Wednesday 29th October 2008
By Neil Waterman
Know Your Money Editor
A new deadline of October 31st for the return of self assessment forms has been put in place by HM Revenue and Customs (HMRC) - and as that date approaches, spending the time to get all forms filled in correctly is not only necessary but will cut the risk of being fined.
Whether filling in paper forms ahead of the October 31st deadline or online forms before the January 31st deadline, everyone who has to complete a self-assessment form could benefit from keeping their affairs in order.
Late-filed returns may incur a £100 penalty - so individuals who are wishing to avoid such a levy but who have not yet begun the process of filing their paper forms may wish to consider switching to the electronic version, giving them three more months to get their affairs in order.
Paper or online?
Aside from the obvious advantage of having a later deadline, choosing to file returns online could also reap other rewards.
Less calculation needs to be carried out by individuals, as the maths is all done automatically. As well as this, an automatic receipt is provided when the form is returned, meaning that individuals can be safe in the knowledge that the Revenue has all the information it needs.
As well as this, the forms are processed faster, HMRC states, meaning that if an individual is owed any money, then they stand to get their hard earned cash back more quickly than if they file a paper return.
But, around half of those that do file self assessment forms do so on paper. Statistics from HMRC indicate that around nine million forms are issued each year, with approximately 4.5 million people opting to return a hard copy.
And if the October 31st deadline is too close for comfort, individuals that can return their completed forms by hand to their local tax office before November 4th will not be liable for the penalty of £100. This gives one more weekend to complete all the necessary paperwork.
Keeping the bill down
There are, of course, a number of ways that individuals can keep their tax return bills to a minimum.
Possible ways to keep the bill to a minimum have been highlighted by the Guardian. These include remembering to claim for all costs associated to a business if an individual is self-employed or works freelance. However, such claims must be "wholly and exclusively" for business purposes.
Tax relief can also come from an employer for items such as protective clothing or travel in your own car for business purposes.
Indeed, if an employer deems it necessary that you relocate for your job, then the first £8,000 of any relocation costs are tax free. Taking factors such as this into account can help to keep down the tax bill following a tax return.
More deadlines?
Although there is a closing date of October 31st for paper returns, there are a number of other deadlines in place throughout the rest of the year for completion of the tax assessment and payment process.
If people opt to fill in their forms online, then HMRC must be in possession of them by January 31st. However, if people wish for their tax to be collected through their tax code, where less than £2,000 is owed, then the deadline is in fact December 30th.
And once the returns have been completed, there are payment deadlines to meet. If a completed form has been submitted by the end of October, then any outstanding payments should be made by January 31st.
If the payment has not been received by this date, then on February 28th a five per cent surcharge on any amount outstanding will be charged, as well as any interest.
However, if individuals receive their forms from HMRC after October 31st, then they must be filed within three months of receipt. There will then be 30 days from a request for payment until any outstanding tax bill must be settled.
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