Top 10 tips for mastering a last-minute UK tax return

Saleha Riaz
·4-min read
Make sure you have your Unique Taxpayer Reference number and can access the Government Gateway, says Hargreaves Lansdown. Photo: Getty Images
Make sure you have your Unique Taxpayer Reference number and can access the Government Gateway, says Hargreaves Lansdown. Photo: Getty Images

The HMRC’s self-assessment tax return deadline is midnight on 31 January and recent research has shown that one-fifth of self-employed Brits leave their tax returns until the last minute.

Here are British financial service company Hargreaves Lansdown’s (HL.L) top 10 tips for mastering a last-minute tax return.

1. Check you have access to the system: Make sure you have your Unique Taxpayer Reference number and can access the Government Gateway.

2. Cut the corners you’re allowed. If you work from home or use your own car for work, instead of calculating the actual expenses, you can use flat rates for both.

3. Claim for everything you can. This isn’t one of the corners you can cut. Collect together all your receipts and invoices, and use the list on the government website to check you haven’t missed anything: https://www.gov.uk/expenses-if-youre-self-employed.

4. Estimate if you need to. If you’ve left it too late and there’s some paperwork outstanding, you can submit an estimated return, and update it when the paperwork arrives.

5. Don’t rush the pensions bit. This is a really common area for mistakes to happen. Higher rate taxpayers need to check if they have to claim for additional higher rate relief on their pensions. They also need to make sure they enter the gross value of contributions. This isn’t just a total of all the money paid in: it’s everything they paid in, plus tax relief at 20% on top.

READ MORE: One-fifth of self-employed Brits leave tax return until last minute

6. Squeeze the value from your charity donations. Ticking a box to claim Gift Aid means the charity can reclaim 20% tax on your donation from the taxman, but if you’re a higher rate or additional rate taxpayer, you can reclaim the rest of the tax on your donation through your tax return. Only 22% of higher rate taxpayers bother to do it, but it can really add up.

7. Do your tax return even if you can’t afford the bill. 31 January will be crunch time, and is going to be especially painful if you put off your payment on account (advance payments towards your tax bill) in July. If this year has laid waste to your usual careful plans, then can do the return now and arrange to pay in instalments. But do it sooner rather than later. If you leave it more than 60 days past the deadline, you can’t set up installments.

8. Don’t forget to pay. You’d be surprised how many people are so focused on the admin that they forget this bit. It’s also important to think about your payment method. The payment can clear on the same day if you pay by debit or credit card, but will sometimes take a day to go through. If you pay by BACS or direct debit it can take three days (or five days if this is the first time you have paid HMRC by direct debit).

9. Go back and check it. Make sure you’ve completed every relevant section and input all the details. If you’re unsure of something, check the rules on the HMRC website. It’s far better to take the time now than run into problems later.

10. Change previous years’ returns: If you’ve stumbled across something you should have been claiming for in previous years, you can amend returns going back four years.

READ MORE: HMRC to waive some late tax payment fines

Sarah Coles, personal finance analyst at Hargreaves Lansdown said that “many self-employed people are so worried about their potential bill that they can’t face doing the calculations. Meanwhile, others are so busy juggling running a business with the stress of lockdown, that the extra faff is the last thing they need.”

“There are some secrets to doing a last-minute tax return, that can make the process simpler, reduce your chances of making expensive mistakes, and cut your tax bill too. Even if you’ve already completed your return, they could pay off, because you have until the deadline to log back in and make changes,” she added.

Hargreaves Lansdown also said once the return has been submitted, most people forget about it for another year. But now is the time to make certain changes. For those with investments, putting them in an ISA doesn’t just cut a potential tax bill, but it also makes life simpler, because it does away with the worry about declaring dividends or profits.

Meanwhile, HMRC has said those affected by the coronavirus pandemic can delay completing their return without facing a fine. This could include parents who are homeschooling, those who are ill, and people whose accountants are unwell. They will need to complete a form stating why their return is late.

Watch: Why tax rises may be inevitable in Britain