Do I Have To Complete A Self Assessment Tax Return?
When you start considering to become self-employed, there are probably a lot of questions that will come to your mind. But it is unlikely that on top of your list would be, “do I have to complete a Self Assessment?” However, this is probably one of the most significant ones, though.
Do you know that when you are self-employed, Self Assessment is one of the most important tax documents that you need to be dealing with? Also, you need to be careful with this, or else it could cause you a tremendous headache. Here, we will examine what Self Assessment is all about, whether you are required to file one, and what makes it so important.
What Is A Self Assessment?
Actually, a Self Assessment, otherwise known as Form SA100, is the method in which HMRC will know the amount of National Insurance and Income Tax that you have to pay on any income that has not been taxed at source. For employees, their earnings from their employment are automatically deducted by Income Tax. However, this is not the case for the self-employed or any other types of income including pensions or income from investments and savings. This is why Self-Assessment is very significant.
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If you are required to file a Self Assessment, then you have to complete this form. Afterwards, you can then submit this to HMRC, most often, this is submitted online. Take note that the deadline for its submission is before January 31. Based on the information that you provide, HMRC will try to compute the amount of National Insurance and Income Tax that you need to pay by January 31.
Do I Need To File A Self Assessment?
The general rule is any individual who has earnings that have not been taxed at source must complete a Self Assessment.
If you are a sole trader, then the income that you obtained from your trade does not include any Income Tax or National Insurance deduction. Therefore, you are required to inform HMRC about this income by completing the Self Assessment form. In this way, they can compute how much tax you owe, if there is any.
If you are a director of a limited company, then most likely you will be required to file a Self Assessment.
Some examples of income that are not taxed at source are investment income or dividend, income from abroad as well as income from your own property in case you have any.
By visiting the Gov.uk website, you can find the entire list of who is required to file a Self Assessment. The website also offers an online tool that can help you in determining whether you must complete a Self Assessment.
When Do I Have To Register For Self Assessment – Do HMRC Give Me A Self Assessment Notice Or Do I Have To Contact Them?
Do you find yourself asking these questions? If you believe that you have to complete a Self Assessment based on the given criteria, then the first thing to do is to register. This must be done by October 5 after the end of a given tax year. However, for the tax year that starts on April 6, 2017, and ends on April 5, 2018, the registration will end on October 5, 2018.
You need to consider that when you register as a self-employed or you set up a limited company, registering for Self Assessment would not be automatic. Hence, you have to tell HMRC about this circumstance. You can either get in touch with their Self Assessment Helpline by calling 0845 900 0444 or you could register online.
When Do I Have To Complete A Self Assessment?
Filing for Self Assessment should be done by January 31, just right after the end of a relevant tax year that it applies to. You have to take into account that tax years will run from April 6 until April 5. Although, there is no need to wait. In case you are employed, then you can file your Self Assessment immediately right after your employer gives you your Form P60.
If you are operating your own company, then you have to generate the Form P60 on your PAYE system or you could ask your accountant to help you in preparing it. If you are a sole-trader then you can submit your Self Assessment right after the tax year ends. Filing your Self Assessment earlier can provide you with a lot of benefits.
What Happens If I Don’t Register And File In Time?
In the event that you fail to tell HMRC, then you might be charged with a fine or penalty. Also, you will be required to file Self Assessments for the previous tax years when applicable. If you are having some doubts if you have registered or not, then you can always get in touch with HMRC using your National Insurance number as a way to confirm.
In case you fail to file your return after you have registered for Self Assessment, then you will be required to pay some significant penalties. HMRC is very strict when it comes to deadlines and penalties pertaining to late filing for returns. That is why it is important that you have to submit your Self Assessment on time.