There’s less than one month left to tell HMRC about any income you earned during the 2020-21 tax year that might require you to submit a self-assessment tax return. If you’ve never submitted a tax return before, and have earned money that you haven’t yet paid any tax on, you’ll need to act now.
While HMRC often gets in touch to let people know they need to submit a tax return, this doesn’t always happen – and the onus is on you to declare all forms of income you’ve received that you need to pay tax on.
What is a self-assessment tax return?
A self-assessment tax return is intended for individuals whose income isn’t taxed automatically when it’s paid. They are a way of telling HMRC how much untaxed income you have received, so that it can be taxed correctly. Self-assessment tax returns can be completed via a paper form or online and you will be asked several questions about your income and expenses for the previous tax year. HMRC will then calculate what you owe based on what you report.
The reason it is called “Self-Assessment” is because it is your personal responsibility to self-confirm, and check that the information you submit is correct.
What do you need to do by 5 October?
You need to register for self-assessment with HMRC by 5th October in order to get your tax account set up in plenty of time to submit your 2020-21 tax return. You can register online, or by calling HMRC on 0300 200 3300.
You’ll need to choose whether you’re self-employed, not self-employed, a business partner or partnership. Here are the links for each:
Register for Self Assessment: Register if you’re self-employed - GOV.UK (www.gov.uk) Register for Self Assessment: Register if you're not self-employed - GOV.UK (www.gov.uk) Register for Self Assessment: Register if you're a partner or partnership - GOV.UK (www.gov.uk)
To create an account there are a few pieces of information you will need to hand, including:
• Your contact details • Your National Insurance number
Once you’re registered, HMRC will send you a Unique Taxpayer Reference (UTR) in the post within 10 days, along with instructions on how to create a Government Gateway account. You will then be sent an activation code for your Government Gateway account and then you can access the self-assessment area to submit your tax return.
You only need to register for self-assessment once – so if you’ve already submitted a tax return in the past, you can use the same UTR and other details from last time. If you’ve lost your UTR number, call HMRC’s self-assessment helpline on 0300 200 3310.
While you won’t get a fine for not registering for self-assessment by 5th October, you do run the risk of not being ready to file your first tax return – and submitting it just a day late could mean a fine of £100, which quickly escalates the longer you leave it.
Who needs to complete a self-assessment tax return?
You must complete a self-assessment tax return if, in the last tax year (6 April to 5 April), you were:
· self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on) · a partner in a business partnership · an employee earning over £100,000 You may need to send one if you have any other untaxed income, such as: · money from renting out a property · tips and commission · income from savings, investments, and dividends · foreign income
You can also choose to fill in a return to:
· claim some Income Tax reliefs · prove you’re self-employed, for example to claim Tax-Free Childcare or Maternity Allowance
If you get Child Benefit:
· If your income (or your partner’s, if you have one) was over £50,000, you may need to send a return and pay the “High Income Child Benefit Charge”.
If you’re still not sure whether you need to send a return, then you can check here: Check if you need to send a Self Assessment tax return - GOV.UK (www.gov.uk)
Need further help?
You don’t have to manage self-assessment alone. Hiring a professional can take all the stress and worry away and it won’t cost as much as you may think.
Virtual Accounts and Taxes can help you register properly and ensure you never miss a deadline. To learn more, book a discovery call today.