How to Complete Your Self Assessment: A Guide

If you are self-employed or earn income from sources other than employment, you may need to complete a Self Assessment tax return. Self Assessment is a system used by HM Revenue and Customs (HMRC) to collect Income Tax. It is important to understand what Self Assessment is and how to complete it correctly to avoid penalties and interest charges.

Self Assessment tax returns are used to report your income and any tax you owe to HMRC. The process can be completed online or on paper, and the deadline for submission is usually 31 January following the end of the tax year. If you are new to Self Assessment, it can be confusing to know where to start. However, with the right guidance, it can be straightforward.

In this article, we will explain what Self Assessment is, who needs to complete a tax return, and how to complete it correctly. We will provide step-by-step guidance on how to register for Self Assessment, how to fill in your tax return, and how to submit it to HMRC. Whether you are self-employed, a landlord, or have income from other sources, this article will provide you with the knowledge and confidence to complete your Self Assessment tax return accurately and on time.

Understanding Self Assessment

Whether you are self-employed, a partner in a business partnership, or a company director, completing a Self Assessment tax return is a yearly requirement. Understanding this process is crucial, especially for small businesses and limited companies.

Basics of Self Assessment

Self Assessment is a way of paying tax by sending a tax return to HM Revenue and Customs (HMRC) each year. The tax return shows your income and expenses for the year, and how much tax you need to pay on that income. You need to complete a Self Assessment tax return if you have earned income that is not taxed at source, for example, income from self-employment, rental income, or investment income.

When you complete your Self Assessment tax return, you need to include all your income for the tax year, which runs from 6 April to 5 April the following year. You also need to include any expenses that are allowable for tax purposes, such as business expenses, travel expenses, and office expenses. You can find more information about what expenses you can claim on the gov.uk website.

This process involves reporting your income and expenses for tax purposes. It’s particularly important for those in partnerships or operating as limited liability partnerships.

Who Needs to Complete a Self Assessment

If you are self-employed, a partner in a business partnership, or a company director, you need to complete a Self Assessment tax return each year. You also need to complete a tax return if you have any other income that is not taxed at source, such as rental income, investment income, or foreign income.

If you are employed and your income is taxed at source, you generally do not need to complete a tax return. However, there are some circumstances when you may need to complete a tax return, such as if you have income from a second job or if you have income from self-employment in addition to your employment income.

In summary, Self Assessment is a way of paying tax by sending a tax return to HMRC each year. You need to complete a Self Assessment tax return if you have earned income that is not taxed at source, and you need to include all your income and expenses for the tax year. If you are self-employed, a partner in a business partnership, or a company director, you need to complete a Self Assessment tax return each year. This includes individuals in various roles, like contractors or businesses using Xero accounting software.

Registering for Self Assessment

If you need to complete a Self Assessment tax return and have not sent one before, you must register for Self Assessment by 5 October. Failure to register for Self Assessment on time could result in a fine.

Registration Process

To register for Self Assessment, you need to create a Government Gateway account. You can do this by visiting the Government Gateway website. Once you have created an account, you will be given a unique User ID. You will then need to enrol for Self Assessment by selecting the option to “Add a tax, duty or scheme”.

You will be asked some questions about your business or personal circumstances to determine whether you need to complete a tax return. If you are required to complete a tax return, you will be given a Unique Taxpayer Reference (UTR) number.

Unique Taxpayer Reference (UTR)

Your Unique Taxpayer Reference (UTR) is a 10-digit number that is unique to you. You will need your UTR to file your tax return and to communicate with HM Revenue and Customs (HMRC).

Your UTR will be sent to you by post after you have registered for Self Assessment. It can take up to 10 working days for your UTR to arrive, so make sure you register well in advance of the tax return deadline. If you lose your UTR, you can find it on any correspondence you have received from HMRC or by contacting them directly.

In summary, registering for Self Assessment involves creating a Government Gateway account and enrolling for Self Assessment. Once enrolled, you will be given a Unique Taxpayer Reference (UTR) number, which you will need to file your tax return and communicate with HMRC. Make sure you register well in advance of the tax return deadline to avoid any fines.

Filling Out Your Self Assessment Tax Return

Filling out the SA100 form is a critical step. This includes reporting income from different sources and claiming allowable deductions. It’s important to maintain good bookkeeping practices to ensure accuracy.

Understanding the SA100 Form

The SA100 form is divided into several sections, each of which requires you to provide different information. You should start by filling out the personal details section, which includes your name, address, and National Insurance number. You will also need to provide details of any other income you have received during the tax year, such as rental income or dividends.

Reporting Your Income

The income section of the SA100 form is where you need to report your income from all sources, including employment, self-employment, pensions, and savings and investments. You should make sure that you have all the necessary information to hand, such as P60s and P11Ds from your employer, and bank statements showing interest earned.

Claiming Deductions and Allowances

The deductions and allowances section of the SA100 form is where you can claim any tax relief you are entitled to. This includes claiming for expenses incurred in running your business, such as travel and equipment costs, and claiming for any charitable donations you have made.

It’s important to make sure that you claim for all the deductions and allowances you are entitled to, as this can significantly reduce your tax bill. However, you should also make sure that you are claiming for these items correctly, as incorrect claims can result in penalties.

In conclusion, filling out your Self Assessment tax return may seem overwhelming at first, but with a little knowledge and preparation, it can be a straightforward process. By understanding the SA100 form, reporting your income accurately, and claiming the deductions and allowances you are entitled to, you can ensure that you pay the correct amount of tax and avoid any penalties.

Deadlines and Penalties

Submission Deadlines

When it comes to submitting your Self Assessment tax return, it’s important to know the deadlines. The deadline for submitting your paper tax return is 31 October following the end of the tax year. If you choose to submit your tax return online, you have until 31 January following the end of the tax year to do so.

It’s important to note that the deadline for paying any tax you owe is also 31 January following the end of the tax year. This means that if you submit your tax return online but don’t pay the tax you owe by the deadline, you will be charged interest on the amount owed.

Late Submission Penalties

If you miss the deadline for submitting your Self Assessment tax return, you will be charged a penalty. The penalty for missing the deadline is £100, even if you have no tax to pay or have already paid all the tax you owe.

If you still haven’t submitted your tax return three months after the deadline, you will be charged an additional penalty of £10 for each day that your tax return is late, up to a maximum of £900.

If you still haven’t submitted your tax return six months after the deadline, you will be charged an additional penalty of either £300 or 5% of the tax you owe, whichever is higher.

If you still haven’t submitted your tax return twelve months after the deadline, you will be charged an additional penalty of either £300 or 5% of the tax you owe, whichever is higher. In addition, HMRC may take further action to collect the tax you owe.

It’s important to avoid missing the tax return deadline as the penalties can quickly add up. Make sure you keep track of the deadline and submit your tax return on time to avoid any unnecessary charges.

Paying Your Tax Bill

Once you have completed your self-assessment tax return, you will need to pay any tax you owe to HM Revenue and Customs (HMRC).

Here, you’ll learn how to calculate your tax bill and explore different methods of payment. This section is particularly important for those needing to file VAT returns.

Calculating Your Tax

Your tax bill will depend on the amount of income you have earned, any allowances you are entitled to, and the tax rate that applies to your income. You can use the HMRC’s online tax calculator to estimate your tax bill.

Methods of Payment

There are several methods of payment available to you when paying your tax bill. These include:

• Online: You can pay your tax bill online through the HMRC website. You will need your 10-digit Unique Taxpayer Reference (UTR) to do this.
• Post: You can send a cheque payable to HM Revenue and Customs along with a paying-in slip to the address provided on your tax bill.
• Bank Transfer: You can pay your tax bill by bank transfer using the details provided on your tax bill.

Budget Payment Plan

If you are struggling to pay your tax bill in full, you may be able to set up a budget payment plan with HMRC. This will allow you to spread the cost of your tax bill over a period of up to 12 months. To set up a budget payment plan, you will need to contact HMRC as soon as possible.

Remember, it is important to pay your tax bill on time to avoid penalties and interest charges. If you are having difficulty paying your tax bill, it is important to contact HMRC as soon as possible to discuss your options.

Records and Requirements

When completing your self assessment, it is important to keep accurate records of your income and expenses. This will help you to fill in your tax return correctly and avoid any potential mistakes or penalties. In this section, we will cover the two main aspects of records and requirements: keeping records and supplementary pages.

Keeping Records

You should keep records of all income received during the tax year, including any employment income, self-employment income, and income from property. You should also keep records of any expenses incurred, such as business expenses, capital allowances, and charitable donations.

If you are employed, you should receive a P60 form from your employer at the end of each tax year. This form will show your total income and the tax that has been deducted from your earnings. You should keep this form for your records.

If you have changed jobs during the tax year, you should also receive a P45 form from your previous employer. This form will show your total earnings and the tax that has been deducted up to the date you left your job. You should keep this form for your records.

If you have received any benefits or expenses from your employer, you may also need to complete a P11D form. This form shows the value of any benefits and expenses paid to you, and it is used to calculate any tax due on these amounts.

Supplementary Pages

In some cases, you may need to complete supplementary pages when filling in your self assessment tax return. These pages are used to report additional income or expenses that are not covered by the main tax return.

For example, if you have income from property rental, you will need to complete the property income pages. If you have income from self-employment, you will need to complete the self-employment pages.

It is important to check whether you need to complete any supplementary pages before submitting your tax return. Failure to complete the correct pages could result in your tax return being rejected or penalties being imposed.

Overall, keeping accurate records and completing any necessary supplementary pages will help you to complete your self assessment tax return correctly and avoid any potential mistakes or penalties.

Maintaining accurate records, including company accounts and management reports, is essential for a successful tax return.

Special Circumstances

If you have special circumstances, such as self-employment, income from abroad, capital gains, or investments, you may need to provide additional information on your self-assessment tax return. Here are some guidelines for completing your tax return in these situations:

Self-Employment and Partnerships

If you are self-employed or in a partnership, you must report your business income and expenses on your tax return. You will need to provide details of your income and expenses, including any allowable deductions, such as travel expenses, office costs, and equipment expenses.

You may also be required to pay Class 2 and Class 4 National Insurance contributions. Class 2 contributions are a flat rate paid by self-employed individuals, while Class 4 contributions are based on your profits.

Income from Abroad

If you have income from abroad, you must report it on your tax return. This includes income from employment, self-employment, pensions, and property. You may also need to pay tax in the country where the income was earned, so it’s important to check the tax rules in that country.

Capital Gains and Investments

If you have sold or disposed of assets, such as property or shares, you may need to pay Capital Gains Tax (CGT). You will need to report the gain or loss on your tax return. You may also be able to claim certain reliefs or allowances to reduce your CGT liability.

If you have investments, such as stocks and shares, you may need to report any income or gains on your tax return. This includes dividends, interest, and profits from selling investments.

It’s important to keep accurate records of your income, expenses, and investments, so you can complete your tax return accurately and on time. If you’re unsure about any aspect of your tax return, you should seek professional advice.

Help and Support

Completing your Self Assessment can be a daunting task, but there are various resources available to help you. Here are some ways to get assistance:

HMRC Assistance

HM Revenue and Customs (HMRC) provides a range of support services to help you complete your Self Assessment. You can visit the gov.uk website to find out more about the different types of assistance available.

One option is to use the HMRC online service, which provides guidance and support to help you complete your Self Assessment. You can access this service by logging into your HMRC account. If you don’t have an account, you can create one on the HMRC website.

HMRC also offers a digital assistant service, which can help you with common Self Assessment queries. You can access this service by clicking on the “Get help with this page” button on the Self Assessment form.

Professional Advice

If you need more help, you can seek professional advice from a qualified accountant or tax adviser. They can provide you with expert guidance and ensure that your Self Assessment is completed accurately.

You can find a list of accredited accountants on the gov.uk website. Alternatively, you can search for a local accountant or tax adviser using an online directory.

It’s important to note that professional advice can be costly, so make sure you are aware of the fees before you agree to any services. However, the cost may be worth it if it helps you to avoid making mistakes on your Self Assessment and potentially facing penalties from HMRC.

In summary, completing your Self Assessment can be challenging, but there are various resources available to help you. Whether you choose to use the HMRC online service or seek professional advice, make sure you take advantage of the support that is available to you.

Common Questions

FAQs on Self Assessment

If you are new to Self Assessment, you may have some questions about the process. Here are some of the most common questions we receive:

What is Self Assessment?

Self Assessment is a way of paying tax by sending a tax return to HM Revenue and Customs (HMRC) each year. If you are self-employed, a company director, or have income that is not taxed at source, you will need to complete a Self Assessment tax return.

Who needs to complete a Self Assessment tax return?

You will need to complete a Self Assessment tax return if you are self-employed, a company director, have income that is not taxed at source, or if you receive income from a trust. If you are unsure whether you need to complete a tax return, you can check with HMRC or consult with a tax professional.

When is the deadline for submitting a Self Assessment tax return?

The deadline for submitting a Self Assessment tax return is usually 31 January following the end of the tax year. For example, the deadline for submitting a tax return for the 2022/23 tax year is 31 January 2024. It is important to submit your tax return on time to avoid any penalties.

What information do I need to include in my tax return?

You will need to include information about your income, expenses, and any tax reliefs or allowances you are entitled to. You will also need to provide details of any PAYE income, National Insurance contributions, dividends, child benefit, or trust income you have received during the tax year.

How do I complete my Self Assessment tax return?

You can complete your tax return online using the HMRC website or by filling in a paper tax return. If you choose to complete your tax return online, you will need to register for Self Assessment and set up an online account. If you choose to complete a paper tax return, you can download the form from the HMRC website or request a copy to be sent to you by post.

Do I need to pay anything when I submit my tax return?

If you owe tax, you will need to make a payment to HMRC when you submit your tax return. The amount you owe will depend on your income, expenses, and any tax reliefs or allowances you are entitled to. If you have overpaid tax, you may be entitled to a refund.

What happens if I miss the deadline for submitting my tax return?

If you miss the deadline for submitting your tax return, you may be liable for a penalty. The penalty will depend on how late your tax return is and whether you owe any tax. It is important to submit your tax return on time to avoid any penalties.