5 Common Myths About Self Assessment Tax Returns
Do the words “self assessment tax return” strike fear into your heart? If you’re self-employed, they probably do.
In this post, we’ll debunk five common myths about self assessment tax returns, so you can complete your filing with confidence, save money and avoid fines.
Myth 1: Only the self-employed have to complete a self assessment tax return
False. You may still have to complete a self assessment tax return, even though you’re not self-employed. Here’s when this might happen:
- You’ve earned £2,500 or more in untaxed income (for example if you rent out a property)
- You’ve earned £10,000 or more from savings, investments or dividends
- You or your partner’s income was over £50,000 and one of you claimed Child Benefit
- If you need to pay Capital Gains Tax on profits from selling shares, a second home or other chargeable assets
- If you want to claim tax back on donations to charity, work expenses over £2,500 or private pension contributions
You can check whether you need to complete a self assessment tax return using HMRC’s handy checker.
Myth 2: You only have to complete a self assessment tax return if you owe tax
If your circumstances have changed and you believe you don’t need to file, it’s still a good idea to contact HMRC to make sure. HMRC may fine you if you don’t complete one or confirm you don’t need to. So better safe than sorry.
Myth 3: HMRC will fine you automatically if you miss the filing deadline
Yes. There’s an automatic fine of £100 if you miss the deadline for submitting your tax return. And there are further fines if you don’t pay your tax bill on time.
However, you can appeal if you feel you have a ‘reasonable excuse’. Reasonable excuses include:
- A serious illness
- The death of your partner or a close relative
- A fire, flood or theft that has affected your business
Myth 4: You need an accountant to complete your return
You may think you need to pay an accountant to fill your return, but for many people, this isn’t necessary. Are your tax affairs straightforward? Have you kept good records? If so, you should be able to complete the return yourself.
Of course, it’s still worth talking to an accountant to find out whether you can deduct certain expenses or are eligible for a refund. If you’re self-employed, it’s also worth investing in accounting software to keep track of your sales and expenses. This is will make completing your tax return much easier.
Myth 5: HMRC automatically fines you if you miss the paper return deadline
Yes. The deadline for paper tax returns is midnight on 31 October. And unless you have a ‘reasonable excuse’ for your late submission, HMRC will fine you £100 for sending a paper return anytime after this date.
But you can avoid the fine (and get a deadline extension to boot) really easily, too. Simply register to submit your tax return online. That way, you’ll have until 31 January to send in your return.