This is the annual process of completing your tax return for HMRC. This tax return includes all your Trading, Investment and Foreign income and any Capital Gains that you have made in the year. From this income you deduct your Allowances, Reliefs and allowable expenses and then you are taxed at the prevailing rate on the balancing figure.
The tax year always runs from 6th April to the following 5th April, you then have until the 31st October to complete and file a paper return or the 31st January if you complete and file an online return. Either way your tax bill must be settled by the 31st January.
If you do not file your return on time you will have a £100 penalty and the later you pay and file your return the higher your penalty will become.
Most individuals will enlist the assistance of an Accountant or Tax Adviser with the completion of their Tax Return as knowledge is key to reducing your tax bill.
Who needs to complete a Self Assessment Return?
There are a number of situations whereby you may be required to complete a Self Assessment tax return:
- you are self employed (run a business of your own)
- you are a partner in a partnership
- you own and rent out property
- you earn interest above the tax free threshold
- you earn dividends above the tax free threshold
- you are a trustee
- you receive foreign income
How do I register for Self Assessment and complete my return?
Your first step when you are required to register for Self Assessment is to notify HMRC and obtain your Unique Taxpayer Reference (UTR). This is a 10 digit number that is used for all your tax correspondence – like your National Insurance (NI) number this is unique to you. If you were registered at some time in the past your UTR will not have changed.
The deadline for registration is the 5th October following the end of the year that you wish to send your tax return for. Regardless of when you start your business your first tax period only runs up to the 5th April. Therefore if you started your business on 1st January 2014, your first tax return would run from 1st January 2014 to the 5th April 2014 and would be due on paper by 31st October 2014 or online by 31 January 2015. The latest you could register for Self Assessment would be the 5th October 2014.
Once you are registered for Self Assessment you do not have to do it each year it will be assumed that you are still under the scope of Self Assessment until you tell HMRC any different.
Once you are registered with HMRC for Self Assessment they will send you a paper return for completion every April – the deadline for returning this is the following 31st October. If however you miss this deadline or you prefer to file online you have until the 31st January of the following year to complete and file your online return.
If your tax affairs are relatively straight forward you may wish to complete the form yourself however assistance and knowledge from a Qualified Accountant or Tax Adviser could mean you will be paying HMRC less tax.