The deadline looms for anyone needing to submit a paper self assessment tax return, as all documents need to be in by Monday 31 October.
89% of people who submit self-assessment returns now do so online, according to HM Revenue and Customs (HMRC), but last year more than one million people filed physical returns.
If you complete a paper return and miss the deadline there’s an immediate £100 fine. If after three months you’ve still not filed your taxes you could be charged an extra £10 per day. If you file very late the penalties are even higher, with a 5% surcharge of the total amount you owe (minimum £300) after six months, and the same after 12 months.
However, if you think you’re going to miss the deadline for paper returns it’s possible to sidestep these fees by filing your taxes online instead. The deadline for electronic returns is three months later, so you’ll have until 31 January 2017 to submit your returns.
If you plan to switch to the online system, bear in mind it can take a few weeks to set up, so don’t leave it until the last minute.
From 2020, everyone who submits a tax return will need to do so online.
Who needs to submit a tax return?
Generally, self assessment tax returns are required from the self-employed, and people who earn income that’s not taxed automatically through a company pay as you earn (PAYE) system.
You may also need to submit a return if:
- You’ve received more than £2,500 in untaxed income in the last year.
- You get more than £10,000 from savings or investment income (excluding Isas).
- You’ve sold investments that are liable for capital gains tax, for example, a buy to let property, or investments that don’t sit within an Isa or pension.
- You’ve received income from outside the UK.
- You’ve lived abroad while receiving an income from the UK.
- You’ve been notified by HMRC that you’ve underpaid your taxes in previous years.
- You’re a parent with an income over £50,000 and you’re also receiving child tax credits.
- You’re a higher-rate taxpayer with a pension – as some employers only claim basic tax relief for you, you’ll need to claim higher rate relief yourself.
Tax return tips
If you’re filing a return, bear these tips in mind.
- If you don’t submit your tax returns online already, do consider making a digital return. You’ll get more time to complete the documents, and the online tools will help calculate what you owe.
- Collect all the relevant documents before you begin. Employees will need payslips, and P45 documents if you’ve switched jobs during the tax year.
- Self-employed workers will need records of how much they’ve earned, and any allowable expenses. If you’ve invested in stocks, shares, or funds that aren’t within a pension or Isa you’ll need those details too.
- If you can’t afford to pay your tax bill contact HMRC as early as possible – it may be willing to agree to a payment plan that lets you pay your tax bill over a longer period, and avoid any late fines in the process. Don’t leave this to the last minute.