Take the pain out of filling in your tax return...

NOBODY likes completing their self-assessment tax return but millions of us don’t have a choice in the matter.

Every year, more than 12million must fill in a tax return and file it with HM Revenue & Custom – and boy do we hate it.

There are loads of reasons to delay submitting your tax return. It’s complicated, boring, time-consuming and when it’s over, you have to pay a bill.

But there is one overriding reason why you must comply – it’s the law, and there are stringent penalties if you don’t.

The first big deadline arrives on October 31, when the 1.3million people who still submit a paper return must have sent it. Most taxpayers submit their return online now and have until January 31, 2022.

James Hunt, an adviser at ATC Tax, said tax returns will become more digitalised as the Government tries to simplify and streamline the system, so leave paper behind if you can.

He said: “It makes sense to get ahead of the curve and embrace digital sooner rather than later.”

That deadline will come around fast enough so even if you do plan to file electronically, it’s a good time to start preparing the necessary information.

Here’s what you need to know :

Don’t leave it to the last minute if you want to avoid fines and other complications

YOU WILL FACE TOUGH PENALTIES IF YOU FAIL TO MEET THE DEADLINE

Do I have to submit a return?

The good news is you will not usually need to send a return if your only income is from your wages or pension.

However, you may need to send one if you have any other untaxed income such as money from renting out a property, tips and commission, income from savings, investments and dividends held outside a tax-free Isa, and foreign income.

The self-employed, company directors and those with varied sources of income on top of PAYE or a pension are most likely to send a form.

If you didn’t submit a return for last year, you probably don’t need to do so again unless your circumstances have changed – say, you have started working for yourself, are now renting out a property or have made a large capital gain.

There are no penalties for missing the October 31 deadline. It simply means you have no choice but to submit electronically. However, if you also miss the January 31 deadline for online returns, you face an automatic £100 penalty, with more to follow if you continue to delay.

The pandemic messed up tax filing last year, with nearly 1.8million missing the January 31 deadline. That’s almost double the 958,296 who missed the deadline last year.

This year, taxpayers have less of an excuse. HMRC has stopped sending out paper returns, so either download one from government portal, gov.uk, or apply for one to be posted.

Take action now

Don’t leave it to the last minute, warns Grace Taylor, from the Accountancy Partnership.

She said: “Nobody enjoys doing their tax return but it is so important to start thinking about it well before the deadline to avoid fines and other complications which come with submitting late.”

As deadlines loom, accountants get busier.

Taylor added: “The later you leave it, the harder it will be to find someone with time to help.”

To complete your tax return, you will need your Government Gateway login and Unique Taxpayer Reference as well as all relevant accounts, receipts and paperwork.

She said: “Gather all this up before starting the return so you have everything easily accessible in one place.”

Incredibly, four in 10 small and medium-sized business owners are still using paper-based systems to keep accounts, while one in 10 stores essential documents loose in a drawer or shoebox, Accountancy Partnership research shows.

Taylor said: “If you’ve spent hours looking through drawers, desks and shoeboxes for these details, learn from your mistakes and implement a system so you won’t be floundering again next year.”

If this is your first tax return, check out the self-assessment section at gov.uk to understand what is required. Taylor added: “Seeking help from friends and family who are experienced in tax returns is also sensible. While finance can be daunting for many, asking for help is the best way to avoid fines and miscalculations. After a year of financial hardship, that’s the last thing that you need.”

If you have claimed a Covid grant under the Self Employed Income Support Scheme (SEISS), remember the money must be declared on your tax return.

Gather your paperwork

Melanie Hicks, a tax p accountancy firm HW Fi allow plenty of time t paperwork.

She said: “This includes which will confirm the tot have paid on your incom also need a record of be expenses, which can be your P11D or P9D forms. I left a job in the last tax yea also need a P45 from you employer.”

Make sure you keep det pension contributions to to claim the right tax relie

You will also need det your gift aid payments.

Hicks added: “Ha sponsored a friend to charity? This can be inclu as HMRC provides some relief on charitable givin

Once you have compl your tax return, make a and keep a proof of postage

Hicks said: “If you employed or a pensioner, all paperwork for 22 mo from the end of the tax ye

which it relates to. If you are self-employed or letting a property, keep all paperwork for five years and 10 months.”

Don’t forget the personal savings allowance can be applied to interest earned on your savings.

Hicks said: “You could receive up to £5000 in interest, tax-free.”

Roll up your sleeves – now

Laurence Taylor, founder of social enterprise Easy as 123, says don’t be put off by all the jargon.

He added: “HMRC says tax shouldn’t be taxing but still manages to make this the most complicated tax return in the world with lots of difficult words, double negative questions and things that don’t apply to 99.9 per cent of the population.”

You still have to tackle it though.

Taylor added: “Take a deep breath, don’t panic and reach out for advice if you get stuck – you won’t be alone.”

He says the good news is you may need fewer figures than you think., adding: “If you are self-employed or have some investment income or income from property, HMRC will only need to see a few totals.

“Try to use your actual bank transactions for your ins and outs so they will be correct and traceable.”

Sort out any supplementary pages you may need.

Taylor said: “If you’ve got income from several different places, go to gov.uk and download any relevant forms such as SA102 (Employment) or SA105 (UK Property).”

He said you should also think ahead and budget for your next tax bill, adding: “By the time the self-assessment deadline comes around, it can be tricky to determine how much you owe, so start setting the necessary funds aside.”

This is particularly hard this year as a third of Brits have either seen their savings ravaged by the pandemic, or had to take on more debt to make ends meet, according to research from Royal London.

Easy as 123 works alongside the insurer’s Changemakers programme, which helps people set aside money as a cushion against life’s nasty little shocks – including tax bills.