The size of tax returns has ballooned with 19% more questions than just 15 years ago, with eight suppplementary forms making compliance more of a challenge
The main tax return form, the SA100, has hit 88 questions, up 17% since 2009, and that has to be completed by Friday 31 January for tax year 2023-24.
But the over 11 million taxpayers who are liable for self assessment are likely to have to use one or two of the eight additional forms to disclose specific details such as SA105 for property income or SA108 for capital gains, to ensure HMRC is satisfied with the return.
When taking into account all the endless extra forms, the full self-assessment tax return form is 19% longer than 15 years ago with 624 questions in total, showing that simplifying tax is not working. In fact, the total number of questions was 531, showed analysis by Lubbock Fine.
The increasing length of tax returns is a perfect example of red tape getting out of control in the UK tax system, warned Lubbock Fine.
David Portman, tax partner at Lubbock Fine, said: ‘The amount of work UK taxpayers are required to do to file their taxes has ballooned over the last 15 years. To taxpayers many of these changes feel like box-filling for box-filling purposes.
‘It’s becoming increasingly easy to make mistakes on your tax returns – especially for those that don’t make enough money to justify employing an accountant.
‘If the government wants to get serious about cutting red tape, they must take a good look at reducing the length and complexity of these tax returns.’
Portman added that the high number of supplementary tax return makes it even more complicated for self-employed people, as it is sometimes unclear which forms they need to fill out.
The eight supplementary forms include:
- SA101 – additional information on certain income sources
- SA102 – employees or company directors
- SA103S or SA103F – self employment
- SA104S or SA104F – business partnerships
- SA105 – UK property income
- SA106 – foreign income or gains
- SA108 – capital gains
- SA109 – non-UK residents or dual residents
Portman said: ‘There are just too many supplementary forms that taxpayers with a complex investment portfolio will need to fill in. Some of these forms contain very similar questions, making the process of filling them in laborious – and increase the risk of mistakes.
‘The growing complexity of tax returns has become a major concern for taxpayers, particularly self-employed people. Confusion around how to answer parts of the form may lead taxpayers to do so incorrectly – which can lead to a fine.
The whole process has become so daunting that some self-employed people with a low tax bill have given up filling in their tax returns, pushing them into the “informal economy.’
Risky high income child benefit charge
Another example of excessive complexity is the high income child benefit charge. The charge, which was introduced in 2013, hits parents earning over £50,000 with an additional tax on any child benefits they receive. The clawback increases gradually depending on the parents’ income, from 0% at £50,000 to 100% at £60,000.
These thresholds increased from 6 April 2024, but it is vital to remember tax returns are for the 2023-24 tax year.
Portman said: ‘Because the high income child benefit charge has an adjustable rate depending on the income of the parent, the value of the charge is a difficult for a layperson to calculate.
‘The thresholds have finally increased after many years of not rising in line with inflation, but there is still a high effective tax rate for anyone with income between these levels which must dent productivity levels. These high effective tax rates and cliff edges need to be removed to reward workers.’
The self assessment tax deadline is 23:59 on Friday 31 January.