Hurry to avoid a £100 self assessment tax fine

The deadline to send completed online forms for the 2011/12 financial year is 31 January. The minimum fine for missing the deadline is £100. If the return is further delayed, it can rise to as much as £1,600.

If you've yet to get a login to file online, you need to do it immediately to give it sufficient time to arrive.

According to HM Revenue and Customs (HMRC), around 10.5 million people need to submit a self assessment form by the January deadline, and 10% tend to be late.

The deadline to file by paper passed on 31 October 2012, so don't do it that way or you WILL be fined.

Hurry if you've yet to register 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 the first time, visit the HMRC website but do it now, as the login details take up to 10 working days to arrive.

Who needs to file a return?

If you received a notification last April saying you need to submit a self-assessment form, then you must do. This mainly applies to the self-employed, company directors and anyone with savings or investment income of £10,000 or more.

If HMRC has asked you to complete a tax return but you don't think you need to, let it know as soon as possible. You'll have to pay a penalty if you forget and don't send one in.

Those whose tax is deducted by their employer usually DON'T need to submit a form, unless they receive additional self-employed income from a second job or freelance work.

If you only earned small sums of extra cash or you're a higher rate taxpayer who earned less than £10,000 from savings or investments, you need to declare this on a P810 form. The 31 January deadline does not apply here.

If you need a form or you are in any doubt, contact your tax office.

When must I pay by?

The deadline to pay any outstanding tax from the 2011/12 tax year is also 31 January. You may have to pay the first of two 'payments on account' towards your next tax bill on the 31st too.

If you're late paying, you'll face annual interest at 3% on missing payments.

The January payment deadline is the same for both paper and online returns and there are very few exceptions. As an example, the deadline may be later if HMRC sends you the letter, telling you to complete a return, after 31 October. In this case you'll usually need to send in the return and pay the tax due within three months of the date of the letter.

If you want to pay your tax via a bank transfer, you can do so right up until the evening of 31 January. HMRC now accepts money under the Faster Payments, regime which allows cash to go through in two hours.

However, each sending bank has a limit on how much you can transfer under Faster Payments. The limits range between £5,000 and £100,000. See this link for each provider's limit.

What must I pay?

As well as 2011/12 tax, most self assessment payers must also pay the first half of what's called a 'payment on account' for the 2012/13 tax year by the same date, even though the assessment for this payment has not yet been made.

This will be half the total tax owed for 2011/12. So if you owe £2,000 for 2011/12, the first payment on account will be for £1,000.

The next half (£1,000 in the example above) must be paid by 31 July, and come 31 January 2014, you'll settle the current year's tax bill, as you're doing now for 2011/12.

You only have to make payments on account if your previous year's tax liability was over £1,000.

But if an employer (if you have more than one job) deducted more than 80% of that figure, you won't owe a payment on account now.

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 the Revenue's allowable expenses).

What if I'm owed tax back?

After filing, it may be you're due cash back. This may happen if you've only worked part of the year or owe less than the total payments on account you've made for 2011/12. See the Revenue's refund forms for help claiming back.

What if I've yet to register for self assessment?

This is different to registering to use the online service. This is where you tell HMRC you are self employed or you need to file a self assessment form.

You must tell HMRC by the 5 October after the tax year in which you realised you need to file a self assessment form.

So if you became self-employed during 2011/12, became a company director in that time or earned over £10,000 from savings or investments, you should have told HMRC by 5 October last year.

If not, you could face a penalty of up to 100% of the amount of tax due, in addition to having to pay that tax back.

The severity of the penalty depends on whether HMRC believes you deliberately failed to inform it. Where you have a reasonable excuse, there may be no penalty.

See the HMRC website for further information or to register for self assessment.

Where can I get free help?

You can ask HMRC for advice, while there are also a host of charities and agencies that give help completing forms, especially for those on lower incomes. See the Free Tax Help note.