Jo Thornhill, This Is Money
14 January 2003
MORE than three million taxpayers have yet to return their self-assessment forms. Those who do not send them back with the tax they owe by the end of this month will face a £100 fine and a surcharge of 6.5% each day on the unpaid tax.
Adam Hart-Davis was signed up by the Revenue to encourage people to file their tax returns early To complete your tax return, you will need:
- All your accounts if you are self-employed.
- Records of freelance or casual earnings.
- Interest certificates you have received from savings and investments.
- P60 – the certificate that details your total salary and deductions for the last tax year.
- If you have one, your P11D – benefits from your employer such as a company car.
- P45 (again, if you have one) from a previous employer. You will need these slips for the SA101 supplementary employment form.
- The Inland Revenue’s self-assessment tax return guide – available from orderline (0845 900 0404) or at www.inlandrevenue.gov.uk/sa
- The Inland Revenue’s tax calculation guide, also available from the website.
Apart from your personal details on Page One, you have to deal with Page Two to Page 10. There are also nine supplementary pages, including one for employees, share schemes, self-employment, partnerships, land and property, foreign income, trusts, capital gains and non-residence if you have lived outside the UK for all or part of the year.
Chas Roy-Chowdhury, head of tax at the Association of Chartered Certified Accountants, says: "Treat it like an exam and complete it in one go if you can. Avoid mistakes. And don’t guess or make estimates."
THIS shows which, if any, of the nine supplementary pages you must complete. Call the Revenue’s orderline or download them from the website. You can ignore any supplementary pages you may have received with your tax return if they are not relevant.
Page Two also reminds you to fill out the form using blue or black ink and to round down all income and gains to the nearest pound, and round up all tax credits and deductions.
HERE, you are asked about income received from savings and investments in the tax year from April 6, 2000, to April 5, 2001. You should declare this in the box for Question 10. If you answer Yes, you must give details of any interest you have received from bank accounts, building societies, National Savings and share dividends.
Your bank or building society should have sent you an annual statement showing any interest you earned and tax deducted. You need not give the names or details of the banks.
The Tax Return Guide explains what happens to any cash or shares you have received from a building society or insurance company demutualisation. But, basically, if you got the windfall* after a conversion or takeover, it will be potentially liable to capital gains tax*. Shares are liable to tax only when you sell them, so they need not be declared until that event.
Don’t forget to declare here if tax has already been deducted from any income
you earned on savings accounts, otherwise you will be charged twice. And don’t
declare Isas, Peps or Tessas – they are automatically tax-free.
YOU can ignore Page 4 unless you have or are receiving a taxable UK pension, retirement annuity* or other social security benefit. In each of the boxes 11.1 to 11.7, you should enter the total amount of benefits you have received for the tax year.
THIS is where you can claim tax relief for pension contributions. But it is only for personal pensions* and free-standing additional voluntary contributions* (FSAVCs).
This is also where you can declare any relief against charitable donations, venture capital trusts* and alimony or child support payments made under a court order. In each case, enter the total amount paid during the tax year. You can find out how much relief you can claim by reading the tax calculation guide. Some reliefs may apply only to those paying the higher tax rate.
This is also the section where you can claim carry-forward and carry-back allowances on your personal pension. You can carry forward six previous years of unused contributions plus this year’s allowance if you wish to boost your pension. But there are restrictions, so seek the Revenue’s advice if you are unsure.
Page 6 and 7:
PAGE Six is where you claim your personal allowances. Experts say make the most of this section and get everything you are entitled to. Included on this page is the blind person’s allowance and the restricted married couple’s allowance when one or both spouses is at least 65.
This page also includes details of the new Child Tax Credit – due to come into force in April 2003. You should include your details in this section even if you‘re not currently eligible for tax credits. Changes to the rules may mean you will get some tax relief in the next tax-year.
Question 17 is where you must declare any student loan repayments. The Revenue now collects repayments on loans taken out after August 1998 and repayment levels depend on income. If this applies, enter the amount owed in box 18.2.
Don’t forget to tick Box 19 on page 8 if you want to claim back any overpayments. If you forget to tick the box or the overpayment due is less than £10, it will just be used to reduce your next tax bill. The lines below allow you to fill in details of the bank account details where you want the refund paid.
Pages 9 and 10 are for loose ends and you are asked to confirm that the name and address as it appears on the front of the form are correct and give any additional contact information. This makes it easier for the Revenue to get in touch with you should there be any queries.
Remember to tick the boxes for the pages you are sending back with the return.
Roy-Chowdhury says: "Call the Revenue’s helpline if you need assistance or have queries. It’s better to get things sorted out and make your calculation accurate than be fined for giving incorrect information."
Inland Revenue self-assessment form orderline 0845 900 0404; Inland Revenue helpline 0845 900 0444.
The payout from shares. Expressed in pennies. Most shares pay an interim and final dividend. A share on This Is Money with "xd" next to it has gone ex-dividend.
A one-off gain, in cash or shares, when mutual building societies convert to stock market-quoted banks, or are taken over.
Capital Gains Tax
The tax paid on profits from selling investments such as shares. The first £7,200 a year is tax-free.
An investment that produces a guaranteed lifetime income. People with personal pensions are obliged to use much of their pension fund to buy an annuity.
A pension scheme that is personal to you and portable between jobs. Ideal for the self-employed and those without a company pension scheme. A poor choice for those who could join a company scheme.
additional voluntary contributions
Extra payments paid to top up benefits under a company pension scheme. People who choose to pay AVCs get tax relief on their contributions.
Venture Capital Trusts
An investment where you get 20 per cent tax relief on investments in small companies with no stock market quotation. You also pay no tax on your profits. You have to hold your investment for five years. Remember that you get the tax breaks because investing in small and unquoted companies is a high risk business.