‘Tax doesn’t have to be taxing’ the ad campaign said! Who are they kidding! Self-Assessment Tax is exactly as it sounds-you, the taxpayer, have to calculate your own tax bill, based on earned income (self-employed profits; PAYE salary; pensions and casual earnings) plus investment income (interest on bank/building society accounts; dividends; profit on letting out property, etc) plus Taxable Benefits plus Capital Gains less allowances and reliefs, all at the appropriate tax rates. You have to complete a form of ridiculous length and complexity following a trail of box-filling instructions and send it off in time or else get a penalty of £100.

Then you have to pay the tax by the due date or else face automatic interest and surcharges. Plus, if the tax is more than £500, make a first payment on account towards the following years tax bill! If you get it wrong, the Inland Revenue can penalise you up to 100% of the tax that you underpaid! Great-you do their work for them and get fined if you can’t make head nor tail of their illogical system and get it wrong!

To be honest, it’s the complications of the system that make work for accountants and tax advisors. You can spend the time and effort filling in your own tax return but usually you save money by having it done professionally as a qualified professional advisor can save you more in tax than it costs to have done-and no head-scratching for you! Very often, when you are just starting your career, tax bills can be very low if you know how to structure things to your advantage, so don’t bury your head in the sand fearing the worst, because it just maybe that you are worrying for nothing!

Some 9 million Self-Assessment Tax Returns are issued each year and once one has been issued you must complete it, even if it will be full of zeros or the tax bill works out at nothing. Many of these returns are sent to the self-employed but others get them, too. If you do not receive a Tax Return but you have some income not taxed at source then you must request one from your local tax office and submit it by the deadline. As I said-the onus is on the individual to self-assess their liability. Penalties, interest and surcharges will keep being added and, eventually, you could face a £60 per day fine for each year s’ tax return outstanding. 

If you want help with your tax return or want to know whether or not you should complete one, then call Angie Ayre on 01283 531242