UK Tax Returns- The Beginners Guide

UK Tax Returns- The Beginners Guide

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31stJanuary, each year, is the deadline for filing your self-assessment tax returns. While this is one piece of information everyone understands, self-assessment tax, the term itself is often a bit of a mystery for first-time taxpayers.

Here, we will try to decode self-assessment tax returns for you and why do you need to file one.

What is Tax?

Tax is a financial charge levied on resources you own, services you avail, and money that you earn. It can be based on consumption or earnings. However, taxes are not a penalty for a wrongdoing, rather an amount which the government charges its citizens for funding public services. These services might include law enforcement, public transport, health, education, and national security.

Who collects Tax?

Income Tax is one such tax which is charged on how much you earn in a financial year. While it is Her Majesty’s Revenue and Customs (HMRC) that is responsible for the collection of the majority of taxes, it has devised a system called PAYE to collect Income Tax from employment. Therefore, if you are already paying your income taxes through PAYE, you don’t have to file a self-assessment income tax return.

Who is supposed to file Income Tax returns?

If you are a salaried employee in the UK, the right amount of taxes have already been deducted from your salary through PAYE. Otherwise, you need to file an Income Tax return to declare your income and the right amount of taxes you are liable to pay. This would work if you are:

  1.   A director of a company
  2.   Self employed
  3.   Earn more than 100,000 Euros a year
  4.   Have invested in assets and savings which amount more than 10,000 Euros before taxes
  5.   Receiving income from abroad
  6.   Earning over 50,000 Euros a year, the highest earner in the family claiming child benefits
  7.   Earned over 2,500 Euros of untaxed income in the past financial year, say, by letting out a property.

You will either receive the tax assessment forms by HMRC which need to be filled and submitted. If not, you can check who all needs to file a tax return on GOV.UK website and file one online.

What are the steps involved in filing a self-assessment tax return?

If you’re about to file an Income Tax return for the first time this year, then, undoubtedly, it is a big move for you! However, don’t let the celebration overcome the responsibility and follow the below steps carefully to file your self-assessment return.

Also, like Digital VAT Software which store all the VAT related transactions, there is no such software to keep track of your income. So, you need to be truthful and honest while filing a return for the first time, the next, and so on.


  • Activate Your Account


The first-timers, who haven’t filed a tax return before, will have to register themselves on GOV.UK and generate an activation code. You will receive the activation code via post within the following couple of working days.

Once you have received an activation code, you need to be quick and activate your account within the next 28 days. Otherwise, your code will expire and you will have to apply for another one.

  1. Have everything you need to complete your return in hand

Before you begin filing your return, make sure that you have all the information, forms, and documents that are required in hand.

  • If you’ve earned more than 8,500 Euros a year, then you need to obtain a P60 form from your employer (if you are employed), depicting all your income and already deducted taxes.
  • A P45 if you have resigned from your job in the current tax year.
  • To disclose your benefits and expenses in the current financial year, you need to fill out Form P11D and P9D.
  • Summary of income from renting a property, or any such income.
  • Savings and earnings from investments such as dividends and debentures. You need to disclose the interest you are earning from each.
  • If you are self-employed, documents such as receipts, bank statements, and more which will show your income are required.
  • Information about Gift-Aid donations.

Make sure that you ask for all third party details well in advance because they might not take deadlines as seriously as you.

  1. Start filing your Return

When you log into your account to file the self-assessment return, you should do away with the personal details first.

Then, fill in the information that fit your circumstances the best. According to which, HMRC will remove the irrelevant fields, making the process easier for you.

While filling in figures in your form, pay attention to reminders that tell you which field accepts information regarding a particular document or set of documents such as P11D, savings and investments, or payslips.

As it is your first time, go through the guidelines thoroughly to understand the process. Remember, a few minutes invested here are hours saved.

Once you’ve entered all the income in the online form that you’ve earned in the current financial year, ranging from salary, earnings from investments, rent, self-employment etc., the software will calculate the right amount of tax for you.

Though filing the Income Tax Return is crucial, you don’t have to do it right away in one sitting. You can keep coming back to it as and when you get the time for making changes. Plus, most of the obvious mistakes are highlighted by HMRC itself.

  1. Check for any gaps and send

When you have filled in the details, check for any errors and gaps. Then, click send.

Once you have confirmed and sent your income tax return, you will receive an on-screen confirmation message with a reference number from HMRC.

Missing Deadlines Bring Penalties

No matter how occupied you are, you need to file for the income tax return before the deadline approaches because the penalties can be very high. Moreover, there are a few excuses accepted by the regime for the delay.

In the end, everyone who is earning an income in the UK has a moral responsibility to pay its taxes so that the government can use the money for the benefit of public. And, with the above guide, the procedure will become exceptionally easy for you.


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