Completing your tax return will be easier if you have all the right information available before you start, and it helps if you collect this information throughout the year rather than trying to find it all at the last minute.
Completing a tax return is a task that is often left until close to the filing deadline: this time pressure adds to the stress that you may experience from dealing with the task so it is recommended that you do try to make a start as soon as you can. This allows time to draft the entries to the return so that they can be checked before filing.
Record keeping.
You are expected to keep relevant records supporting the figures entered on your tax return in case HMRC ask to see them. They should not be sent with your return.
Information needed.
The information that you will need depends on the type of income that you have, and different pages of the return may require different records to be kept. The most important types of information are shown below, but this is not a comprehensive list and HMRC, if they raise an enquiry into your return, may ask to see other information that supports the figures that you have reported.
Employment and pension income.
Your employer or pension provider should send you a form P60, the end-of-year summary of gross income and tax. This document needs to be kept safe as this information needs to be entered on the return. If you have more than one employer or pension provider, each of them will send a separate form P60 and for paper returns they need to be added together.
If you have left any employment during the year, you will have been provided with a form P45. This form should also be kept, and the information entered on the return.
If you don’t have a P60 or P45 for all of your employments or pensions and you have kept all your payslips for the year you can use them to calculate the total pay and tax from each employment.
You may be able to claim expenses as a deduction in calculating your tax: these expenses need to be incurred “wholly, exclusively and necessarily” for the purposes of the employment and HMRC have detailed rules about what can be claimed. There is more information at https://www.gov.uk/tax-relief-for-employees.
Rental income
You will need a summary of the gross rental income for the year. You are entitled to claim a deduction for expenses you have incurred on the property, but there are some restrictions so you should read HMRC’s guidance https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income#allow-expense before completing the return. If you claim any expense, you should keep copies of invoices and other supporting documentation.
An alternative to claiming specific expenses is to claim the Property Allowance. In this case you can deduct £1000 and do not need to keep any records of actual expenditure. You would only want to do this if your actual expenditure is less than £1000.
Savings income
The total amount of interest credited to each bank or building society account needs to be calculated if you have not been provided with an annual statement by the bank. You should keep a copy of your calculation of the total.
Most interest is paid without tax being deducted. However, if tax has been deducted, the total net interest and the tax amount should be reported separately
Dividends from UK companies need to be reported separately and you will need a record of the total amount paid by each company.
Foreign Income
You will need to have details of each source of income from overseas and will need to report the country from which the income is received and the gross amount in UK sterling of each amount received. HMRC publish official data on exchange rates that you can use to calculate this, or you can keep records of the amount credited to your UK bank account. HMRC rates are at https://www.trade-tariff.service.gov.uk/exchange_rates?_ga=2.37328864.1533083502.1714244350-787282323.1712689876.
If tax is deducted from any payments you receive, you should also keep records of these amounts for each source of income and you may be able to claim a credit for the overseas taxes paid.
Social Security Benefits
DWP will have sent you a letter showing the amount of your state pension and other benefits, which will need to be reported on your return.
Self-employment income
You will need to report profit earned for a twelve-month period on your tax return, but you do not have to use the year to 5 April as the basis for the calculation. You can select any date: 31st December and 31st March are often used, or the anniversary of the date that the business started. The profit for the year ended on the accounting date that falls within the tax year is then reported on the tax return. (for example, if 31st December is used, the profit for the year to 31st December 2023 would be reported in the 2023/24 tax return). A period of less than a year can be used in the first and last years of a business.
To calculate your profit, you will need a record of your income and allowable expenses. Some guidance on income and allowable expenditure is provided in this section of our website.
HMRC guidance on allowable expenses is at https://www.gov.uk/expenses-if-youre-self-employed, and at https://www.gov.uk/self-employed-records.
If your business turnover is less than the VAT registration threshold (£90,000 in 2024), then you will only need to report the total of turnover, expenses claimed and the net business profit on the self-employment page your tax return. Greater detail is required where the turnover is higher.
If you have more than one self-employment, you will need to complete a separate page for each one.
If you are self-employed as a subcontractor in the Construction Industry there are special rules which are explained at https://taxaid.org.uk/guides/information/a-starting-point-for-the-self-employed/cis-subcontractor.
Capital Gains
You will need a record of the gross proceeds received from the sale of capital assets and of the cost of the asset, any improvement costs and the costs of sale and purchase. There are special rules for the calculation of the capital gain on sale of a property that has at any time been your main residence and you will need to have enough information to make a calculation of the taxable gain.
How long should you keep your records.
You are required to keep records supporting the information disclosed on your tax return for at least 12 months from the date you file the return. If HMRC commence an enquiry into your return within that time, you must keep the records until the enquiry is finalised. If you filed your return late, you will also have to keep the records for longer.
HMRC can aks for information about a return for up to 4 years prior if they have reason to suspect that the right amount of income has not been reported. They can go back 6 years if they consider that the error was due to lack of reasonable care, or 20 years in the case of suspected fraud or if you have never submitted a tax return.
If you are self-employed, whether full-time or part-time you must keep all your records for 5 years from the filing date of the tax return on which your profits are reported.
