Self-assessment: don't guess and don't panic

BY TERESA FRITZ

You are unlikely to be convinced that filling in a tax return is fun, but this year it is particularly important thanks to penalties threatened under the new self-assessment regime.

First, pull out the tax return itself (an eight-page grey form) and then the relevant colour-coded supplementary pages, depending on what type of income you have. Among other things they cover income from employment, self-employment, land and property, and foreign income. The Inland Revenue should have sent you the pages relevant to your circumstances.

Turn to page two of the tax return. This lists all the supplementary pages available and is useful to check you have all the pages you need. Remember, it is your legal responsibility to make sure you send a full return.

Income from pensions and savings are covered by the main eight-page tax return, so if you are a pensioner and your only other income is from UK investments or savings then you have just the one form to complete.

The tax return guide has notes for every single box in the return and also contains notes on how to complete the employment pages. If you received other supplementary pages, you should have notes on how to complete each one and there are also help sheets you can order from the Inland Revenue (number on the tax return) if you need more specific information.

If you are employed you will need your P60 and P11D forms (earnings last year and benefits, respectively, ask your employer) and if you are self-employed your books and accounts for the relevant accounting years. If you have savings or investment income, find any relevant statements or other records of income.

Before you start filling in the form there is a decision you need to make. Under self-assessment you now have the option of calculating your tax bill yourself, or providing the Revenue with all your income details and asking it to do the arithmetic.

If the Revenue does the arithmetic for you it will be based on the figures you have provided. If you do the arithmetic the Revenue will check it and let you know if it disagrees.

If you want the Revenue to do the arithmetic you have to send your return back to them by 30 September 1997. But if you want to do it yourself you do not have to send the form back till 31 January 1998.

However, for this first year of self-assessment it might be easier to let the Revenue do the sums, though make sure you check its statement and shout loudly if you do not agree with its final figure. Whatever you decide to do about your new self-assessment tax return the advice is: don't panic, don't make guesses at what to put where (if you are unsure use the Revenue helplines) and, above all, don't ignore it as there are new penalties for late returns.

q 'Which?' publishes TaxCalc, a software program that will calculate bills and complete the tax return. It prompts and provides tax tips where relevant and includes a help book covering all aspects of income and capital gains tax. The 'Independent on Sunday' has 10 free copies of TaxCalc for readers (requires IBM compatible running Windows 3.1 or higher). Send a postcard to Steve Lodge, Personal Finance Editor, Independent on Sunday, 'Which?' Offer, One Canada Square, Canary Wharf, London E14 5DL. 'Which?' also sells TaxCalc for pounds 29.99 (pounds 24.99 for 'Which?' members) - call 0800 252100.

q Teresa Fritz is a senior researcher at the Consumers' Association.