FAQ: Self Assessment

Confused about Self Assessment forms? Scott Wilson from the East Kilbride Tax Contact Centre answers your most common queries about the dreaded tax return.

When do I need to fill in a Self Assessment form?

Around nine million Self Assessment forms (also known as a 'tax return') were sent out by HM Revenue & Customs (HMRC) last year, but not everyone has to fill one out. HMRC will only send you one if it needs information from you in order to find out how much tax you should pay. If your only income is earnings from your job, you won't need to fill a form out because the right amount of tax is automatically taken from your wages.

If you're self employed, run a company, or you have more complex finances, the HMRC will need to know. For example, if you're self employed you'll need to provide details about your business accounts on the form.

Where do I get a Self Assessment form from and what's the deadline?

The deadline for this year's forms was January 31, 2008. If you have completed this, or you will be filling it out for the first time next year, your next deadline is February 28, 2008. If you need to fill out a form the HMRC will send you one. If you don't fancy doing it on paper you can go to the HMRC's website, click on Self Assessment and register to do it online. You'll then be sent a secure password in the post. This can take around seven days to come through, so don't leave it too late. Once you get this you can fill the form out online and send it straight back.

The Self Assessment form looks massive - how do I fill it in?

When you receive the tax return form you'll also be sent lots of notes and help sheets. If you get stuck you can call a special helpline that's been set up and is open until 8pm, seven days a week. The number is 0845 900 0444. Anyone can fill the form out for you as long as you sign and date it and make sure that all the details on the form are correct. If you're still struggling with it you can use the service of an accountant, but they will normally charge you for this.

What will happen if I don't fill the form out?

If you still haven't sent back this year's form you will have to pay a penalty charge of up to £100. Another penalty will be charged if you don't get the form back by July 31, 2008. 

What are the most common mistakes made?

The most common mistake made when filling out a Self Assessment form is to forget to sign and date the form or to leave some details out, so always check you've sent everything that you need to. The other common mistake is to give the right details, but put them in the wrong box. Re-read the notes and make sure that everything is 100% correct because it will save you time in the long-run.

What happens when I fill in my form? Will I have to pay more tax?

Once HMRC receives your form you'll be sent a calculation that will tell you how much you have to pay. You only have to pay tax on amounts over your tax-free allowance, so if you've already had the correct tax deducted by your employer then you won't have to pay it again. If you fill in your form online you'll see a calculation of your tax come up straight away so you'll know exactly what your position is.

What do I need to prove my income?

If you're employed you should receive a P60 at the end of the tax year - this will tell you your earnings and tax deductions for the year. If you've left any jobs during the year then you will have received a P45, so make sure you keep hold of them. If you're self employed you should keep a full and accurate business record and you should also show any money you have coming in and out of any business accounts. If you keep a record book showing receipts, invoices, purchases, sales of stock, business expenses, and so on, then you'll also need to keep those to hand.

What are tax allowable and non-tax allowable items?

You may deduct the running costs you incur solely for the purpose of your business. These include the cost of:

• Goods bought for resale;
• Employee wages;
• Rent and overheads of the premises you use for the business;
• Stationery;
• Running vehicles used for the business.

I'm a student with a small money-making hobby. Am I self employed?

If you have a hobby that brings in some money you're considered self employed and will need to put details on your tax return. The best thing to do is to contact your local tax office to get further advice.

How long do I need to keep my tax records for?

You will need to retain your records for five years from the latest date by which your tax return has to be sent in.