Completing your personal self-assessment tax return can be daunting, which may mean you put it off to the last minute. That said, when you consider that the deadline for the next self-assessment is 31 January 2024, putting if off won’t be an option for much longer.
If you’re delaying when you do yours, you might be making the process of completing it much more stressful than it needs to be. With proper organisation and by starting as soon as you can, it could provide you with enough time to do it properly, something that could reduce anxiety and avoid a potentially costly mistake.
Read on to discover five positive ways you could reduce your stress levels while completing your self-assessment and meet the deadline in a more relaxed way.
1. Don’t leave it to the last moment
Putting your self-assessment off until the very last moment means you’ll be rushing it when you eventually get around to it. This will increase the chances of mistakes, which in turn could result in you paying too much Income Tax or Capital Gains Tax (CGT).
If you provide inaccurate information that means you do not pay enough tax, you might then be faced with an unexpected and unwelcome tax demand, as well as a penalty charge later on.
One way you could motivate yourself to start sooner rather than later is to break your self-assessment down into smaller chunks. For example, instead of spending four hours completing it in one go, you could do one hour a day for four days.
This could help you meet the 31 January deadline, which means you’ll avoid the following penalties:
- between one day and three months late - £100 fine, which is liable even if you submit your self-assessment on 1 February
- between three and six months late – in addition to the £100 fine, a further charge of £10 will be made for each additional day. This is capped at 90 days and the maximum fine is £1,000
- six months to one year late - either £300 or 5% of the tax due, whichever is higher. This is in addition to the above penalties
- more than one year – a further £300 fine, or 5% of the tax due, plus the above penalties. In the most serious cases, you could be fined 100% of the tax due.
2. Ensure you have all the correct documents
To complete your self-assessment, you’ll need information on your earnings, which includes income from a second job, buy to let properties, your pension or any taxable investments. Income from outside the UK should normally be declared.
You’ll also need to include any benefits in kind you received, such as company car, health insurance, or childcare vouchers. This means you’ll need to have a breakdown of the value of each benefit, as HM Revenue & Customs (HMRC) will want you to declare it.
A key point is to ensure that the figures you enter correspond with your P60 and P11D, both of which are provided by your employer or pension provider.
Making sure you have the documents that provide this information to hand will save time, and ensure the figures you provide is accurate. Both of these will reduce your stress levels while you
complete your self-assessment, and significantly reduce the chances of you being confronted with a question you can’t answer straight away.
3. Have the details of your pension contributions to hand
You will need to confirm the amount of contributions you’ve paid to a private pension scheme if you have one, so that HMRC can confirm the amount of tax relief you’re entitled to.
If you’re a 40% higher-rate taxpayer or 45% additional-rate taxpayer, you’ll need to complete a self-assessment in order to receive all of the tax relief from your pension contributions. HMRC only repays the basic rate of Income Tax (20%) automatically, so higher- and additional-rate taxpayers have to claim the remaining 20% or 25% through self-assessment.
As such, it’s important to understand how much you have contributed to your pension and have your tax-code to hand, so that it can be entered into your self-assessment.
4. Understand if you can offset Income Tax using losses
You may be able to claim a capital loss if you have assets or investments that have dropped in value and offset these losses against your Income Tax liability.
As the criteria around claiming losses can be complex, it’s typically a good idea to talk to a financial adviser, as they can confirm whether you’re entitled to do so. This could side-step an innocent mistake that may spark an investigation by HMRC, should it transpire later that you’re not entitled to use losses to reduce your exposure to Income Tax.
5. Check and check again
Before you start your self-assessment, make sure you have checked and double-checked that all of the information you have is correct. This could prevent you from making an innocent mistake which could still result in HMRC deciding to investigate.
Get in touch
As you can see, there are several ways to make filling in your self-assessment far less arduous. If you have a financial adviser, they are usually well-versed in helping clients fill them in, which could save you time and help avoid mistakes.
If you would like to speak to a financial adviser about your wealth and how to improve your tax-efficiency, please get in touch as we’d be happy to help. We can be contacted on 01527 577775 or please feel free to speak to one of our advisers, we’d be happy to help.
Friday 12 January 2024