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This information applies to England, Wales, Scotland and Northern Ireland
What is a tax return
A tax return is a form on which you must give details of your income and expenses, if asked to do so by HM Revenue and Customs (HMRC). The tax return is then used to calculate the amount of tax that you are due to pay.
You can choose to do the tax calculation yourself by answering the appropriate question on the tax return. Or you can ask HMRC to do the tax calculation.
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Who should complete a tax return
Not all taxpayers are required to fill in tax returns. This is because returns are not normally issued to those taxpayers whom HM Revenue and Customs (HMRC) believes are paying the correct amount of tax.
Returns are therefore not usually issued to people who have salaries and pensions taxed under Pay As You Earn (PAYE), since it is usually assumed that the correct amount of tax is being deducted at source.
For more details about PAYE, see The Pay as you Earn – PAYE – system.
Returns are routinely issued to taxpayers whom HMRC believes have:-
- income from self-employment - see below
- rental income from property - see below
- other income which is received gross, that is, where tax has not already been deducted, for example, interest on National Savings investment accounts
- complex tax affairs, for example, higher rate taxpayers or company directors.
Even though returns are not normally issued if you pay tax under PAYE, HMRC may send one to you as a way of checking that your tax affairs are in order. This is quite common where you have changed jobs, or moved from a salary to an occupational pension.
If you know that you have not paid the correct amount of tax on your income for a particular tax year, you should not wait for HMRC to send a tax return but should contact your local tax office. Otherwise, you may incur penalties or pay more tax than is necessary.
Where you have received income on which tax is payable, and no tax return has been issued, it is your obligation to notify your tax office of the income received. This should be done in writing, and by no later than the 6 October following the end of the tax year in which the income was received.
If you fail to notify HMRC of your income, this can lead to penalties and interest on the outstanding tax. If you write to notify HMRC of untaxed income, you will be sent a tax return form, so it is often simpler to telephone HMRC for a tax return form and use this to report the income concerned.
If you believe that you have paid too much tax, you should not rely on HMRC to find out about this automatically. You should contact your tax office for an appropriate form to claim a refund.
HMRC has a legal right to demand completion of a tax return from anyone, and where a return form has been issued the tax office will normally insist upon its completion.
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Completing the tax return form
The tax return consists of a main form, which everyone who receives a tax return has to complete, and nine supplementary pages which people with certain types of income have to fill in. There is also an accompanying booklet that gives further guidance on how to fill it in.
If you do not provide all the information required on the form, this will be regarded by HM Revenue and Customs (HMRC) as the tax return not being completed. This would leave you liable to pay interest and possibly penalties.
You have a duty to keep records of your income and, each year, you should receive documents from your employer or pension administrator which give details of the income you have received, including any fringe benefits. You will need these records and documents to be able complete a tax return.
If there are certain questions on the tax return that you do not have the information to answer, you should enter an estimated figure and let the tax office know when you have the actual figure. Previously you could enter ‘per PAYE’, or ‘as returned by employer’ on the tax return, but under the new rules of self assessment, doing this could lead to penalties.
If you need more help with completing a tax return, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
Self-employed or rental income
If you have been self-employed, or are receiving rental income from property which is not within the rent a room provisions, details of this income will need to be reported in the appropriate supplementary pages of the tax return.
On the supplementary pages, you will normally have to give details of expenses incurred in the course of running a business, or renting out property which is not within the rent a room provisions.
If you need more information about how self-employed or rental income is taxed, you should contact a local tax office, or consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
Deadline for sending back a tax return
You must send your tax return back to the local tax office by the 31 January following the end of the tax year. If you do not do so, you will automatically incur penalties. However, if you want HMRC to do the tax calculation, you must send the completed return back to the local tax office by the 30 September following the end of the tax year.
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Errors on tax returns
If you or the tax office finds a minor error on a tax return, this can often be remedied quite simply by correspondence.
If your income was overstated, resulting in you paying more tax than is actually due, HM Revenue and Customs (HMRC) will repay the amount of the overpayment with the appropriate amount of interest.
If, however, there is a significant error, for example, if income was under declared, the tax office may consider this to be grounds for opening an enquiry into the tax return.
If you need help with a tax office enquiry, you should consult an experienced adviser, for example, at a Citizens Advice Bureau. To search for details of your nearest CAB, including those that can give advice by e-mail, click on nearest CAB.
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