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Thursday, 18 April, 2002, 12:59 GMT 13:59 UK
Self Assessment tricks and traps
angry man
Don't let self assessment drive you around the bend

By John Whiting, tax partner PricewaterhouseCoopers

Let's suppose you're steaming away with your tax return.

It all seems suspiciously easy. What can go wrong?

Believe me, there are plenty of ways you can mess it up.

Here are a few:

  • Page 2 - don't forget to check you have the right additional pages.

  • Page 3 - interest and dividends both need to be entered with the net (after tax) amount you received, any tax credits or tax deducted at source and the gross figure. Make sure they add up correctly.

  • Page 3 again - don't try and enter dividends or interest from Tessas, Peps or Isas - they are tax-free.

  • Page 3 again - if you've got any stock dividends (where you took shares instead of cash) take extra care.

  • Page 4 - not all state benefits are tax-free: child benefit famously is, but benefits such as jobseekers allowance and the basic state pension are taxable.

    Don't mix them up - many people omit the wrong ones. If in doubt, check your Tax Return Guide or ask your benefits office.

  • Page 5 - pension payments made into your employer's pension fund don't have to be entered unless they are additional voluntary contributions. Personal pension payments need to be set out in full.
  • Page 5 again - don't forget to check the reliefs, charitable donations for example.

    If you are a higher rate taxpayer and made Gift Aid or Deed of Covenant payments to charities you can claim the higher rate relief. Set out the payments, excluding the tax you can deduct.

  • Page 6 - Watch the allowances, only older taxpayers (those where one of the couple was born before 6 April 1935) still get the married couples allowance; they also need to make sure they are getting their higher personal allowances.

  • One for the future - Children's Tax Credit is now available, it needs to be claimed either by registering or through next year's tax return.

  • Page 7 - don't forget to check the personal details on your return (question 20)

  • Page 8 - remember to sign it! This is the most common reason that tax returns have to be sent back.

    There are many other tips that depend on the extra pages you get.

    For example, Make sure you claim all the rental expenses, including mortgage interest if you are renting out property.

    If you received a windfall payment, bear in mind that most are taxable, normally as capital gains.

    What about calculating my own tax bill?

    If you can possibly avoid calculating your own tax bill then make sure you do.

    Ideally you'll get your return in by 30 September so that you can leave this to the taxman.

    If you don't, then the tip really has to be to allow lots of time and go through the tax calculation guide - it runs on for 29 pages.

    You should also try and work out a rough tax figure on a bit of paper to check against the one produced by the tax calculation guide.

    You may want to get the Revenue to help - they may still do so if you call in at your local tax office.

    But, to be fair, if you have no capital gains, then the guide is do-able.

    And now to checking

    Do have a look at what the Revenue have sent you.

    At various stages there will be taxpayer statements coming your way - look through, check what is on them and make sure you are happy with the figures.

    If the Revenue have calculated your tax bill, do your own rough calculation to make sure they are in the right ballpark, there have been plenty of instances where things have gone awry.

    I've finished!!!

    No - not quite.

    Like an exam paper, read it through. Does the number you came up with make sense?

    Compare it with last year's return - does it look similar? If by any chance you've messed up your tax return, don't photocopy someone else's.

    That will really mess up the system as everyone has their own taxpayer reference number and you wouldn't want your details on some one else's tax file? Finally, sign it, photocopy it and send it off in good time in the envelope the Revenue generously provided. Don't forget to put a stamp on it.

    If you are sending it off near to the 31 January deadline, don't forget you have to pay your tax - including a payment on account in many cases.

    What's my prize for completing it?

    The prize is somewhat negative - avoidance of the famous �100 penalty for a late return.

    And the knowledge that there's every chance you'll get another return to fill in next year.

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