Self-assessment tax myths dispelled

The main self-assessment deadline falls on January 31: this is the date by which online tax returns should be filed and any outstanding tax bills settled.

But Britain’s tax system is pretty confusing and there is a lot of misunderstanding about issues such as who has to fill out an annual return, as well as what the potential consequences of late filing or late payment are.

In this article, we dispel some of the more common myths.

Myth 1: You won’t be fined for filing a return late if you don’t owe any tax

Sadly, this is not the case: if you are required to file a return, you can be penalised to the tune of £100 if you miss the January 31 deadline (October 31 for paper returns) even if it turns out you don’t owe HM Revenue & Customs a penny.

Avoid a late tax return penalty

Myth 2: If you miss the paper return deadline, you should try to send it in as soon as possible

This seems sensible, but if you send your paper return in a few days or weeks late you open yourself up to a £100 fine. 

A better option is to register for the online self-assessment system instead – this means you have until January 31 to file.

Tax officials don’t know which method you planned to use until they actually get your return.

Complete a tax self assessment form online

Myth 3: You don’t have to fill in a tax return until asked to do so

This is not true: it is up to you to find out if you need to be part of the self-assessment system and, if so, to contact your local tax office.

This should be done by October 5 after the end of the relevant tax year (which is on April 5). So if you started receiving taxable rental income, say, in September 2016, you would need to notify officials by October 5, 2017.

Once notified, your tax office will send you a self-assessment form to fill in.

Four key things to remember when you pay your tax return

Myth 4: You need an accountant to help you fill out your returns

For many people, this is not the case. 

If your tax affairs are relatively straightforward, completing your return should be simple – especially if you use the online service, which gives tips on which sections need to be completed and flags up possible omissions or errors.

Self assessment checklist

Myth 5: If you miss the deadline because of events outside your control, you’ll still be fined

Although tax officials are not renowned for their flexibility, HMRC says it will waive fines for people who can offer a “reasonable excuse” why they filed late. 

This could be due to illness, computer failure or even a domestic emergency. It is worth appealing a fine if you think you were not at fault.

Six taxes you can legally avoid

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