Self Assessment Tips - Get your tax return in early
Last year, 4.8 million people missed the 30 September tax return cut off date. And while the tax return deadline for this year - 31 January 2007 - may seem some way off, individual taxpayers should remember that there are incentives for filing it early, says PricewaterhouseCoopers LLP.
If tax returns reach HM Revenue & Customs (HMRC) by 30 September 2006, HMRC will calculate any tax owed and, if under £2,000, collect it through the taxpayer’s tax code. An early return will also help taxpayers avoid having to wade through the 12 page return themselves, incurring surcharges on any amount underpaid should they make a mistake and losing out on the extra time available to pay their tax.
Leonie Kerswill, tax partner at PricewaterhouseCoopers LLP, said:
“Many people are not aware that by completing their tax return by 30 September they can potentially save a lot of time, hassle and money. Sending in your tax return earlier doesn’t mean you have to pay tax earlier, but the sooner you complete your tax return, the more time you’ll have to get help from HMRC if you need it.”
The advantages of hitting the 30 September cut off date are outlined below:
- If your tax bill is less than £2,000 you can pay the tax you owe via your monthly employment income and through next year’s PAYE tax code. This means the tax you owe is paid in instalments rather than a lump sum.
- By meeting the 30 September deadline, HMRC will not only calculate how much tax you need to pay by 31 January 2007, but it will also give you a month’s warning.
- By missing the 30 September deadline you might not know how much you owe by 31 January, leaving you open to the risk of underpaying your tax and incurring interest charges and surcharges on any amount underpaid.
- If you’re filling in a paper return, check you’ve got all the right pages.
- Get all your paperwork such as payslips, P45, P60 or business accounts sorted before you start.
- Check that the interest and dividend amounts add up (cash + tax = gross).
- Don’t include ISAs, PEPs or ordinary pension contributions to an employer’s scheme.
- If you send back your tax return over the internet the software and online forms will calculate your tax liability for you.
- No need to use pence – round pounds will do.
- Keep a photocopy and send the forms off in good time.
Posted August 24, 2006
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