If you are Self-employed, you must complete a tax return (SA100) each year showing your income, any capital gains and claim allowances and reliefs.
Your Self-Assessment is a standard tax return form and as a business owner you will need to send a report of your annual earnings to HMRC. It is called Self-Assessment because it is your responsibility to work out how much tax you have to pay. You can also claim any tax allowances or reliefs that you are entitled to on the tax return. The information on the tax return is used by HMRC to calculate your tax liability and this process is called Self-Assessment.
Do I need to complete a Self-Assessment tax return?
In the UK, most people pay their tax at source through ‘Pay As You Earn’ (PAYE) if they are employed and therefore are not required to file a tax return. Self- Assessment does not apply to everyone and you only need to complete a tax form if one or more of the following apply:-
- You are working for yourself (self-employed)
- You are a partner in a partnership business
- You are a minister of religion, any denomination or faith
- You are a trustee or executor of an estate
- You are a company director and you receive income that is not taxed under PAYE
- You have untaxed income, for example rental income
HMRC may also want you to complete a return for other reasons details which can be found at www.hmrc.gov.uk.
What are the deadlines for Self-assessment?
A UK tax year runs from 6 April to the following 5 April. For example, the tax year 2019/20 commences on 6 April 2019 and finishes on 5 April 2020. The 31 January during the tax year is 31 January 2020, the 5 October following the end of the tax year is 5 October 2020 and the 31 January following the end of the tax year is 31 January 2021.
What are the Self-Assessment submission deadlines?
If you have to file a Self-Assessment tax return, you normally have:
- If you choose to submit a paper tax return you have until 31st October to complete a return
- Or until the following 31 January if you file online.
You have an additional three months for online filing compared with paper. HMRC take the date of the first return received by them and this will also generate a late filing penalty. For example, if you file a paper return for 2018/19 after 31 October 2019, you cannot avoid a late filing penalty by filing the return online before 31 January 2020.
How long do I have to keep my self-assessment returns?
It is a legal requirement for people in Self -Assessment to keep records and if HMRC check your tax return, they may ask to see some of your records. You can keep records on paper or digitally. If your self-assessment is not completed on time and accurate, HMRC can charge you a penalty. The normal rule for the self-employed and those letting property is to keep business records for at least six years.
What do I do if I no longer need to complete a tax return?
If your circumstances have changed and you think you no longer need to complete a tax return (ie because you are no longer self-employed and you pay all your tax under PAYE), contact HMRC to let them know as soon as possible.
If you have already received a tax return for the year, HMRC might agree to cancel it, if you explain your circumstances to them over the telephone. It is always advisable to send them a letter once you have spoken to them explaining your circumstances. If they agree to withdraw the return, you will no longer need to submit it and any penalties for missing the filing deadline will be cancelled.
However, if HMRC do not agree, then they may ask you to complete the return and also tell them about any changes in your circumstances in the Additional Information boxes.
What if I am entitled to a tax refund on my Self-Assessment?
When you file a tax return, any refund that you are due is automatically calculated as part of the tax return process. However, if you are no longer within self-assessment but are due a refund, you may need to claim a repayment of tax each year by contacting HMRC.
What if I have not completed a tax return previously?
If you have been in receipt of either Income or Capital Gains, you will need to advise HMRC by 5th October following the end of the tax year in which you had the income, otherwise you may face a penalty.
For further information on Self-Assessment please visit the link www.hmrc.gov.uk.
Conclusion
If you want to find out anything further about this topic then please feel free to call on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email me vee@navigatebr.com
This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.
Leave a Reply