Do I need to complete a self-assessment tax return?
You must complete one if you earned more than £1,000 from self-employment, if you rent out a property that earned you more than £2,500, if you earned £2,500 or more from untaxed income, if your gross income from savings or investments was more than £10,000, if you’re a company director (unless it’s a non-profit organisation), if you or your partner’s income was over £50,000 and you claim Child Benefit, if you have income from overseas and need to pay tax, if you live overseas but have an income in the UK, if your taxable income was £100,000 or more, if you earn £50,001 or more and pay pension contributions, if you are a trustee of a pension scheme or trust, if your State Pension was your sole source of income and was more than your taxable allowance, or if you received a P800 from HMRC because you did not pay enough tax last year. (You are liable for Capital Gains Tax on profits from selling such things as works of art, shares or a second home.)
What are the important self-assessment dates?
You must register as self-employed by early October. (In 2020, it was 5th October.) If your self-assessment is paper based, you must submit it by the end of October; if online, by the end of January. And 31st January is also the deadline for paying any tax owed.
How do I complete self-assessment?
You will need your 10 digit Unique Tax Reference (UTR), your National Insurance Number, data relating to your untaxed income, self-employed income, share dividends, pensions and so on, records of all expenses related to self-employment, details of pension or charity contributions, P60 or other records of income on which you’ve already paid tax. You do not need to complete the self-assessment at one sitting, and there is a lot of help online on the government websites.
I am worried about expenses
It is very important that you calculate self-employed expenses correctly. Again, there is guidance online. You do not have to submit receipts but you should keep these for five years.
How do I pay my tax bill?
You will be told how much tax and National Insurance you need to pay, and you must pay this by 31st January, via BACS, CHAPS, online banking, a company credit or debit card, direct debit or cheque.
What if I miss the deadline?
You will have to pay a penalty. Up to three months late, it’s £100, and after that, it increases.
What if I make a mistake?
You have until the filing deadline next year to make changes.
What if I can’t pay?
If that is because of the pandemic, look at the help that the government has provided for businesses. If you don’t think you’re eligible, contact HMRC and ask their advice. If you simply can’t afford to pay, contact the HMRC Business Payment Support Service: they will consider if you should have more time to pay.
If you still think that you need more help, please do contact us (we would say that, wouldn’t we?!) – we can advise you and even perhaps take on the burden of self-assessment for you, leaving you to get on with making more money, free from stress, knowing that your assessment will be accurate and on time, and that your company will be compliant in the eyes of the government.