What is ‘Self Assessment’?
“Self Assessment is a system HMRC uses to collect Income Tax. Usually tax is automatically deducted from wages, pensions, and savings. People and businesses with other income must report it in a tax return.”
It is a way of telling HMRC how much income you have earned over the tax year. The process also shows how much money you may you owe HMRC.
Who needs to complete a Self Assessment return?
You need to send a tax return if any of these factors applied to you in the previous tax year (6th April 2020 to 5th April 2021):
- self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on)
- a partner in a business partnership
You will not usually need to send a return if your only income is from your wages/pension.
But you might need to send one if you have any other untaxed income, such as:
- foreign income
- tips and commission
- income from savings, investments and dividends
- money from renting out a property
Other reasons why you may need to send a tax return:
- Child benefit – If your income (or your partner’s) was over £50,000, you may need to send a return and pay the High Income Child Benefit Charge.
When are the Self Assessment deadlines?
We’ve provided you with the deadlines you need to know in order to avoid a fine.
5th October 2021:
- Register for Self Assessment if you’re self-employed or a sole trader, not self-employed, or registering a partner or partnership.
31st October 2021:
- Paper tax returns
31st January 2022:
- Online tax returns
- Pay the tax you owe
What if I miss the Self Assessment deadline?
If you do not submit a return/self-assessment when you are required to, or miss the deadline, you will receive an automatic £100 fine from HMRC.
This £100 fine is issued if your tax return is up to 3 months late. If it’s later, you will have to pay more.
In addition, interest will be charged on these late payments.
How do I register for Self Assessment?
Firstly, you need to register if you did not send a tax return last year.
Secondly, a very important point to remember is that if you’re new to Self Assessment, you’ll need to keep records (for example bank statements or receipts) in order to fill in your tax return correctly!
There are different ways to register if you’re:
All of the above hyperlinks will take you to the gov.uk website where you can register for self assessment.
Submitting your return and how Spectrum can help
This is where Spectrum Accountancy Solutions can help you.
- We can work with accounting records of any type. Anything from a bag of paperwork to an online or desktop-based accounting system.
- As part of the self-assessment process, we will ensure that we work through your numbers with you at a pace that suits you. Ensuring that you have a full understanding of your accounts and their implications for your business.
- Spectrum can help you get together the information needed to complete the assessment, by completing and filing your tax return on your behalf, and keeping you informed of when your tax payments are due and how much to pay.
- In the event that you face a tax enquiry from HMRC, we are on hand to provide advice and support.
The internet is full of advice, some of it conflicting about how to complete a self-assessment. Our clients know that we are a phone call away if they need any help and advice. Saving them valuable time searching the internet for answers.
Self Assessment may seem daunting at first, but we are here to help you. If you’re interested in our Self Assessment services please do not hesitate to get in touch.
For a free initial consultation please contact us and find out how we can support you through your preparation for year-end accounts.
If you’re looking for more information, there are plenty of advice and help sheets on the gov.uk website.
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Whilst you’re here, why not check out our post on ‘Making Tax Digital’.2021, accounting, business, Finance, Self Assessment, Tax Return
This post was written by Daisy Vowles