Self Assessment

What is Self Assessment ?

 

Self Assessment is the system HM Revenue and Customs use to collect Income tax. Tax is usually deducted from wages, pensions and savings via the PAYE system but people and businesses with other income must report this via a tax return.

It is called Self Assessment as it is the individuals responsibility to work out how much tax should be paid.

Local Chartered Accountants Self-assessment tax

There are a number of different reasons why an individual completes a self-assessment tax return, the main reasons are as follows:

  • You are a company director who has income not taxed under PAYE
  • You have income from self-employment
  • You have income from savings and investments of £10,000 or more before tax
  • You have annual income of £100,000 or more before tax
  • HMRC has sent you a tax return
  • If your income (or your partner’s, if you have one) was over £50,000, you may need to send a return and pay the High Income Child Benifit Charge
 

What Information is Required?

A Self Assessment tax return will include:

  • Your P60 form and P11D if relevant
  • Details of untaxed income for the year, this includes income from self employment, dividends and interest on shares
  • Records of expenses relating to self employment
  • Details of contributions made to charity 
  • Income received from pensions

 

Payments

The balancing payment for the tax year is due by the 31st January following the end of the tax year.

There could also be a  ‘payment on account’ this is a way of ensuring you pay off some of your tax bill in advance. The first payment on account will be due by the 31st January (the same as the balancing payment) with a second payment on account due by 31st July.

Paying HMRC

You can pay your tax bill online here you will need your 10 digit Unique Taxpayer Reference (UTR)  followed by the letter k.

Submission Deadlines

Tax returns can be filed on paper or online, if filing a paper return then the deadline for completion is 31st October following the end of the tax year. The online returns have to be submitted by the 31st January.

Download our key dates & deadlines guide here

Missed Deadlines

Failure to file on time results in a £100 fine plus interest charged on any tax owed. You will receive a fine regardless if any tax is due or not. If your return has still not been filed 3 months later (by the end of April) then HMRC can impose an extra £10 daily fine for the next 90 days thus raising the penalty to £1000.

Further penalties can be imposed after 6 months and 12 months; these are usually dependent on the amount of tax owed to HM Revenue and Customs.

Missed Payments and Penalties

Failure to file on time results in a £100 fine plus interest charged on any tax owed. You will receive a fine regardless if any tax is due or not. If your return has still not been filed 3 months later (by the end of April) then HMRC can impose an extra £10 daily fine for the next 90 days thus raising the penalty to £1000.

Further penalties can be imposed after 6 months and 12 months; these are usually dependent on the amount of tax owed to HM Revenue and Customs.

You can appeal against the penalties using the online system or a S8370 form. If you have a reasonable excuse HMRC will waive the fine but it is down to the officials’ discretion.

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