What is Income tax

Income tax is the amount of a person’s total earnings, paid by the individual to the UK government. UK income tax is collected by Her Majesty’s Revenue & Customs, if you are an employee it will be automatically subtracted from your pay by PAYE. If you are a director or have additional streams of income such as property rentals or dividends, you will need to submit your own tax return. Income tax is just one tax paid by individuals working in the UK: businesses have to pay corporation tax on the earnings of the company. Taxes are levied on some state benefits too. Income from pensions is subjected to tax and is classified under state benefits.

What period is Income Tax Calculated?

To ensure you are HMRC compliant, you must pay your tax according to your total income in that tax year. In the UK, the tax year runs from 6th April to 5th April of the following year. If an individual is to submit a tax return for the year 2017-18, then the period they must provide information for would be 6th April 2017 to 5th April 2018. If you want to file a paper return, the last date for return filing will be the 31st October 2018, and if you wish to file the return online, the final date for filing is 31st January 2019.

How to File a Tax Return Online

Filing a tax return can be a time-consuming process. It requires the submission of accurate data, as with the importance of the information you are submitting, any mistakes can lead to an incorrect filing and sanctions from HMRC. The deadline is the most important thing while filing income tax return online. You must file the tax return before the deadline. Missing the deadline leads to fines and penalties. The best practice is to submit the income tax return before deadline to avoid any last-minute rush and the possibility of mistakes. To file your tax return online, follow these steps:
  • If this is your first time submitting a return, you must register for an account on the HMRC website. To register for the tax year 2017-18, visit – http://www.gov.uk/register-for-self-assessment
  • You will receive a 10-digit UTR code and your account will be activated.
  • Your UTR number then becomes your ID and the activation code you receive from HMRC becomes your password.
  • Upon the arrival of the activation code, you must activate your account within 28 days as further delay will lead to code expiration and you will have to repeat the entire process again.
  • Before filing a tax return, keep all the necessary information available with you. Missing information or submitting the wrong information will lead to an inaccurate filing of the tax return.

Details and Documents needed to file an Income Tax Return Online

  • Details about your income i.e. Form 60 (if your income is more than £8500)
  • Form P11D, which contains details of your expenses & benefits
  • Pay slips
  • Interest statements from Bank & Building societies - contact Bank & Building societies as early as possible and collect the interest statements.
  • Details of any contribution made to Pension fund.
  • Information about Gift Aid donations.
  • When you are registered, login to your income tax return account for filing tax return online for tax year 2017-18 - https://www.gov.uk/government/organisations/hm-revenue-customs
  • Top tip: save your tax return throughout, so if you cannot complete it in one sitting, you can continue filing the return from where you left off.
  • Check your personal details are correct.
  • Fill in the necessary section. Irrelevant or unwanted sections are automatically removed by HMRC.
  • Attach form P11D, form P60 or pay slips (whatever needed) and the information will be automatically filled by the documents.
  • You must report all the income you earned in the tax year 2017-18 from employment, self-employment, income from property, income from interest & gains, pensions etc.
  • Check your information is correct before submitting it to HMRC. Make sure everything is correct and there are no gaps or it could cause fines and penalties.
  • When you find that all the information inputted is 100% correct. You can submit the same to HMRC by clicking on send tab.
  • After submitting the return online for tax year 2017-18, you will see an onscreen confirmation message & a reference number will be displayed on screen from HMRC. Kindly note that reference number for future use.

Need help?

If you need any help in filing your return for tax year 2017-18, you can use our Self-Assessment Software. You can also avail the helpline facility by calling the helpline number (0300) 200 3310 and can also use the HMRC Income Tax Calculator, if you want to check, if you are overpaying the tax.