With the deadline for self-assessment tax returns rapidly approaching on 31 January, John Cullinane, CIOT's tax policy director, provides advice on how to complete and file a return on time to avoid receiving a £100 fine from HMRC to start the new year.

Last year, 10.39 million Self Assessment returns were filed on time but 870,000 people missed the filing deadline leaving themselves facing a £100 penalty. With self-employment in the UK now at record levels, it is expected that more people than ever will be required to file a return this year.

This is the first year that taxpayers can submit their tax return using their Personal Tax Account and with the introduction of the government’s Making Tax Digital programme from April 2018, this year will also be one of the last times that the return will be submitted in its current format.

Greater numbers of people in self-employment is a growing feature of the UK’s economy and unfortunately, one of the first things they need to think about in 2017 is tax. We urge self-employed people not to begin their new relationship with HMRC with a £100 fine by taking advantage of the tax authority’s online offerings, such as accessing their new Personal Tax Account to submit their Self Assessment return and follow the guidance on Gov.uk.

Anyone who is self-employed is required to file a Self Assessment return, whether they are a sole trader or in partnership. This includes people who work in the ‘Gig Economy’ or have a second income from trading on EBay and similar websites. 

Likewise, anyone receiving income from renting out property through sites like Airbnb may also need to file a tax return. The government has recently announced the introduction of a £1,000 tax free allowance for both trading and property income but taxpayers should note that these do not apply until April 2017, so will not affect the 2015/16 tax return.

Taxpayers should:

• Register for SA if they have not done so already (this should have been done by 5 October)
• Register for an online HMRC account
• Complete and file their SA tax return

Our message to taxpayers is not to leave things to the last minute. If they think they might miss the deadline and have a genuine excuse, they should contact HMRC as soon as possible before 31 January to discuss their case so they can potentially avoid a penalty after this date.

For the first time, taxpayers can this year complete and file their SA return via their Personal Tax Account. The Personal Tax Account can be accessed using GOV.UK Verify which takes about ten minutes to set up with the right information, but we know that many taxpayers have found this process difficult.

The alternative is to set up a Government Gateway account which can take up to ten working days, although if you have used HMRC’s online services before you will already have one. 

HMRC has recently been putting in more resources to help taxpayers who have queries or need other assistance with their returns. Even so, getting through to HMRC’s helplines in the final few days may take longer than normal; this is another reason why getting the return out of the way before the final week makes sense.

We recommend that those in any doubt about their status or obligations seek the advice of a tax adviser.