It’s estimated that there are still 3.5 million people who need to file a self assessment.
Don’t panic yet …… you’ve still got a week to get it done to prevent the brown envelope containing the £100 automatic fine from dropping onto your doormat. Last year over three quarters of a million people left filing their tax return until 31st January; so you’re not alone.
If the thought of sitting down to complete the self assessment tax return fills you with dread here’s some common questions answered which should make the whole process a little less stressful.
What is a self assessment?
A self assessment is your personal tax return summarising all of your income as well as your profits from any self employment that you may have received during a tax year.
The tax return is made up of a main section (referred to as a SA100 by HMRC) and a number of supplementary pages.
The most common supplementary pages, with their accompanying HMRC references, are:
- Employment (SA102) for income received from employment and tax that you have paid on that (PAYE). If you’re a Director of a limited company and have been paid a salary then this would also be recorded here. You’ll find the amounts to include in this section on a P60 (received from your employer at the end of the tax year around May time if you still work for the company) or P45 (received from your employer if you leave a role during the tax year).
- Self Employment (SA103) for the profits from any sole trader businesses that you may own
- Property (SA105) to record income and costs if you rent out property
A full list of the tax return pages and help sheets can be found at https://www.gov.uk/self-assessment-forms-and-helpsheets
What is a tax year?
In the UK the tax year runs from 6th April to 5th April.
A self assessment tax return is filed by tax year. For example the tax year 6th April 2017 to 5th April 2018 is referred to as 2017 / 2018.
A tax return is due by the following 31st January after the end of the tax year.
So the tax return for 2017 / 2018 is due by 31st January 2019.
When do I need to pay my tax bill?
When you complete your self assessment any tax due will be calculated. The amount due needs to be paid by 31st January.
If the amount of tax that you owe is over £1,000 you may also have to make a payment on account towards the tax due in the current tax year 2018 / 2019. The first payment on account is also due by 31st January with a second payment on account due on 31st July.
You can read more about payments on account at https://www.gov.uk/understand-self-assessment-bill/payments-on-account
I’m self employed – what do I need to do?
If you run your own business you’ll need to prepare your accounts for the tax year and enter the totals onto the Self Employment supplement, mentioned above. If your turnover is under £85,000 it’s really simple to do as you’ll just need to complete two boxes – income and total costs.
Under what is called the Trading Allowance rules (https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income), if your income is less than £1,000 from your self employment you do not need to report this on the self assessment although you must still keep accounting records.
I have my own limited company – what do I need to do?
As the owner of a limited company you may have received a salary and dividends from the business. You’ll need to record these on your self assessment. It’s worth noting that the company financial year may not be the same as the tax year. So you may need to prepare a schedule of the amounts received or obtain this information from your accounting system to make sure you record the correct amount on the tax return.
Is there anything else I need to put onto my self assessment?
As well as income from your self employment, dividends and salary or wages you will also need to put any income received from the following sources onto your self assessment:
- Interest received on savings
- Charitable giving
- High income child benefit charge
If you have received a tax refund during the year e.g. from the Jobcentre Plus, this needs to be entered onto the form too.
Do I need an accountant?
The simple answer is no; you can complete the tax return yourself. However for those with complicated tax affairs or if accounts and tax returns are just not your thing it may be worth appointing an accountant to help you.
An accountant will still need the information from you, and it does remain your responsibility to ensure the return is complete and accurate. Precise figures will be needed as HMRC will not accept estimates or approximations unless there is good reason such as losing your records through flood or fire.