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There are fewer than three weeks to go before the deadline to file self-assessment tax returns for the 2023-24 tax year, but millions of people still haven’t knuckled down and done theirs.
This week HM Revenue & Customs said 5.4 million people had yet to file.
If you have been putting yours off, Guardian Money has rounded up top tips from a range of experts that will hopefully help make this annual chore a little less of a bore.
Don’t assume it doesn’t apply to you, says Alice Haine, a personal finance analyst at the investment platform Bestinvest.
While most taxpayers do not need to file a return for 2023-24 because tax is automatically deducted from their pay, pensions or savings, there are a number of instances where people do need to do one. “For those where the tax is not automatically deducted or they earn extra untaxed income, filing a tax return is mandatory,” she says.
“With most personal tax thresholds frozen until 2028, more people that are paid through PAYE [pay as you earn] may find themselves forced to file a tax return this year because their total taxable income may have jumped above £150,000 – a salary threshold at which all earners must submit a tax return.
“Other reasons to submit a return include being self-employed and earning more than £1,000, or if you have any other untaxed income from tips and commission, savings, investments and dividends, as well as rental or foreign income.”
Don’t delay, act today, says Jashoda Pindoria, the head of self-assessment operations at HMRC.
She says those who haven’t done so already should start their return today: “Starting now means they take the pressure off themselves and can gather all their information, and access any help and guidance they need on Gov.uk to ensure their tax return is accurate and submitted on time.
“Once they’ve submitted their return, a tax calculation will summarise what they owe for the tax year (if anything), so they can budget and make arrangements to pay by the deadline.”
Give HMRC’s app a spin, says Caroline Miskin, the senior technical manager, digital taxation, at the Institute of Chartered Accountants in England and Wales.
“Use HMRC’s app to get the information you need to complete your tax return, from your self-assessment tax reference number to details of your employment income,” she says. “It’s likely to be much quicker than searching through paperwork or phoning HMRC, and it has lots of other useful features, too, including guidance on tax deadlines.”
Think about whether you owe tax on your savings, says Emma Sterland, the chief financial planning director at the wealth management firm Evelyn Partners.
Sterland says many savers are probably still getting used to the idea that the interest on their deposits may be taxable.
“In the era of rock-bottom interest rates, it was only savers with very large deposits who were in danger of breaching the personal savings allowances of £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers,” she says.
“As savings rates climbed through 2022 and 2023, more people will now be in the position where they have to declare income from savings via self-assessment.”
A higher-rate taxpayer who was earning 0.25% interest could have £200,000 stashed in a standard savings account and still not hit the £500-a-year threshold. But if their account was paying 6%, they would only need to have £8,330 saved in it before they earned enough interest to use up their savings allowance.
Don’t rush the pensions bit, says Sarah Coles, the head of personal finance at investment platform Hargreaves Lansdown.
This is a common area for mistakes.
The way pension tax relief works depends on what sort of scheme you are in. A higher-rate taxpayer with a personal pension plan must make a claim via their tax return to receive the extra relief. Basic-rate taxpayers need not do anything to get all the tax relief they are due. With “net pay arrangements” – used by many traditional workplace pension schemes – your contributions are deducted from your pay by your employer before income tax is calculated, so you get relief on the amount immediately at your highest rate of tax.
“Otherwise, higher-rate taxpayers need to make sure they claim higher-rate tax relief, which isn’t always done automatically,” says Coles. “For example, with a personal pension or Sipp [self-invested personal pension], you need to enter the gross value of contributions. This isn’t just a total of all the money you paid in, it includes the tax relief on top. For example, if you have contributed £800, the gross amount after tax relief is added is £1,000.”
Be aware that there are different rules for Scotland.
Don’t forget about any crypto gains, says Elsa Littlewood, a tax partner at the accountants BDO.
She says that with 12% of UK adults now owning some kind of crypto asset, according to the Financial Conduct Authority, many people need to declare any gains they have made on their tax return.
“In simple terms, HMRC views the profit or loss made on the buying and selling or swapping [ie using to make a purchase or changing into a different cryptocurrency] of exchange tokens as within the charge to capital gains tax,” she says. In other words, crypto investments are treated in the same way as traditional investments such as shares when it comes to CGT.
Amid concerns that many people may be unaware of their obligations, HMRC has been sending “nudge” letters to those it suspects of failing to pay the correct tax on their crypto gains.
Littlewood says it is also worth remembering that any crypto losses should be declared to HMRC in order to be carried forward and available to offset future gains.
Claim tax relief on your charitable donations, says Tim Stovold, the head of tax at the accountants Moore Kingston Smith.
For higher-rate taxpayers, additional tax relief can be claimed on any charitable donations made under the gift aid scheme.
“For every £100 donation, a 40% taxpayer can reclaim £25, and a 45% taxpayer can reclaim £31.25,” says Stovold. “A few donations to marathon-running friends or local charities can quickly build up to a small windfall, or at least be used to reduce the payment you are due to make on 31 January 2025.”
Pay attention if you earn £50,000-plus and you or your partner get child benefit, says Fiona Fernie, a partner at the accountancy firm Blick Rothenberg.
The high income child benefit charge was introduced in 2013 and means child benefit paid to higher earners is clawed back via the tax system on a sliding scale.
Last year, the government lifted the earnings threshold at which the tax penalty kicks in from £50,000 to £60,000 a year. But that change only takes effect from 2024-25 onwards – it won’t affect the tax return due this month.
“In 2023-24, if an individual or their partner received child benefit and one of them had an adjusted net income [your total taxable income minus things such as pension contributions] of over £50,000, the higher earner has to repay the child benefit via their tax return,” says Fernie.
“The child benefit should go on the tax return of the higher earner, regardless of who actually receives the payments, but taxpayers shouldn’t forget to include details of any pension contributions made from net pay and gift aid donations, as these affect adjusted net income and could reduce the child benefit charge.”
Use the child benefit tax calculator on Gov.uk to get an estimate of your adjusted net income.
It may be too late for the 2023-24 tax return, but there are ways to reduce the tax penalty and maybe escape it completely. The main one is by paying more into your pension (if you can afford it). Contributions made into a company or personal pension scheme will reduce your adjusted net income.
Don’t forget to declare any foreign income and your residency status, says Aatif Malik at the Birmingham-based tax consultancy Tax Accountant.
“Tax can get a bit trickier when you’re not based full-time in the UK,” he says. “Perhaps you’re living abroad, an expat, returning to the UK or a non-resident landlord. Your residency status, the amount of time you spend in a country, is what determines your tax obligations.
“It’s really important to remember to include all foreign income in your return and clarify your residency status to HMRC. This way, you can keep on top of what UK tax you owe, as well as any overseas liabilities.”
Make sure you really have filed your return, says Helen Thornley, a technical officer at the Association of Taxation Technicians.
“If you are filing yourself online using HMRC’s filing system, make sure you have not just completed but also submitted your return.
“Every year, some people get to the end of their tax return and think they have completed it when they haven’t. As part of the final submission process, it is necessary to enter your login credentials again – so make sure you keep going through HMRC’s online filing system until you are presented with your submission reference, and the completion box at the top of the screen says 100%.”
Don’t forget to pay the tax you owe, says Charlene Young, a pensions and savings expert at the investment platform AJ Bell.
“Make sure you’ve paid what you owe by midnight on 31 January,” she says. “If you don’t, you’ll start to accrue daily interest from 1 February. The annual interest rate charged by HMRC is a whopping 7.25%.”
Young adds: “If you’re having difficulty paying, you might be able to agree a payment plan online with HMRC as long as you owe £30,000 or less. You can also apply to reduce your payments on account for the next year if you think your earnings will be significantly lower than before.”
