Self-Assessment- Less than 1 month to go!
With the 31st January self-assessment deadline looming, now might be a good time to finally get around to preparing and submitting to HMRC!
Here we will discuss:
- Who needs to file a tax return
- What you need to include
- What happens if you are not registered but need to file
- Late filings & penalties
- How to make the payment
- What if you are unable to pay
- What happens if you have sold a property in the year
Received a request for a tax return?
If HMRC believes that you need to file a tax return they would have sent you a request to do so – this will be based on the assumption that you have filed a return in previous years.
However if your circumstances have changed and you no longer feel as though you are required to complete a tax return, for example, your only income is from your employment, then you can contact HMRC and see if the request can be retracted.
Who needs to file a return?
HMRC require you to file a self-assessment tax return if you meet at least one of the following:
- are a self-employed sole trader whose annual turnover is over £1,000
- earn dividend in excess of the current £2,000 dividend allowance
- have earned more than £2,500 from renting out a property
- you or your partner have received Child Benefit where either of you had an annual income of more than £50,000
- have received more than £2,500 in other untaxed income
- are an employee claiming expenses in excess of £2,500
- have an annual income of over £100,000
- have earned income from abroad that you need to pay tax on (if you are not sure please get in touch)
What do I need to include?
Providing that one of the above criteria is met then you will need to disclose all of your earnings in the tax year to HMRC alongside other considerations that may grant you some tax relief:
- Employment income
- Self-employment income (& allowable business expenses)
- Pension Income
- Dividend Income
- Rental Income
- Income from savings & investments
- Foreign Income
- Capital gains on disposals of assets
- Redundancy payments
- Tips or commission
- Pension contributions
- Charitable donations
- Benefits and allowances
What happens if I am not registered?
If you have not previously submitted a tax return you will need to register with HMRC
Upon registering, HMRC will issue you with a Unique Taxpayer Reference or UTR that HMRC will use to identify you for tax purposes – this can take HMRC up to 2-4 weeks.
You will then need to use this UTR number to create an online self-assessment account to file your tax return or provide this to your accountants and they will do the rest.
Can I submit by paper?
Unfortunately, the deadline for paper submissions has passed and was the 31st of October 2020.
If you would like help submitting your return electronically, please get in touch.
What happens if I am late to file?
If you are late to file your tax return you will incur a late filing penalty of £100.
If by the 1st May you still haven’t filed your tax return, you will start to incur a daily £10 penalty to a maximum of £900 taking the total penalty to £1,000!
These penalties will continue to worsen the longer you leave your tax return un-filed so it is vital that you get this sorted ASAP.
If you have a reasonable excuse for not filing your tax return you can make an appeal direct to HMRC against the penalty.
When is the payment due and what if I am late to pay?
Payment of any calculated tax owed must also be made to HMRC by midnight on the 31st January.
Late payment usually attracts a hefty interest charge that is normally applied at 5% of the outstanding tax liability at the date of late payment. HMRC will continue to charge you interest until the payment is made.
How can I make the payment?
Of course, there are numerous ways to make the payment to HMRC, however, the easiest is probably via BACS using the details provided by HMRC.
Remember to include your 10-digit UTR as the references followed by the letter ‘K’
What if I am unable to pay?
HMRC offer payment plans on the amounts owed to providing that:
- they do not exceed £30,000
- You have no other payment plans or debts with HMRC
- Your tax returns are up to date
If you are unable to pay your tax bill due to the impact of coronavirus then you will need to contact HMRC and let them know. The self-assessment payment helpline number is 0300 200 382
What if I have sold a property?
Historically, disposals of residential properties would need to be disclosed to HMRC via a tax return.
However, there have been some changes to these rules since 6th April 2020 where individuals who are due to pay capital gains tax on UK residential property disposals have 30 days after the completion date to report and pay HMRC the tax.
For more information on this please visit our blog >
How can PJCO Accountants help you with your self-assessment tax return?
At PJCO Accountants, we work closely alongside our clients to support them with their tax requirements. We can help you find and access the correct tax relief schemes, to ensure that you are never paying any more tax than you absolutely have to.
Our expert team will help you keep up with the ever-changing tax legislation and relief schemes, prepare and file your tax returns for you and introduce you to the best cloud accounting software there is, so you can run your business efficiently.
Arrange your free Discovery Call here: