The deadline for filing self-assessment tax returns is 31 January and, unlike the past two years, the cut-off date won’t be extended.
At the start of the year, HMRC was still waiting for almost 5.7 million taxpayers to file their tax returns. If you’re among those who still haven’t filed, there’s just days left to submit the form and pay your tax bill – or you could face late filing fees and interest on any outstanding tax.
Here, Which? offers tips on how to get on top of your self-assessment tax return for 2021-22.
1. Get prepared
In November 2022, we surveyed 881 people who will be submitting a tax return for the 2021-22 tax year and found that 42% of them incorrectly believe you can’t change a mistake.
Around a third (31%) of those who’ve submitted one before said the thing they disliked the most about tax returns was worrying about making a mistake – but errors can actually be rectified after submission.
Nevertheless, it’s better to get ahead with your preparations now to lessen the risk of fines for an inaccurate return.
The first step is making sure you’re clear about all your income streams – including things like employment, savings interest, pensions and any other sources. You might want to start by going through your savings and current account statements and making a list of the different places your money is coming from.
Once that’s done, you’ll have a better idea of which income sources you need to declare on your return and which taxes may be due. These could include income tax, National Insurance, dividend tax and capital gains tax.
Gather all relevant documents and information together before you start filling out the form, including your P60 form (if you’re employed), relevant receipts and invoices, bills, bank statements, tenancy agreements, student loan statements and details of any benefits.
Crucially, you’ll also need your National Insurance number and Unique Taxpayer Reference (UTR) number.
2. Don’t forget allowances and expenses
You can reduce your tax bill by taking advantage of tax reliefs and allowances, which could include:
If you’re self-employed, you can also claim expenses, but there’s often confusion around what you can and cannot claim for.
For example, our tax return survey from November 2022 found that 48% of respondents thought you can claim your commute to work as a legitimate expense. Unfortunately, you can’t claim for your regular trip to the office – but you can claim travel expenses for a business trip, such as travelling to a meeting or conference.
You can include purchases that are necessary for your business, such as stationery, and the cost of running a business premises, including energy bills.
If you run a self-employed business from home, you can also claim a proportion of your bills, depending on the space you’re working in and the time you spend working. Surprisingly, 13% of people questioned in our survey didn’t think you could claim working-from-home expenses, and 18% weren’t sure either way. If in any doubt, the gov.uk website has more information on what counts as an expense.
Alternatively, you may be able to apply the ‘trading allowance’, which allows you to set up to £1,000 against your self-employed income. However, if you use the trading allowance, you won’t be able to deduct actual expenses.
3. Review and keep copies
Once you’ve been through the tax return and filled in all of the relevant sections, take time to review your figures.
When you’re satisfied that the information is correct and complete, you can click the button to file. If you’re filing directly with HMRC, you’ll be given the opportunity to save a PDF of your completed return, in case you want to keep it on file or review it later.
HMRC will also send a notification to say your tax return has been filed successfully. Keep this (and the PDF of your completed form) in a safe place in case of any queries, or in the (unlikely) case HMRC says it never received your form and issues a penalty.
4. Remember to pay on time
Filing your tax return isn’t your only task – the deadline for paying the tax you owe is also 31 January. If you don’t pay your tax bill by this time, you’ll be charged interest from the date the payment was due. Late payment interest is currently set at 6% – it’s linked to the Bank of England base rate, so could rise further in future.
There are several ways you can pay your bill, although HMRC doesn’t accept personal credit cards and you can no longer pay your tax bill at the Post Office.
To get the payment to its destination on the same or next day, use Faster Payment or Chaps, online and telephone banking services, a debit card or business credit card. Paying by Bacs or by cheque in the post can take around three days – but cheques could take much longer to arrive if there are postal delays.
If you’d prefer, you can also pay your self-assessment bill via the free HMRC app. The app can also help with information such as your UTR number, National Insurance number, tax credit payments and any PAYE information.
Allow for payments on account if self-employed
These are advance payments towards your tax bill for self-employed people, payable by 31 January and 31 July each year. They’ll apply unless your last self-assessment tax bill was less than £1,000, or you’ve already paid more than 80% of all the tax you owe – for example, through your PAYE tax code.
Each payment is half your previous year’s tax bill. If your payments on account don’t cover your full tax bill for the subsequent tax return, you must make a ‘balancing payment’ by 31 January.
If you haven’t previously paid your bill by payments on account, your first time will involve having to pay your full bill for the previous year’s tax return, plus 50% of next year’s estimated bill, which can come as a shock if you weren’t expecting it.
5. Struggling to pay? Talk to HMRC now
Our survey from November found that 31% of people who are submitting a tax return for the year 2021-22 were concerned about being able to pay their tax bill this year.
If you don’t think you can pay by the deadline of 31 January, get in touch with HMRC as soon as possible.
You may be able to set up a Time to Pay arrangement that lets you pay in instalments over an agreed period. You’ll pay interest on anything owed after the deadline. Our survey found that 22% of people who are submitting a tax return plan to use the Time to Pay arrangement this year, and 28% have used it in the past.
To set up a payment plan online, you’ll need to owe less than £30,000, be within 60 days of the 31 January payment deadline, and not have any other payment plans or debts with HMRC. If these circumstances don’t apply to you, you can call the Payment Support Service on 0300 200 3835.
6. Use the Which? tax calculator to submit your 2021-22 return
Which?’s online tax calculator tool offers a quick and easy way to find out how much tax you owe.
After inputting your income and outgoings, it can suggest expenses and allowances you might have forgotten – plus, when you’re finished, you can also submit your return directly to HMRC.
Try it for yourself at which.co.uk/taxcalculator.