Many Happy Returns
- Adam Shaw - TheMoneyDoctor.TV
- 5 days ago
- 6 min read
Updated: 4 days ago
Around 12 million people are busy finishing their tax returns – or may have just finished. If the tax return is not sent in by the end of the month, you will get fined and could also have to pay penalty fees. So, who has to fill it out and what are the tips for how to do it easily?
Q: How easy is it to do the tax return?
It is fairly straight forward if your finances aren't too complex. But it is worth spending some time on it and getting it right because it is taking ages for HMRC to get them to correct mistakes. Some people are waiting a year or more for HM Revenue and Customs to refund overpaid tax and national insurance contributions. In some cases, refunds that were previously processed within a few weeks are taking 10 months or more, an investigation by Guardian Money has found.
Even getting advice can be a nightmare. Nearly 44,000 customers were cut off without warning after being on hold for more than an hour last year, a report by a committee of MPs has found.
Q: Who needs to do one?
Although the deadline is the 31st of January for online returns, it covers the period of earnings between 6 April 2024 to 5 April 2025.
Side Hustles: If you get taxed by your employer and have no extra income, then you probably don’t have to fill anything out. Even if you have a side hustle and earn a little extra – you may get away without filling one out. That’s because everyone has a so called ‘trading allowance of’ £1,000 each tax year, which means you can earn up to that much on top of your main job without paying tax.
Protect Your NI payments: If you earned £1,000 or less, you may still need to submit a self-assessment return if you want to pay 'class 2' National Insurance contributions voluntarily to protect your entitlement to the state pension and certain benefits.
Savings: You are allowed to earn some interest without having to pay tax.
· Basic rate taxpayers are allowed to earn £1,000
· Higher-rate taxpayers are allowed to earn £500 without paying tax.
Most accounts pay the interest without tax being deducted (gross) and it is up to you to keep track if you have gone over the allowance.
Skipton Building society has a useful calculator which helps work out any tax you may owe on interest you have been paid. But as a guide, if you are earning 4% interest on your savings, you can hold up to £25,000 before facing tax as a basic-rate payer, or £12,500 as a higher-rate payer.
Investments: Capital Gains Tax (CGT) is what you pay on any profits you make when you sell an asset. There are two kinds of assets which get caught by CGT:
All share and similar disposals, not ISAs for instance, could be liable to CGT. You only pay tax if your total gains exceed the £3,000 annual CGT allowance.
Personal possessions (which HMRC call chattels) – if you sell them for more than £6,000, CGT may be charged on the gain. A chattel is a movable personal possession, such as:
Jewellery
Art
Antiques
Collectables
Classic cars (some exemptions apply)
You do not have to pay it on the sale of your main home or car.
The tax-free allowance has been cut from £12,300 in 2022, so it’s a lot less generous than it used to be.
The CGT rate is as follows:
Shares, funds, crypto & most investments
10% if you’re a basic-rate taxpayer or non-tax payer
20% if you’re a higher- or additional-rate taxpayer
Residential property (not your main home)
18% if you’re a basic-rate taxpayer
24% if you’re a higher- or additional-rate taxpayer
These rates apply only to gains above your £3,000 CGT allowance.
NOTE: Other rules apply – so it is not as straight forward as it may first sound – so it is always worth checking, as this is mean as a rough guide only. If you're in any doubt, use HMRC's online tool to check if you need to file for self-assessment.
Q: How do I register to do a return?
If you're new to self-assessment, you need to register with HMRC first and get a Unique Taxpayer Reference (UTR). The deadline to do this has already passed, it was 5th October. If you have missed the deadline, get in touch with HMRC and explain the situation. If you had wanted to submit a paper tax return, the deadline was also in October.
Q: What bits of paper do I need?
If you're employed
· Payslips,
· P60, which shows how much you earned and how much tax you paid in a tax year and which you get from your employer.
· P11D, which shows the perks you’ve received at work that are taxable and which can include, company car or fuel, Private medical or dental insurance, Cheap or interest-free loans and any living accommodation
· P45, if applicable and which your employer gives you when you leave a job
If you're self-employed
· Receipts
· Invoices.
If you have property income
Receipts
Invoices
You don't need to send any of this paperwork to HMRC, unless it asks you to.
If you're self-employed: you must keep records for at least five years.
For employed: you must keep records for at least 22 months after the end of the tax year
Q: What happens if I miss the deadline?
If you need to complete a tax return and you send your return late – or pay your tax bill late – you can pay penalties. HMRC has full details of these, but in brief:Late-filing penalties: Missing the deadline means an automatic penalty of £100 – and that goes up the later it is.Late-payment penalties: You'll be charged interest and or penalties on anything you owe.
Q: How do I get extra relief for pension payments?
Simple pensions sorted through your employer are usually called ‘Net Pay Arrangements’ and they don’t require you to do anything. That’s because the employer pays into your pension pot by deducting the sum from your pay before income tax is calculated, so you get tax relief automatically at your highest rate of tax and so you have the benefit baked into the pension.
If you have sorted out your own pension, things may be different. That’s because your personal pension may work under a scheme known as ‘relief at source.’ If you are a higher-rate taxpayer then by filling out a tax return, you can get a bit of a bonus by claiming some extra tax relief.
The rules are different in Scotland.
Q: How does my child benefit payments affect the tax return?
The ‘high-income child benefit charge’ is a way for the amount paid to higher earners to be clawed back via the tax system. The earnings threshold starts at £60,000 a year and the more you earn, the more they claw back.
Q: Are crypto investments exempt?
HMRC are clamping down on crypto investors and for the first time this year, the self-assessment tax return has a dedicated section to declare any gains and losses
Q: How to reduce your tax because you made some donations to charity?
When you donate to a UK-registered charity and tick the Gift Aid box:
You donate £80
The charity claims £20 from the government
The charity receives £100
That £20 comes from basic-rate tax you’ve already paid.
How you benefit (by tax status)
Basic-rate taxpayer
· You don’t get money back
· But your donation goes 25% further at no extra cost
· No further action needed
· Example: You donate £800 → charity receives £1,000
Higher- or additional-rate taxpayer
You get extra tax relief.
You can claim back:
20% (higher rate), or
25% (additional rate) on the grossed-up value of the donation.
Example (higher-rate taxpayer)
You donate £800
Charity gets £1,000
You can reclaim £200
Q: How to Watch out for scams
HMRC is urging people to “stay alert to potential scams” before the deadline. It recently warned that more than 4,800 self-assessment scams had been reported since February 2025
Q: What’s the least fascinating YouTube channel
It belongs to HMRC and is here https://www.youtube.com/@HMRCgovuk/videos and may help you with any questions – but don’t expect it to be as good as Netflix or Mobu.
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