If you need to file a paper self-assessment tax return and haven't already done so, do it now to avoid a hefty fine as the deadline is fast approaching. But if you do miss the deadline, don't file by paper – do it online instead.
You have until Friday 31 October to submit a completed paper self-assessment tax return for the 2013/14 financial year, which ended 5 April 2014, to HM Revenue & Customs (HMRC).
This means your return must be received by HMRC by this date, not that you need to post it by this date. It's your responsibility to ensure it reaches HMRC in time – you can't blame the postman if it doesn't.
If you miss the deadline you'll be fined £100 if you file a paper return BUT you can still fill in an online form, so long as you do so by 31 January 2015. Whether or not you send a paper or online tax return you must pay any tax due by 31 January 2015.
You needed to have registered for self-assessment with HMRC by 5 October. If you haven't and you need to, contact HMRC straightaway.
Do I need to file a return?
If your tax is deducted by your employer, you usually don't need to submit a form, unless you get additional income from a second job or freelance work, or have been caught up in the changes to child benefit.
Since 7 January 2013, all parents with incomes above £50,000 who receive child benefit payments have to pay a tax charge based on their income and how much of the benefit they received in the 2013/14 tax year.
If you have received a notification since April 2014 saying you need to submit a self-assessment form, then you must do it.
If HMRC has asked you to complete a tax return but you don't think you need to, tell it as soon as possible. You'll have to pay a penalty if you forget and don't send one in.
If you haven't received a notification, you should get in touch with HMRC if you fall into one of the following categories, as it's likely you'll need to file a return:
- You're self-employed
- You're a partner in a business partnership
- You're a company director
- Your annual income is £100,000 or more
- You have income from property
- You have income from savings or investments that has been taxed and was £10,000 or more before you paid tax on it
- You have income from savings or investments that hasn't been taxed and is £2,500 or more (bank account interest is usually taxed automatically)
- You need to claim expenses or reliefs
- You or your partner receive child benefit and your income is over £50,000
- You get income from overseas
- You have income from trusts, settlements or estates
- You have capital gains tax to pay
- You've lived or worked abroad or don't live in the UK permanently
- You're a trustee
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The deadline to register for self-assessment was 5 October. But what if I missed it?
If you didn't register for self-assessment by 5 October you should contact HMRC immediately and explain your reasons for not registering in time. It will then assess whether or not you need to file a tax return. It is unlikely it will charge a penalty if you contact it and your excuse is reasonable.
However, if you fail to notify HMRC then you could face a penalty of up to 100% of any tax you're due to pay.
Can I file a paper return if I didn't register in time?
If you send a paper return (before 31 October) without registering for self-assesment it'll be treated by HMRC as an 'unsolicited' return, which is a return received without HMRC giving statutory notice that one is required.
An unsolicited return will be looked at by HMRC and if you meet the criteria for self-assessment, HMRC will write to you to confirm this and set up an account for you. However, it is always best to contact HMRC first and explain your situation.
You'll be fined £100 if you file a paper return after 31 October. But you can stile file online.
You'll get a £100 penalty if you file a paper tax return after 31 October. To avoid this you can file your tax return online by 31 January 2015.
How do I file a return online?
To file online, you first need a login. If you've had one for previous years, this will still be valid.
To register for a login for the first time, visit the HMRC website. Ensure you allow enough time before the 31 January 2015 deadline, as it can take up to 10 working days for HMRC to send you an activation code by post.
What must I pay in my return?
As well as 2013/14 tax, most self-assessment payers must also pay the first half of what's called a 'payment on account' for the 2014/15 tax year.
This is half the total estimated tax owed for 2014/15. So if you owe £2,000 for 2013/14, the first payment on account will be for £1,000 to be paid by 31 January 2015.
The next half (£1,000 in the example above) must be paid by 31 July, and come 31 January 2016, you'll settle the current year's tax bill, as you're doing now for 2013/14.
If you don't think you will earn as much money during 2014/15 you can ask for your payments on account to be reduced, but you will have to give a valid reason, such as an expected drop in profits or a change in circumstances.
You only have to make payments on account if your previous year's tax came to more than £1,000. But if an employer (if you have more than one job) has already deducted more than 80% of that figure, you won't owe a payment on account now.
HMRC will usually send you a Self-Assessment Statement that shows how much you owe, or you can check your tax bill online.
How can I pay?
If you want to pay your tax via a bank transfer, you can do so right up until the evening of 31 January 2015. HMRC now accepts money under the Faster Payments regime, which allows cash to go through in two hours.
However, each bank has a limit on how much you can transfer under Faster Payments. The limits range between £5,000 and £100,000. See the Payments Council for each provider's limit.
What if I'm late paying?
If you're late making your payment on account or tax bill you'll be charged 3% interest. This is on top of the minimum £100 fine for missing the deadline for filing your tax return.
What expenses can I claim?
For the self-employed, you only pay tax on profits after legitimate expenses, so claim back all you're entitled to (see HMRC's allowable expenses).
What if I'm owed tax back?
After filing, you may be due cash back. This could happen if you've only worked part of the year, or you owe less than the total payments on account you've made for 2013/14. See the Revenue's refund forms for help claiming back.
What if I can't afford to pay the tax back?
If your bill is correct but you can't afford to pay it, contact HMRC as soon as possible as you may be able to avoid late payment penalties by coming to an arrangement to spread your payments over a period of time (see our Free Tax Code Calculator to ensure you're on the right tax code, and how to reclaim overpaid tax back).
You will need to discuss your financial position openly with HMRC and bring any outstanding tax affairs up to date.