What is a self-assessment tax return?

A self-assessment tax help return is an online or paper shape that needs to be submitted to HMRC every year by way of folks who owe tax on profits they have obtained.

In a few instances, tax is deducted automatically out of your wages or pension – referred to as PAYE.

However, if you receive some other income – along with from self-employment, property, capital gains, or dividends. You need to document this to HMRC by way of sending a self-assessment tax return.

Who pays self-assessment tax?

More than 12.1m people beings were predicted to document a self-assessment tax return for the last tax year.

If you’re self-employed, you may need to post a self-assessment tax return each year.o pay income tax and National Insurance for your earnings.

Other individuals who want to fill in a tax go back consist of anybody who:

• £100,000 or extra last tax year as an worker or pensioner
• Earned £10,000 or greater from financial savings interest, or declared income (however, note that you should also declare income from savings interest above the personal savings allowance, and dividend income above the dividend allowance
• Earned £2,500 or greater in untaxed profits – for example, from guidelines or commission
• Needs to claim tax relief on pension contributions if you’re a higher- or additional-rate taxpayer
• Owes capital gains tax from selling assets at a profit
• Claims child benefit, if you or your partner’s income is over the High Income Benefit Charge threshold
• Receives taxable income from abroad, or lives abroad but receives an income in the UK
• Receives state pension payments that exceed your personal allowance and it’s your only source of income
• Is a business partner, or director of a limited company
• Is a trustee of a registered pension scheme or other trust
• Is a trustee or representative of someone who has died
• Is a ‘name’ at the Lloyd’s of London insurance market
• Is a minister of religion
• Received a £800 form from HMRC saying you didn’t pay enough tax last year, and you haven’t yet paid the outstanding sum.

Self-assessment tax return deadlines

Self-assessment tax is based totally to your profits from the last tax year – not on the calendar year.

The tax year runs from 6 April to 5 April, and your tax go back can be due the subsequent January.

The self-assessment deadlines on your 2023-24 return are as follows:

• five October 2024: cut-off date to check in for self-evaluation for the primary time
• 31 October 2024: paper tax go back deadline
• 31 January 2025: on line tax go back deadline
• 31 January 2025: tax fee deadline for 2023-24 tax owed. If you pay your tax by using payments on account you can have already made bills in the direction of this invoice.

HMRC has the power to charge increasingly expensive penalties if you miss the tax return deadline, which starts with a £100 fine from the first day your return is late.

If you do not pay your tax bu 31 January 2025, HMRC will fee you interest, set on the Bank of England base rate plus 2.5%.

How do self-employed tax returns differ?

If you are self-employed, you’ll need to detail all income you’ve received during the tax year in question. This can be offset against any expenses and allowances you qualify for, meaning that your resulting tax bill will only be based on your taxable profits.

Here are three key things self-employed taxpayers need to be aware of when completing their returns:

• Tax period

While HMRC issues closing dates to submit your return and pay the tax you owe, you may select the dates that your tax is calculated for. This is your ‘accounting period’, which commonly spans 365 (1 year) days.

Many sole traders pick between 31 March to 4 April for their year end. Because the tax year finishes on 5 April. HMRC says that debts prepared to 31 March will remember as being prepared to the give up of the tax year.

This means your money owed will begin once more in accordance with the begin of a new tax year. And you will have the longest viable time in which to pay the tax you owe, which won’t be due till 31 January the subsequent calendar year.

Your ‘basis period’ is the duration HMRC assesses your tax on. From April 2024 all unincorporated business were required to use 6 April to 5 April as their foundation duration. No matter their accounting length.

The 2023-24 tax year become used as a transitional year in which companies were anticipated to calculate a foundation length. It’s longer than 12 months if their accounting period does not healthy up to the tax year.

Many organizations may also now locate it less complicated to transport their accounting length to 6 April to 5 April.

• Payment schedule

Calculating what tax is due when can be tricky to get your head around at the start. Here is a breakdown of how self-employed tax payments paintings:

Year 1: to your first year, you are taxed on income made from the date you began your business to the end of the tax 12 months. For example, in case you commenced your business on 5 February. You’d be taxed at the income you made between 5 February and 5 April.

Year 2: inside the second year, you are taxed on earnings for twelve months on your ‘accounting date’. In our example, this will once more be 5 February. So you’ll be charged on income made between 5 February to 4 February. Successfully paying tax for a 2nd time on earnings among 5 February and 5 April. This is known as ‘overlap profits’ and may be claimed lower back – but handiest whilst you end trading.

Year 3: your tax invoice could be primarily based on income made to your accounting 12 months.

• Payments on account

After your first full year of business, as well as paying tax for the tax year that’s just ended. You are also required to pay tax for the current year in two instalments. The first on 31 January and the second on 31 July.

These are known as ‘payments on account’ and are based on what you owed the previous tax year.

Conclusion:

Navigating self-assessment tax returns can be complex and time-consuming, especially when dealing with additional income streams or business earnings. To simplify this process and avoid costly mistakes, FineX Outsourcing offers expert self-assessment tax help. Ensuring that your tax returns are accurate and submitted on time. Here’s how FineX Outsourcing can assist you:

1. Expert Guidance: FineX Outsourcing provides detailed guidance on all aspects of self-assessment tax returns, ensuring you understand your tax obligations and deadlines.
2. Accurate Filing: With professional assistance, your tax returns will be accurately completed, reducing the risk of errors that could lead to penalties or fines from HMRC.
3. Maximizing Deductions: FineX Outsourcing helps identify and claim all possible deductions and allowances, minimizing your tax liability and ensuring you don’t overpay.
4. Time-Saving: By outsourcing your self-assessment tax tasks, you save valuable time that can be better spent on running your business or personal pursuits.
5. Avoiding Penalties: Ensuring that all tax deadlines are met and payments are made on time, thus avoiding late fees and interest charges.
6. Tailored Services: Whether you are self-employed, a business owner, or have multiple income streams, FineX Outsourcing offers services tailored to your specific needs, including handling complex tax scenarios and providing ongoing support.
7. Compliance: FineX Outsourcing keeps you compliant with the latest tax laws and regulations, providing peace of mind that your taxes are being managed correctly.

By leveraging the expertise of FineX Outsourcing, you can confidently handle your self-assessment tax returns. Optimize your tax payments, and avoid the stress and potential pitfalls of doing it alone. Visit FineX Outsourcing to learn more and get started on simplifying your tax processes today.