As we approach the end of the year there’s the inevitable scramble, for those that have to complete an SA100 Self Assessment Tax Return, to either beat the October 31st deadline for paper SA100 returns or the January 31st deadline for electronically submitted returns. The question we ask is: “Should you let an accountant complete the self assessment tax return for you?”. We’ll explore that question in this article.
Completing a tax return is something that can be planned for, especially if you are required to do so, such as those with supplementary income, sole traders, directors, etc. However, as an accounting firm, our busiest time always seems to be in the last few weeks before the January 31st deadline.
For some, completing an SA100 is a new experience, and often over trivialised, as reporting additional income from a second job or interest from investments appears straightforward. However, one quickly realises that SA100 actually comprises 18 supplementary pages, around 10 of which may apply to many people.
Tempus fugit – time flies, especially when tax deadlines are concerned
Faced with filling out a supplementary page and pressed for time due to the looming deadline, a degree of panic often sets in. The one thing many of these supplementary pages have in common is lots of boxes to tick, amounts to fill out and somewhat confusing descriptions, although HMRC does provide guidance notes as to how to fill this in. Still, it’s a lot to take on board.
The outcome is fairly typical in these circumstances; mistakes are made, sometimes costly ones.
What are the common SA100 supplementary pages you are likely to encounter?
Here, we will quickly list some of the typical supplementary pages you may come across given your personal circumstances.
SA101 Supplementary Income.
This is used to report less common sources of income, although these days they appear more often than in the past. Examples include:
- Interest from different types of securities
- Gains from life insurance policies, annuity contracts, etc
- Stock dividends, securities issued as bonuses and redeemable shares.
- Business receipts as income from previous years
- A range of other tax reliefs, such as venture Capital Trusts shares, EIS share subscriptions, maintenance payments and many others.
- Married couple’s allowance
- Income tax losses
- Pension savings tax charges
SA102 Employment
You’ll want to complete this form to list each of your jobs, including your main job. You’ll also report what benefits you have received and the expenses you have incurred as part of the job.
SA103 Self Employment
There are two forms here, ‘short’ and ‘full’, and you’ll need to decide which one applies to you. Essentially, it depends on whether you received £85, 000 or more in income.
The short form asks for basic details as to your income source, the business details, expenses, profits etc. It helps you calculate your profits and tax payable.
The long form version is similar in many ways to that experienced if you ran a private limited company and had an accountant prepare your full company accounts. It’s a complex form.
SA104 Business Partnerships
Again, there are short and long form versions of this. Which one you use will depend upon the Partnership Statement your tax advisor gave you.
SA105 UK Property Income.
In recent years, with the popularity of buy-to-let ownership and more people becoming landlords, this form has become more prevalent.
You’ll need to provide full details about the property, whether it’s furnished or not, the types of income – i.e. income from services provided vs actual rental income. Your expenses and you’ll calculate your taxable profit or loss.
SA106 Foreign income or gains
With an increasingly globally mobile population and more foreign or naturalised residents required to complete a self assessment, many people have investments and income bearing assets overseas that must be reported as part of their ‘world-wide income’.
Use SA106 to report income from:
- Interest from overseas saving
- Dividends from foreign companieS
- Remitted foreign savings income
- Remitted foreign dividend income
- Income from overseas pensions
- Income from land and property abroad
- Foreign tax paid on employment, self-employment and other income
SA108 Capital gains summary
If you own a second home, whether in the UK or overseas, and decide to sell, you’ll incur capital gains on the profits of the sale. If the property is overseas, then you may have to declare the sale in that country too. SA108 is used to report capital gains on property. Also, if you’ve made gains or losses on shares and securities (listed or unlisted), report them here.
There’s a section for ‘non-residents’ to report capital gains on UK property too.
SA108 Residence, remittance basis etc
Residence and domicile are two fairly complex subjects and you should fully understand your obligations to HMRC in this regard. Your UK tax liability depends on where you’re ‘resident’ and ‘domiciled’ in a tax year. The notes to SA108 help you understand your requirements here.
It applies to UK nationals too, particularly if they are working overseas for extended periods.
Should you complete your own self assessment tax return or let an accountant do it for you?
As we have seen, completing an SA100 is not necessarily a walk in the park. It’s definitely not a task to leave to the last minute, especially if you may have more complex income sources.
More often or not, when clients come to TaxAgility seeking us to complete their returns for them, we hear the words “I wish I hadn’t left this so late”, and “I didn’t realise it was that complicated” or “I underestimated the effort involved”.
From our perspective, having seen and assisted countless clients with last minute returns, the cost of having a professional assess and complete your SA100 Self Assessment Tax Return, is by far outweighed by the potential to make mistakes and be penalised by HMRC for under reporting or miss out on things you could have claimed for. Then of course, there’s the reduction in stress knowing it is being handled by a professional.
What happens if I do make a mistake?
Here’s a list of the most common mistakes we see clients that eventually come to us make.
- Reporting the wrong NI or UTI number
- Failing to report all your income
- Not claiming all your expenses
- Claiming the wrong expenses
- Over-claiming expenses
- Failing to use the appropriate supplementary pages
- Poorly understanding their tax status and liabilities
- Not fully grasping the implications of residency and domicile
- Ticking the wrong boxes
- Missing the deadlines
- Poor record keeping
- Miscalculated or incomplete information
If you’ve made simple honest mistakes, HMRC may just correct them for you and update your return accordingly, and not penalise you.
However, if the mistakes are not so simple and those which may lead HMRC to suspect some form of avoidance or deliberate under reporting, you could find yourself the subject of a tax investigation and stiff penalties.
You can make corrections if you discover honest mistakes after you have filed your return. There is a three days window after the deadline in which to do this. The process to do this depends on how your SA100 was submitted. If you submitted online, you can sign in to your government Gateway and correct it through your online account. If it was a paper return, send the corrected pages to HMRC, but make sure you clearly note on each page that this is an ‘amended page’.
In summary, we do believe it is worth the extra cost to have a professional quickly review your personal tax circumstances and prepare your SA100 Self Assessment Tax Return (and supplementary pages) for you. While you might expect us to say that, we just know from the experience of others how beneficial this is, as you may have underestimated your tax liability or worse still, missed out on an opportunity.
Call TaxAgility today on 020 8108 0090 and tell us about your circumstances and we’ll see how we can assist. The earlier you do this, the less stress there will be for you.