Who needs to file a Self Assessment tax return?
If income isn’t taxed automatically, after it’s paid to you, you must file a return. Most taxpayers pay their taxes through the employee PAYE scheme, but if you’re a sole trader or a company director, completing a Self Assessment is required to help find out how much Income Tax and National Insurance you need to pay to HMRC. If you’re a sole trader, it’s advisable to save around 30% of all of your self employed earnings each month.
Tax returns are usually done online although you can still fill out a paper form. From there HMRC will confirm how much is owed.
How do I register for a Self Assessment tax return?
Register with HMRC via Gov.uk to tell them you need to submit a Self Assessment tax return. They will send you your unique taxpayer reference (UTR). If you’ve already filed a return, you should already be registered.
When are the deadlines for the Self Assessment tax return?
In the UK, the tax year runs from 6th April until 5th April, so the last day of 2020/21 tax year is the 5th April 2021. If you need to file for the 2020/21 tax year, you should register by 5th October 2021.
The next deadline to file your tax return for 2020/21 and to make the payment is 31st January 2022.
If you are sending HMRC a paper tax return this must be submitted by 31 October 2021.
It’s good practice to get your accounts in order early at the end of the tax year on the 5th April. Waiting until the following January can cause unnecessary stress and mistakes. Filing late will incur fines.
How to complete a Self Assessment tax return
If you have accurate records of your income and expenses, filling in the tax return shouldn’t be a stressful experience. It’s just like completing an online expense form. The tax return form is called the SA100 and takes into consideration things like your student loan payments and pension contributions. There are also supplementary sections for income from other sources that you haven’t paid tax on.
Paying a Self Assessment tax bill
When HMRC tells you how much tax you owe, you can pay via Direct Debit, cheque or bank transfer. More information can be found on payment methods on the government website.
You can set up a Direct Debit payment plan to make regular payments towards your tax bill early, so that it is more manageable. You just need to make sure you pay the difference by the deadline.
For business owners struggling to pay their tax bills due to the Coronavirus pandemic, ‘Time to Pay’ facilities are available. You will avoid the first late payment penalty if you set up a Time to Pay arrangement by 2 March 2021. Another payment option is ‘Payments on account’, which are advance payments towards your tax bill. You pay two a year, one by 31st January and one 31st July, each covering half of your tax bill.
Remember, you don’t have to do the Self Assessment on your own.
You can hire an accountant to help you manage your income and expenses and advise on what can be claimed. Get in touch with us at Surrey Accountancy Limited via firstname.lastname@example.org find out how we can support you.