What you need to know about self-assessment

self-assessment tax return

Christmas is over for another year which means only one thing – the self-assessment deadline is upon us! Yes, if you haven’t already filed your self-assessment tax return for the year 2017/2018, then you only have until 31st January to both file it and pay what you owe.

But don’t panic, this blog will explain what self-assessment is, who it applies to and what you need to do next. And remember, if you’re really struggling, give us a call and we’ll be happy to help you out.

What is self-assessment?

Self-assessment is a way of reporting your income and paying tax to HMRC. If you’re employed then income tax will be automatically deducted from your salary by your employer, but if you work for yourself, then you will need to complete a tax return and pay any tax you owe yourself.

Who needs to file a tax return?

You will probably need to file a self-assessment tax return if you:

  • Are self-employed
  • Are a company director
  • Have an annual income of £100,000 or more
  • Have savings or investment income of more than £10,000 before tax
  • Have income exceeding £50,000 and receive Child Benefit
  • Receive untaxed income from abroad
  • Live abroad but have UK income
  • Earned £2,500 or more in untaxed income, for example from renting out a property.
  • Need to pay Capital Gains tax (e.g. if you sold shares or a second home)
  • Receive dividends from shares

If you are still unsure whether you need to file a tax return, take a look at this useful self-assessment guide on the Gov.UK website.

How do you complete your self-assessment tax return

Paper returns should have been done by 31st October, so you will need to file your return online. You can do this either via the Government Gateway or Gov.uk Verify. If it’s the first time you’re filing a return, you will need to register for an account. Do this as soon as possible, as it can take up to 10 days to receive an activation code.

What do you need to complete your tax return

Before you start to complete your tax return, we suggest getting all the necessary paperwork together, so you have everything to hand. This may include the following:

  • If you have an employer, a P60 showing your income and any tax already paid.
  • If you have left a job in the current tax year, a P45.
  • A P11D or P9D showing any benefits and expenses.
  • Documents detailing your self-employment income. This should include bank statements, accounts, receipts and dividend information.
  • A list of all other income such as rental income, investments, savings and pensions.

And make sure you’re thorough when you review your income. All of HMRC’s databases are linked, so it’s easy for them to spot a pension or savings account, you may have missed.

How can you pay your self-assessment payment?

You can pay your tax bill by bank transfer, debit card or cheque. Since last year, you can no longer pay by credit card.

What happens if you miss the self-assessment deadline?

If you fail to file your return on time, you’ll be charged a £100 penalty. And if you are more than three months late, you’ll be charged £10 a day for a maximum of 90 days.

What happens if you don’t pay your self-assessment payment on time?

You’ll be charged a £50 penalty plus 3% interest on what you owe. And if you’re more than six months late, you’ll be charged a further £50.

Still panicking? Then, let us help

Filing your own self-assessment tax return can be stressful, especially if you’ve never done it before. That’s why we offer a full self-assessment service, which will help keep your tax bill as low as possible and make sure you meet the self-assessment deadline. Just give us a call and we’ll help make the process as painless as possible

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