If you pay tax through self-assessment, as more than nine million of us do, you may be thinking of doing nothing until January. However, if you meet the 30 September deadline, HM Revenue and Customs (HMRC) will calculate your tax bill for you, and, if it's under £2,000, will collect it through next year's PAYE code. But if you wait until January, as five million did last year, you risk a £100 fine for missing the deadline and a further £60 for each additional day you delay.
There's also the issue of mistakes, says Nina Montagu-Smith in The Daily Telegraph. According to IFA Promotion, errors on self-assessment forms will cost UK taxpayers £487m this year. Miscalculations and surcharges slapped on by HMRC for underpayment can be avoided if you file early, as the Government will tell you how much you owe and give you a month's warning of the amount due at the end of January. If you file online (www.hmrc.gov.uk), your tax will be calculated instantly, although your tax affairs do need to be fairly straightforward for online filing.
If online filing is suitable, you will need to register first and wait for a user ID number and password to arrive in the post, which takes a few days. You also need to gather all relevant documents. The two key forms for most people are the P60, which details your salary, and P11D, which details benefits and expenses incurred in employment. You don't need to show these to the taxman, but you will need the figures for the form. Also ensure you have all relevant documents to hand anything concerning your income and expenses between April 2005 and April 2006. You don't need to include Peps, Isas or contributions to an employer's pension scheme on your return, but you will need information on the following:
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Interest from savings and investments, including offshore accounts, accounts earmarked for young relatives, loans to friends.
Capital gains from the sale of any property you own aside from your home and/or rental income.
Capital losses, which can be offset against gains.
If you are self-employed, enter pension contributions to make sure you receive tax relief.
If you have any overseas investments, some foreign withholding tax will have been deducted from dividend payments. Claim this back.
Self-employed people also need all invoices and receipts for work expenses. When it comes to completing the form, follow each instruction to the letter. Always tick the repayment box (19) at the end of the form, even if you don't think one is due, so that any repayment will be sent to you rather than being left on your account with the Revenue. Remember: sign the form and photocopy it. An amazing number of people forget.
