If you still do not know what it is all about, the chances are that you are one of the 23 million taxpayers who will not be hugely affected by the most fundamental change to the tax system in decades. As John Whiting, a tax expert with Price Waterhouse, the accountants, says: "The vast majority of taxpayers will not notice it," but do not assume you are one of them.
Self-assessment actually started in April 1996, the beginning of the current tax year. But it is not until April this year that the first of the new tax return forms will be sent out by the Inland Revenue.
Around 8.5 million people will receive the forms, which ask questions about your sources of income, capital gains and any expenses. The people who will receive the forms are generally those who are self employed, company directors, those in partnership or those with what the Inland Revenue likes to call "involved" tax affairs.
Most of these people will be used to filling in a tax return and getting a bill called an "assessment" from the Inland Revenue each year. If you have not had to fill in a tax return in the past then you will not receive one just because we are all moving on to the new system. But you might get one for the first time if your tax status has changed recently - you might have set up in self- employment, for example.
The key difference under the new system is that individual taxpayers have the option of working out how much they owe the Revenue. Obviously, the Inland Revenue does not want people making the figures up. At the start of this year it introduced a law obliging all taxpayers to keep records of any information or documents they receive that they might need if they were ever asked to fill in a tax return. That is why no one can afford to ignore self-assessment.
Even if your affairs are simple, there are still records you should keep. Employees should keep pay slips and should watch out for any forms with numbers beginning with a P. At the end of the tax year your employer should give you a statement called a P60 setting out details of your pay for the year and the total tax deducted.
If you leave a job you will get a P45 setting out pay and tax to the time you left. At the end of the year you might also get a P11D or P9D from your employer showing any expenses that you were reimbursed and any benefits you paid tax on, such as a company car.
Pensioners in an occupational scheme should receive a P60 from whoever pays their pension. Those receiving a state pension or any other social security benefits need to keep information supplied by the Benefits Agency or the Employment Services Agency.
It is also important to keep statements P2 or P2K, called PAYE Coding Notices, which are currently being sent out to 15 million taxpayers.Reuse content