January, 2012

Warning: Self Assessment Tax Return 2011 Deadline Approaching

Have you submitted your tax return yet?

If not, the deadline for your Self Assessment is fast approaching.  In most cases, you have to submit your return online by midnight on 31st January 2012 and there are penalties if you are late.

Keep reading to find out more about the deadline, what to do if you’re new to online filing and some tips for completing your online tax return.

The 31st January deadline

You have to send your online tax return by midnight on Tuesday 31st January 2012.

Don’t send a paper tax return now as the deadline for paper returns was 31 October 2011. You’ll have to pay a £100 penalty straight away if you do and so you should send it online instead.

The only time you can send your return later than this is if you received your tax return, or the letter telling you to complete a tax return, after 31 October 2011. If this applies to you then you will have three months from the date you received the letter.

If you’re new to online filing

If you have never submitted your tax return online before then you need to start the process very soon.  This is because you will have to register to use HMRC’s online services first.

You should register to use HMRC’s online service by 21st January 2012.  This allows HMRC sufficient time to send your Activation Code to you before you start using the service.

3 tips for using the HMRC Online system

Here are three useful tips for using HMRC Online Services:

  • Have your user ID and password to hand – Make sure you know how to log into the system and don’t leave it until the last minute
  • Deal with error messages immediately – When completing your online tax return, it is advised that you correct any errors straight away.  It is often a simple error such as using text or punctuation that the online service does not accept
  • Submit your return – You don’t have to complete your tax return in one go.  You can save your progress and come back to the return at a later date.  However, don’t forget to actually push the button and submit the return to HMRC once it is completed.  When you submit your return you will be asked to re-enter your User ID and password.  You will also get an on-screen acknowledgement that your return has been sent

Penalties for being late

If you don’t submit your online tax return by the 31st January deadline then you will be liable to pay a penalty.

The penalty is £100 and you will pay this even if you have paid the tax you owe or your return is just a day late.

The penalties then increase the longer your tax return is late.  There is a subsequent penalty of £10 per day that your tax return is late for up to three months.  This means that if you submit your tax return three months late your total penalty will be £1,000.

You then have to pay further penalties if your tax return is up to six or twelve months late.  The total penalty could exceed £1,600.

Understanding your 2012-2013 PAYE Coding Notice

If you pay your tax through the Pay as you Earn (PAYE) system, over the next few weeks you will receive your PAYE Coding Notice for the 2012/2013 tax year.

Your PAYE Coding Notice tells you what your tax code should be and how it is worked out.  It also tells your employer or pension provider how much tax-free income you are entitled to and how much tax they should deduct.

Our guide will help you understand your 2012 – 2013 coding notice.  Keep reading to learn more.

Tax allowances/reliefs that increase your tax-free income

There are two main parts to your PAYE Coding Notice.

Firstly, there are tax allowances and reliefs that increase the amount of tax-free income that you are entitled to earn.  These include:

  • Tax-free allowances such as your Personal Allowance (the basic Personal Allowance for the 2012/13 tax year is £8,105)
  • Other allowances and reliefs that you are entitled to, including Married Couple’s Allowance and any professional allowances/subscriptions

If these are the only entries on your PAYE Coding Notice, they are deducted from your taxable income (such as income from employment, pensions and rent) and you pay tax on what’s left.

Items that reduce your tax-free income

Your PAYE Coding Notice may also include negative amounts which reduce the amount of tax-free income that you are entitled to earn.  These include:

  • Unpaid income tax that you owe from a previous tax year
  • Any taxable income that you receive without tax being deducted (for example company benefits such as medical insurance or a company car)
  • State benefits or any pensions that you receive without tax having been deducted

Effect of deductions from allowances

One your deductions are taken away from your tax free allowances there are three possible outcomes:

  • The items that reduce your tax-free amount are less than your allowances – this means that whatever amount is left is the amount of tax-free pay you are entitled to in the 2012/13 tax year
  • The items that reduce your tax-free amount are equal to your allowances – this means you will pay tax on all your taxable income
  • The items that reduce your tax-free amount are greater than your allowances – this means you will owe tax on the difference between the two.  The amount will be added to your overall taxable income and you will pay tax on the total over the whole tax year

Common tax codes in 2012/13

If you receive the basic Personal Allowance in the 2012/13 tax year and you have no deductions, your tax code is likely to be 810L.

This is worked out by dividing your Personal Allowance (£8,105) by ten and then adding the letter ‘L’.

If your PAYE Coding Notice is wrong

When you receive your PAYE Coding Notice over the next few weeks, if your circumstances have changed or there is incorrect information then you should contact HM Revenue and Customs (HMRC).

If the figures on your Coding Notice are incorrect, you could end up paying the wrong amount of tax.

What Everyone Should Know About the 2012 Tax Deadline

Do you have to complete a Self Assessment tax return?

If so, the deadline for completing your tax return is fast approaching.  If you didn’t submit a paper tax return (for which the deadline was 31st October 2011) then you have to submit your tax return for the 2010/11 tax year online by 31 January 2012.

Do I have to submit a tax return?

If you earn a regular salary from your employer and don’t have income from any other sources then the chances are you won’t have to submit a tax return.  You will pay your tax through the PAYE system.

If you are a higher-rate taxpayer, you are self-employed, you have some self employed income or you have income from more than one source you will probably need to file an online tax return.

If you have to complete a tax return you should probably have received a letter from HM Revenue and Customs (HMRC) in mid 2011.  If you think you should complete a tax return and haven’t been notified you should contact HMRC as soon as possible.

What is the 2012 tax return deadline?

The deadline for your paper based tax return passed on 31 October 2011.

So, if you want to submit your tax return on time you will have to file it online.  The deadline is midnight on 31 January 2012.

The Daily Telegraph advises: “If you haven’t filed online previously, you need to register and request a secure password, which will be sent through the post. This can take up to two weeks, so you need to get cracking soon.”

The newspaper also says: “Remember that HMRC’s website – and their phone help lines – can get very busy as the January 31 deadline approaches, so it pays not to leave it to the last minute.”

Don’t forget that as well as having to submit your tax return by 31 January 2012, you will also have to pay any tax that you owe by this deadline.

What tax return am I submitting?

The tax return that you have to submit by the January deadline is for the 2010/2011 tax year.  This ran from 6 April 2010 to 5 April 2011 and should include any income you earned during that tax year.

What will I need to submit my tax return?

If you have to submit a tax return online you will need various items of documentation.

You will need your P60 for any employed income, your self employed earnings, pension statements, bank and savings account statements showing any interest and details of any property income.

You will also need proof of any other earnings such as share dividends, other taxable benefits etc.

What are the penalties for missing the 2012 tax return deadline?

If you miss the deadline you will automatically face a penalty of £100 (even if you have no tax to pay).

You will then face a penalty of £10 for every subsequent day that your tax return is late up to a maximum of 90 days (£900).  There are then further penalties if you still haven’t submitted your 2011 tax return.