The world of tax is a complicated one. For many people, it’s something they don’t really have to think about as their employer will take care of it for them. Therefore, for those who are employed, tax is simply a sum that’s taken out of their pay packet and distributed amongst public spending before the money even reaches their bank account.
However, if you aren’t employed by an individual or company, or if you have a means of making additional income on top of your main form of employment, it will be your responsibility to figure out how much tax you owe the government. You will then need to organise payment to HM Revenue and Customs (HMRC), which is called completing a self-assessment tax return.
There’s no denying that understanding self-assessment tax returns can be tricky. However, for this reason, we’ve put together our very own guide to demystify the process.
Do I need to submit a self-assessment tax return?
First of all, do you need to submit a self-assessment tax return? There are a number of conditions in which you’ll need to figure out how much tax you owe and pay it yourself, as opposed to your employer taking care of it for you. These conditions include:
• You’re self-employed: If you’re self-employed, you’ll need to let HMRC know exactly how much you earn annually as you won’t have an employer to do this for you.
• You earn £100,000 or more annually as an employee or as a pensioner.
• You’re a director of a limited company.
• You have savings of more than £10,000 prior to tax.
• You gain income from abroad that needs to be taxed.
• Your family claims Child Benefits and either you or your partner earned over £50,000 in a year.For a full list of conditions, click here. If you aren’t sure whether or not you need to complete a self-assessment tax return, we recommend discussing your particular situation with a reputable accountant.
How do I submit a self-assessment tax return?
Once you’ve figured out whether you need to complete a self-assessment tax return or not, there are two main avenues for doing so. You can either do so online or by mailing the tax return back to HMRC, depending on your preferences.
Submitting your tax return online
To do so online, you’ll need to register for self-assessment on the government’s dedicated webpage, which can be found here. Here, you’ll be able to fill in and submit your tax return, which will be sent straight to HMRC. If you don’t complete your tax return in one go, you’ll also be able to go back and finish a pre-existing return.
The first time you submit your tax return online, you’ll need to register with your Unique Taxpayer Reference (UTR) and select the service you want. Following this, you’ll be sent a letter containing a code which you’ll need to use when signing in.
Submitting your tax return by post
If you don’t have access to a computer or would prefer to fill out your self-assessment forms by hand, you’ll first need to download the government’s SA100 tax return sheet. The SA100 tax return sheet can be found here. Once completed, you’ll need to mail your tax return to HMRC.
How do I complete a self-assessment tax return?
If you haven’t submitted a self-assessment tax return before, you may be wondering exactly what information you’ll need. While the SA100 tax sheet will tell you exactly what you need to fill out your form correctly, it’s likely you’ll need information from:
• A P60, as this will show the tax you’ve already paid to HMRC
• A P45, if you’ve left a job during the current tax year
• Any documents which show your income as a self-employed individual, such as receipts and bank statements.Double-check exactly what information you need before you start filling out your form, as this will save you time and make the whole process much less stressful. We also recommend that you ask a qualified accountant for advice as they’ll be able to tell you exactly what documents you need to complete the return.
When do I need to submit my self-assessment tax return?
Of course, it’s important to make sure you submit your self-assessment tax return to meet the deadlines set out by HMRC. You’ll also need to make sure you’ve paid any tax you owe to HMRC by the deadline, so it’s imperative to give yourself plenty of time to figure out what payments you need to make and when.
Failing to meet all appropriate deadlines could see you facing a penalty. The penalty you pay will depend on how late your tax payments are, but for the first three months, you’ll pay a fixed fine of £100. After this, you’ll also be charged interest on any taxes you’ve failed to pay.
Due to the fact that paper tax returns take a little longer to process, the deadline for these is midnight on the 31st October 2019. The deadline for online tax returns is, however, at midnight on the 31st January 2020. This is also the same deadline for paying all tax you owe to HMRC.
Make sure you double-check these deadlines at the end of every tax year so you’re well prepared for the year ahead.
What happens if I make a mistake on my self-assessment tax return?
If you make a mistake on your self-assessment tax returns, yet you submitted your return online and the deadline has not yet passed, you will be able to log onto the government portal and make the relevant amendments.
If, however, you submitted your self-assessment return by post, you’ll need to send off a new copy. Make sure you write ‘amendment’ on every page of the new document before sending it to HMRC.
If you realise you’ve made a mistake but there isn’t time to change your tax return before the deadline, or if the deadline has already passed, you’ll need to write to HMRC directly. They will be able to advise you on all future steps and help you with the process of making amendments.
Should I hire a tax advisor to help me out?
While you can certainly complete your self-assessment tax return yourself, it’s recommended that you hire a tax advisor for assistance, especially if this is your first time completing a tax return. It can be a complicated process and it’s imperative to make sure you submit accurate information on time.
With this in mind, we recommend hiring a tax advisor to help with your tax return. Here’s why:
Hiring a tax advisor can help you stay compliant
It’s no secret that tax laws change regularly. Changing tax laws can leave individuals and businesses confused and at risk of making mistakes, which may even see you faced with a penalty. While it can be difficult to keep up to date with changing laws, it’s the job of accountants to do so. A trusted accountant will be able to give you honest and up-to-date advice to make sure you’re staying compliant at all times.
Hiring an accountant can save time and energy
It can be easy to underestimate just how long it will take to complete and return your self-assessment tax sheet until you’ve actually started the process. It can be a time-consuming task, yet is one that you don’t want to rush, just in case you miss something particularly important. Hiring an accountant is a great way to streamline the entire process, making it quicker and a less stressful task.
Tax accountants can assist with lots of other services
Finding an accountant you can rely on is important for all self-employed individuals and businesses as they offer a wide variety of useful financial services. From helping out with self-assessment tax returns to providing bookkeeping and payroll services, qualified accountants can help you stay financially compliant, save money and minimise stress.
Looking for Chartered Certified Accountants you can rely on? Look no further than Barron & Co Ltd
Whether you need advice regarding self-assessment tax returns or any other financial services, Barron & Co are the local accountants you need. Based in Birmingham, we specialise in a range of accountancy services including those related to self-assessment, taxation and VAT, limited company formations, bookkeeping and payroll.
We’re proud to have achieved a reputation for excellence throughout Birmingham and are now one of the leading accounting companies in the local area. Our team of qualified accountants are dedicated to keeping up-to-date with all UK tax laws, helping our customers to stay compliant in every case and free from any financial stress. For more information about our range of services, or to book a consultation with one of our highly-trained accountants, please don’t hesitate to get in touch with us at Barron & Co today.