SELF ASSESSMENT TAX RETURN

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Self Assessment

Self-Assessment is a system HM Revenue and Customs (HMRC) uses to collect details of earnings and expenses from specified individuals. You may be trading as a sole trader or partnership in which case you may need the right paperwork and records to submit your tax return such as pension, income, expenses, together with capital gains information.

Who must complete a Self-Assessment?

If any of the following applies to you during the most recent tax year (from 6 April to 5 April):

  • A partner in a business partnership
  • Self-employed
  • Directors of limited companies
  • Person who has UK earnings but lives abroad
  • Person who resides in the UK but has foreign income
  • Higher Rate Taxpayers whose earnings are over £100,000
  • Trustees
  • Person with investment earnings over £10,000
  • Recipient of a portion of the COVID-19 grant or assistance payments.
  • Recipient of gratuities and commissions from dividends and savings income
  • Person letting out a property for rent

While this is a non-exhaustive list, it covers the most relevant categories of people who need Self-Assessment. However, if you are unsure or have any confusion about whether or not you meet the criteria, please contact us. We would be very glad to help. Our accountants will incorporate relevant information from your company accounts (if applicable) into your tax self-assessment return. Other factors that contribute to income include investments, land and property, and overseas assets.

  • Goods and inventory for resale
  • Salaries and Wages
  • Costs of rent, taxes, gas, and electricity
  • Administrative expenses such as phone, mobile, and stationery charges
  • Capital allowances for vehicles, tools, and equipment (a tax- advantaged type of depreciation)
  • Allowances for operating your office from home
  • Costs for counsel and accounting
  • Cost of advertising
  • Additional areas

Expenses can be claimed if self-employed

Reporting expenditures for a self-employed trade is far more liberal than claiming expenses under PAYE. You are permitted to deduct expenditures in the following categories while filing the self- employed portion of your tax return:

Deadlines

HM Revenue and Customs (HMRC) must receive your tax return and any money you owe by the deadline. The 31st of January following the retroactive tax year is the due date for filing your self-assessment tax return. For instance, HMRC would need to collect tax returns for the year ending 5th April of this year by midnight on January 31st, next year. This applies to online Self Assessment Tax Returns. The deadline is substantially shorter and expires at midnight on October 31st after the tax year for paper Self-Assessment Tax Returns. Thus, the cut-off date for the previous tax year would be October 31st of the current year. If you need to send a tax return and you miss the deadline for sending it or paying your bill, you may be assessed a penalty.
31st January after the end of the tax year is the deadline for HMRC to receive your tax return. Depending on how far behind the tax return is, the following fines may be imposed:

  • f you are late for less than three months £100 and after three months £10 per day.
  • If more than six months have passed, 5% of the tax owed, or £300 whichever is higher.
  • For more than 12 months, 5% of the tax owed, or £300, whichever is higher.
  • As you can see, the penalties for self-assessment late filing increase significantly the longer you wait to submit
  • your tax return. In addition, there may be contributing factors, such as illness, a death in the family, computer
  • problems, or other extenuating circumstances, that contributed to the late filing of your tax return. In certain
  • situations, HMRC has the option of removing the fines if it so chooses.
  • If you are late in settling your Tax debt, there are late payment fees in addition to late filing penalties:
  • 5% for every 30 days late
  • 5% for a six-month delay
  • 5% for every year late
    • You must pay your tax obligations on time since HMRC also assesses interest for late payments.

    Ways for Self-Assessment tax return

    There are 2 ways to do a Self-Assessment tax return. You can:

    • File your Self-Assessment tax return online
    • Download and fill out SA100
      • Self-Assessment tax returns can be submitted online if you:
    • Work for yourselves (self-employed)
    • While not being self-employed, you are required to file taxes, for example if you earn money by renting out property.
      • We are here for you. If you want hassle-free service on your tax claim, let us know and we will make sure you get your money back.

      How long does it take to fill out a tax return?

      If the tax return was submitted online, HMRC will often accept it right away. Depending on how busy they are and the amount of backlog in paperwork they are dealing with, the time it would take to submit a paper document may range from weeks to months. Although tax returns submitted online can be "processed" right away, it may take some time to request an overpayment of tax. Most of the time, HMRC employees must manually approve these tax refunds. Repayments for straightforward tax rebates are often credited within a few days. Claims that are more complicated or need more information may take longer, sometimes several months. At Frontiers Consulting, we make every effort to give HMRC the information they want as soon as possible so that Tax overpayments can be promptly reimbursed.

      Updating your tax return

      Online tax returns

      • Sign in using your Government Gateway user ID and password.
      • From ‘Your tax account’, choose ’Self-Assessment account’ (if you do not see this, skip this step).
      • Choose ‘More Self-Assessment details.
      • Choose ‘At a glance’ from the left-hand menu.
      • Choose ‘Tax return options.
      • Choose the tax year for the return you want to amend.
      • Enter the tax return, make the corrections and file it again.

        • The tax returns of high earners

        HMRC mandates that anybody who makes more than £100,000 annually—and in certain situations, more than £45,000—file an annual Self Assessment Tax Return. The reason for this is because when so much money is made, any mistakes can have a significant impact.
        HMRC will need a thorough, in-depth breakdown of your total income and outgoings. That information contains details about all of your sources of income, such as:

        • Employment
        • Interest
        • Pensions
        • Dividends on shares
          • You will also be required to disclose any work perks you have been getting, and HMRC will also need this information if you have any allowed costs.

          The tax returns of high earners

          HMRC mandates that anybody who makes more than £100,000 annually—and in certain situations, more than £45,000—file an annual Self Assessment Tax Return. The reason for this is because when so much money is made, any mistakes can have a significant impact.
          HMRC will need a thorough, in-depth breakdown of your total income and outgoings. That information contains details about all of your sources of income, such as:

          • Employment
          • Interest
          • Pensions
          • Dividends on shares
            • You will also be required to disclose any work perks you have been getting, and HMRC will also need this information if you have any allowed costs.

            Property Income

            Typically, if you have rental income, you must file a self assessment tax return. Especially if you also receive income from other sources, like a pay check. Income from real estate might come from either residential or commercial properties; HMRC does not distinguish much between the two. All of it is considered rental revenue. The list of allowable costs is quite similar to that for self-employment, although the kind and quantity of the expenses will obviously change. You'll have expenses associated with renting such as:

            • If the property is financed, the interest on the loan or mortgage.
            • Rental costs
            • Costs of maintenance and repairs
            • Depending on the contract set up, utility expenses might be included.
            • Legal costs
            • Tax deductions for equipment and tools
              • It may be difficult to determine whether certain repairs are legal. Consider whether the expense is related to property improvement or only to restoration.

              Tax Returns for Company Directors

              Limited company directors must submit Self Assessment Tax Returns. This is mostly because they have complete discretion over how the firm pays them for their own income; for example, it may be a combination of:

              • Salary
              • Dividends
              • Loans made available by the business
              • Benefits in kind
              • Reimbursement for costs
              HMRC mandates that all business directors submit a personal tax return that includes information on the after mentioned categories in order to prevent system abuse. The preparation of the company director tax return should be done concurrently with the preparation of the Corporation Tax return to maximize tax efficiency. There are several ways to lower the overall tax owed by small limited corporations with one or two directors.