalty you will have to pay

1 day late                       A penalty of £100. This applies even if you have no tax to pay or have paid the tax you owe.

3 months late                £10 for each following day - up to a 90 day maximum of £900. This is as well as the fixed penalty above.

6 months late                £300 or 5% of the tax due, whichever is the higher. This is as well as the penalties above.

12 months late              £300 or 5% of the tax due, whichever is the higher.

In serious cases you may be asked to pay up to 100% of the tax due instead. In some cases the penalties can be even higher than this.
These are as well as the penalties above.

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 £1,000 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 2016/17 due at 31 January 2018 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 2017/18 tax liability. This will be followed by a further payment to account of £600 due at 31 July 2018. Once your final 2017/18 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 £3,000 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 31 October (paper submissions) or 31 December (online submissions). After this date any tax liability must be paid direct at 31 January following the end of the relevant tax year; payments to account for the following tax year may also be payable if the relevant amount is greater than £1,000.

To enable employees to complete their Tax Returns by 31 October 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

Applicable Deadline      
05/10/17 Deadline for notifying HMRC of requirement to submit a Tax Return
31/12/17
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 £3,000).
31/01/18 Filing date for 2016/17 Self Assessment Tax Returns.
Payment of 2016/17 Self Assessment Balancing payment due.
Payment of 2016/17 Capital Gains Tax liability due.
Payment of 1st Payment on account for 2017/18 due.
02/03/18 First 5% surcharge applied on any 2016/17 balancing payment remaining unpaid.
01/05/18 Daily penalties of £10 per day commence if 2016/17 remains unfiled.
31/07/18 Payment of 2nd Payment on account for 2017/18 due.
02/08/18 Second 5% surcharge applied to any 2016/17 balancing payment that remains outstanding
31/10/18 Tax Return for 2017/18 to be submitted if you wish HMRC to calculate your tax position.
Deadline for paper filing of 2017/18 Tax Returns.
31/12/18 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 £3,000).
31/01/19 Filing date for 2017/18 Self Assessment Tax Returns.
Payment of 2017/18 Self Assessment Balancing payment due.
Payment of 2017/18 Capital Gains Tax liability due.
Payment of 1st Payment on account for 2018/19 due.
Third 5% surcharge applied to any 2016/17 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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