Step-by-Step: Completing Your First Self Assessment

Self Assessment - two words that can instil the fear of god in many taxpayers.

The Self Assessment process has got something of a reputation for being an insurmountably difficult task to complete. Furthermore, many people presume that only the self-employed are required to complete a Self Assessment.

In fact, Self Assessment is also an important fact of life for many people involved with trusts. Beneficiaries, trustees, personal representatives and others may all be required to complete a tax return each year, in order to ensure that they pay the right amount of tax.

Completing your first Self Assessment can seem daunting. But with a bit of preparation and accurate record keeping it shouldn’t be the end of the world.

Do you need to?

The first step is to determine whether or not you need to complete a Self Assessment tax return. Trustees, beneficiaries, and personal representatives are all likely to have to do so. If you are confused about whether or not you need to complete a return, you should contact HMRC as a matter of urgency.

Registration

Your next step is to register for Self Assessment. You can do this by completing and returning form SA1, which is available on the HMRC website.

If you want to file online, you should remember that registration occurs in stages. You will need to request login details for the Government Gateway system. These are sent by post, and can take around a week to arrive. You should factor this into your planning, and ensure that you don’t leave registration too late.

Format

Next you need to decide whether you will be completing your Self Assessment online or on paper. Self Assessment taxpayers will automatically receive a paper return each year, but you can file online if you prefer. Over the course of the next few years it is thought that paper filing will be gradually phased out.

Deadlines

The deadline for filing will depend on the format you choose. If you file on paper, your return must be received by HMRC by midnight on 31 October. If you file online, you have until midnight on 31 January. If, however, you want HMRC to collect the tax through your tax code, and if you owe less than £3,000, you must file by 31 December.

Additional pages

As a trustee or beneficiary you may have to request additional pages for your paper tax return. In addition to form SA 900 you may also need the land and property pages, and foreign income pages. Those who file online will not need to request these.

Record-keeping

Before you begin filling in your Self Assessment, make sure that you have your records in order. Depending on the complexity of your trust affairs you may well have a significant amount of paperwork. You might choose to invest in bookkeeping software to help you keep track of income and expenditure during the year.

You are obliged to keep documents including bank statements, bond certificates, dividend reports, proof of interest paid, and proof of all expenditure from the trust. You will need these in order to complete the return.

Completion

If you are completing the return online, you will notice green question-mark buttons next to each of the fields. By clicking these buttons you will launch a help box explaining what is required. The language used in many of the fields can be confusing, and the help fields can demystify some of it.

Of course, if you are filing on paper you will not have this luxury. Instead, you will find that your paper return comes with explanatory notes on separate sheets. Broadly, though, the process of actually filling in the form is pretty self-explanatory. As long as you have your records in a usable format, and close to hand, you shouldn’t struggle too much.

Checking

One of the great benefits of filing online is that the HMRC system will automatically check your return as you go. This often throws up errors – for example an absent decimal point.

If you are filing on paper, though, it is vital that you check your return thoroughly before sending it off. Incorrect information could lead to fines.

Penalties

There are stiff penalties for those who fail to file their Self Assessment tax return on time. Late filing will attract an automatic penalty of £100. You will also be charged interest on any unpaid tax.

You have a legal responsibility to complete and return your Self Assessment tax return within the statutory time period. If you are confused about your responsibilities you should seek independent advice as a matter of urgency.