theFIREstarter

Get your tax return in early and put your feet up!

In my last post we went over the benefits of the SIPP (Self Invested Personal Pension) and how it led me to “earn” around £1500/hour simply by filling out my self assessment tax form. Now for me, attempting to do this seemed rather daunting, and so even though it does not really need a step by step guide, I thought I would create one anyway to show any folk out there who may also be daunted, that you should really not be daunted by it. I probably also should’ve thought of another word for daunt ¹ rather than writing it three four times 🙂

I’ve just come back to the intro having written the guide and can confirm in fact that it isn’t really all that straight forward!!!! Therefore, I am really glad I decided to write it. There were various points where, even though I’d already gone through the process, I forgot what I had to do next. So there you go, a government process that is convoluted and unnecessarily long winded and confusing, who’d have thought!? 🙂

But now, you have below a comprehensive and fool proof guide to filling out your first self assessment tax form! If you get stuck or have any questions just leave a comment below and I’ll try to answer if I can.

Important note: There is a lot of waiting around for registration codes and so on to come through the post! So be warned, if you want to do it online and have never done one before then you need to start this process well before the deadline for online tax returns which is normally 31st January of the following calendar year (You can read all the other tax return deadlines here).

I am going to assume you are a boring old regular Joe like myself and do not have very complex tax affairs (otherwise I would assume you’ve already worked out how to do this, or are paying someone else to do it for you). This means that all you really need to know to fill in your tax return is:

• How much you earned and tax you paid in the given tax year you are claiming for (find your P60!)
• How much interest you paid (and how much tax on it you paid)
• How much you put into your SIPP
• Amount of gift aid eligible charity donations you made

I am also going to assume that you don’t have any taxable share accounts or have had any other capital gains outside of tax wrappers such as your ISA, as again if you do then you are probably one step (or more like several steps) ahead of me here.

Before you get going with this: please consider whether you really need to fill in this form, since I wrote this guide the comments section has revealed that there is an easier way to claim tax back on your SIPP (if that’s all you really need to do. Read about the updates here and check the comments section as well.

OK multiple intros and caveats over with, if you still want to or think you need to fill in a self assessment form, here it is. Your step by step guide to registering for HMRC online services and filling in your self assessment tax form:

step 1 – fill in an SA1 form to receive your UTR

Fill in an SA1 form here and then HRMC will send you your UTR (Unique Taxpayer Reference) code. This should take around 2 weeks.

It is pretty straight forward but you will need your National Insurance number (this can usually be found on your pay slip). You will need to tick one of the boxes stating why you think you need to fill out a self assessment form. I didn’t tick any of the main boxes but I would hazard a guess that some of you may need to tick the “I’m getting income from land and property in UK”. If you are like me and are just claiming the tax back from your SIPP contributions then I just filled in the “Any other reason” section with “I am claiming back tax from SIPP contributions” – well duh 🙂

step 2 – wait, and get your shit together

You will then have to wait around 2 weeks for your UTR to come through the post. You may as well use this time to get all of the information you need and pop it in a spreadsheet or something like that if you have not already done so.

Under the money tree recommends setting up such a spreadsheet and entering it as you go through the year (this is especially a good idea for charitable donations which are much harder to track down on your bank statement than interest etc…) which I am definitely going to do from this point going forward. If you are already tracking your expenses then it’s only a minor extra task each month.

You can also use this time to dig out your P60 if it’s not immediately to hand and work out the total of your SIPP contributions for the tax year, which will hopefully be easy enough as you can just log into your brokers account and see how much you deposited.

After 2-ish weeks you should get a letter looking a bit like this:

step 3 – register for HRMC online services

It may sound ridiculous but once you have your UTR you then have to re-register on pretty much the same page for HMRC online services and wait another 2 weeks to get an activation code. Well I did tell you most of this involved waiting!

To register for this involves a few mini steps so I have broken it down for you:

A)  Follow this link to start the registration process, you should then see a screen with tick boxes. Tick the Self Assessment option and click Next

B) The next two pages is just some information. Read them and click Next

C) Read the terms and conditions on the next page ² and then tick the box and click Next

D) The next page you will need to remember your full name 🙂 and fill in a current email address:

E) The following page you enter your password. Remember to make it something secure people!!!

F) THIS NEXT BIT IS REALLY IMPORTANT!!!!!!!!!! DO NOT CLICK NEXT BEFORE NOTING YOUR USER ID!!!!

Yes, despite having just given your email address, the system decides that it will not email you your User ID so if you hit next then it is lost forever. (However do not worry if you do hit next, you can re-register with the same email address at this point and receive a new number ³)

Here is an example of this all important page ⁴:

G) You will now hit “Next” and then be taken back to the start/log in page and probably be thinking:

WTF just happened, it booted me out of the sign up page with 2 steps still to go!??!

Do not worry. You then need to log in using the User ID it just gave you and the password you just set up. Type the information into the top left of this login page here (which you should already be on if you are following this process through):

H) It will now punt you straight back to step 5 of the registration process where you can finally bloody fill in your UTR!!!! You will also need your NI number or Post Code.

That’s it for this step! You can now finally relax for a further two-ish weeks, sipping cocktails by the pool on your private tax haven island.

step 4 – activate your online government gateway/HMRC account

After 2 weeks you should get a letter like this with a hidden panel with your one time activation code on it:

As you can see from the picture you will need to activate this within 28 days so don’t dilly-dally.

To activate the code go back to the login page here and then log in using your details you set up from earlier in step 3.

You should then be funnelled to the activation page. Unfortunately I forgot to do a screen dump of this page so can’t show you this step but I don’t remember it being particularly perplexing. Hopefully you can work this one out on your own, kiddo! 😉

step 5 – logging in and starting your tax return

A) Once you are logged in and activated you will either appear on this page:

In which case you need to click on “Self Assessment details and options” and you will get to the self assessment home page of HRMC.

Alternatively you might just get funnelled straight onto the correct page:

B) There should be a menu bar down the left hand side, click on “Tax return options”

C) Select the year you wish to file for in the drop down menu and click on “Go”

D) There should be a button near the bottom left of the screen saying “File Return” or similar. Click it!

E) You now get to the start of the actual return and will be given the following info:

step 6 – finally you can do your tax return!!!

After all this kerfuffle filling in your tax return is actually very simple. If you have all of the information I spoke about above to hand, it should take you no more than about 1 hour.

The sections which you need to fill in are very simple so I won’t bother going through each step by step, but here are some notes on each:

• Tell us about you – personal information, name, address etc…
• Tailor your return – This will help HMRC work out what extra sections need to be filled out later on and will make the rest of the process very simple if you just have one source of employed income and no other weird tax issues as I spoke about at the start of the article. Most people will answer “Yes” to Charity, Bank Interest and maybe the child benefit question. The important question to answer “Yes” to if you are claiming SIPP tax back is this one:

• Employment – Fill in your employment details!
• UK Interest – You have two sections here, Taxed interest and Untaxed interest. Most bank accounts will tax your interest for you so you just need to enter the total amount of interest you received in all of your accounts for the year (but obviously double check that in your own accounts! It should tell you on your bank statement). If you have a joint account you just divide the interest you received in that account by two.
• Personal Pensions and retirement annuities – IMPORTANT BIT: This is the key bit for the SIPP. It’s simple though, you just fill in how much you contributed to the SIPP PLUS the automatic 20% tax relief you received on top of this. You shouldn’t need to work this out because the tax relief should appear in your SIPP account anyway so you can just add it together with your contributions, but if you are not sure you can just divide your contributions by 0.8 as described in my first post here. In my case I contributed £12,080 so the amount I filled in here was £15,100:

• Charitable giving – The only thing you need to remember here is that you only add up donations to UK charities where Gift Aid was applicable. If in doubt I would just leave it out (unless you have made huge contributions, then definitely find out!)
• Underpaid tax and other debts – Should just be £0 in most cases
• Overpaid tax – ANOTHER IMPORTANT BIT: Select “Yourself” as the recipient, then fill in your bank account details on the next page where you want your tax rebate to go.
• Not paid enough tax – Select “No” for both options if you are sure you have paid enough tax and are definitely due a rebate.
• Adjustments to tax due – I left this blank
• Any other information – I may have to declare dividends here next year if my self employment stuff takes off but for now this was blank and the second question I answered “No”

step 7 – sit back and wait for the cash to roll in!

Once you’ve gone through all that your return status should magically jump from about 10% complete to 100% (weird!?) and then it should tell you how much your rebate should be:

That’s it!

Let me know if you have any questions or get stuck at all, but hopefully this should navigate you through the murky waters of filing your first self assessed tax return.

Cheers!

TFS

Important Update: Comments fromBeat TheSeasons tell us that if you have relatively simple tax affairs* (e.g. no self employment income) then you don’t actually need to go through all of the above and can just send HMRC a letter stating how much you paid into your SIPP, how much you donated to charity and how much interest you earnt in the year and you will get your rebate. So I would definitely do that if all you are doing is claiming back your SIPP tax!

Many thanks to BeatTheSeasons!

*For me, I am expecting some self employed income this year so it was worth setting up anyway to get the hang of how the system works.

Some useful links from the article all in one place:

HMRC Help section

Tax return deadlines

Register for Self Assessment home page

Register for Self Assessment and UTR code with SA1 form

UTMT Tax return article

When you have your UTR – New User registration form

HMRC Log in page

Tax accounts home page

Self assessment home page (only works if you are logged in)