A Brief Guide to Self-Assessment
The deadline to file your 2020 to 2021 tax return is approaching fast and the deadline for submitting your online Self-Assessment Tax Return is 31 January 2022, pay any tax you owe is before the deadline to avoid fines. If you submit a manual tax return, you need to send the manually filled form to HMRC by 31 October 2021. You can count on us for outsourcing your tax bookkeeping to avoid hassle for building reliable and long-lasting relationships with your clients.
What is self-assessment?
It is a method of declaring your income and paying the income tax according to your declared income to HRMS self-assessment. (HM Revenue and Customs).
Normally income tax is deducted by your employer from your salary or wages if you are employed and it’s his responsibility to deposit deducted income tax. However, if you are a freelancer or self-employed, you will be required to declare your income and pay income tax by yourself by filling a tax return form online or manual.
Who required self-assessment?
The people who typically are self-employed, whose source of income is untaxed or who have foreign income in the UK, are required to annually Self-Assessment Tax Return. These types of people normally pay tax at higher rates.
You must file a tax return if you:
Are a company Head
Earn a Net income of £100,000 or more in a year
Have savings or investment income of more than £10,000 before tax
Receive any type of income from abroad
Are the highest earner in a family claiming child benefit, if you earn over £50,000.
Earned untaxed income more than £2,500 or more in, e.g. renting or other ways
If you got self-assessment forms from HMRC then you must complete it and submit them back or complete your tax return by online.
To find out exactly or consult on self-assessment feel free to contact us…
Register: 5th October
Paper tax returns: 31st October
Online income tax returns: Midnight 31st January
Pay tax bill: Midnight 31st January
2nd payment bill: 31st July
The methods how you can file your tax return:
Manually or by mail post Or Online You need to be aware of a 2nd payment deadline on the 31st of July if you make advance payments.
You can contact us to check that applies to you or not or log in to your personal account by yourself using your ID and view your latest self-assessment income tax return. We will guide you when your next deadline for return is and how much is due.
What are the penalties of late self-assessment returns?
A bill of £100 is charged if you submit a self-assessment tax return after the due date or pay your tax bill late. After three months, late charges could cost £10 a day up to a maximum of £900.
To estimate late self-assessment return penalties, contact us to get a free expert opinion.
Ways to submit self-assessment tax return:
Online filled forms. If you have not sent an online tax return before, you need to register with GOV.UK first. This can take up to 20 days, so make sure you do it in plenty of time before the deadline.
There are a number of ways depending on if you are:
Sole proprietor, Free-Lancer or Self-employed earn over £100,000 and not self-employee A partner
Postal Mail Applications
After deciding that you are filing your Self-Assessment by mail post. First, you download a form from GOV.UK website. A help form is also available at GOVT.UK website to guide you on how to complete your paper self-assessment tax return form. After completing four paper tax returns, post it to the HMRC before the last date.
What address you should send the tax return to?
Return your paper tax return to HM Revenue & Customs, Self-Assessment, BX9 1AS, United Kingdom.
What things do you need to complete and documents for filing your tax return?
You must gather all your documents and paperwork to fill in correct data when you fill out your paper tax return and these include:
P60 from your employer mentioning your wages and the tax already you have paid.
P45 form if you have left a job in the current tax year.
P11D or P9D form shows any benefits and expenses.
Detail of any rental income and expenses.
Savings and investment statements that show how much you have earned in interest and other income. Documents that support your Self-Employment, including receipts, bank accounts statements.
How can you pay your self-assessment tax bill?
You must pay your tax bill by 31 January, and you can send what you owe to HMRC by bank transfer, for example, CHAPS or Faster Payments, or by debit card payment.
Pay your tax bill before the 31ist of January to avoid penalties to HRMC by online bank transfer, by debit card payment or via cheque through the post or pay in your bank by using a paying-in slip from HMRC. You cannot be able to pay your tax bill by credit card anymore.
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