Self Assessment Tax – Everything You Should Know

Self Assessment Tax - Everything You Should Know

It is that time of the year again when you have to prepare yourself for the Self Assessment Tax Return. If you are a self-employed person, you should be aware of everything related to ‘Self Assessment Tax’ to avoid any delay or error while filing your tax return. Failing to understand the essentials may end up inviting a lot of troubles for you.

Here is everything you should know about self assessment tax.

What is Self Assessment Tax?

If you are an employee of a registered business organisation or any other firm, your income taxes will be automatically deducted from your salary. However, business owners, freelancers, self-employed workers or individuals with other types of income, such as investments, savings or pensions fall in the self assessment tax category.

Who needs to file Self Assessment Tax Return?

The rules suggest that any individual who receives income that isn’t taxed has to fill the self assessment tax. However, any income only from pension or other allowances don’t fall in this category.

The following fall under the self assessment tax category:

  • Business Owners/Partner
  • Freelancers
  • Self Employed Workers
  • Income from tips & commissions
  • Sole Trader with Income more than £1000
  • Company Directors
  • Savings/Investment Income more than £10,000
  • Income from dividends
  • Income from other countries
  • Any untaxed income over £2500

How to file Self Assessment Tax?

Depending on your ease and convenience, you can submit your tax online or through paper tax returns and send it using postal services. However, some tax categories don’t have the liberty to submit their taxes online, and they have to send taxes through paper tax returns only. You can visit the UK Government’s official website for more information.

Documents required for Self Assessment Tax

You need to get all your papers updated with correct information while filing your self assessment tax. These may include:

  • P60 from your employer with your income details and already paid taxes if any
  • P45 if you have left your job
  • P11D or P9D showing any benefits and expenses
  • Summary of any rental income or expenses
  • Detailed statement of income from your Saving interests, Investment or Dividends
  • Details of any other self employment income and related documents

What are the deadlines?

It must be noted that the last tax year started on 6 April 2017 and ended on 5 April 2018.

  • Registration: 5th October
  • Paper Tax Returns: Midnight 31st October
  • Online Tax Returns: Midnight 31st January
  • Payment of Tax Bills: Midnight 31st January

If you want HMRC to collect your taxes you owe from your income from wages or pension, the online return must be submitted by 30th December. Also, if you’re a trustee of any non-resident company or pension scheme, the paper tax return must reach by 31st January as an online return is not applicable to them.

Penalty for non-payment of taxes

We won’t advise you to delay your self assessment tax and payments. However, if you miss the deadline to pay your tax bills, you will be charged a penalty of £100. And if the delay is of more than three months, you’ll be charged an extra of £10 a day up to £900.

How to get help?

Filing a self assessment tax can be a very painful tax if you’re not prepared, organised and aware of the taxation laws. Therefore, it is always suggested to hire an expert for your self assessment and accounting needs. We can help you at every step of calculating, computing and filing your self assessment tax. We ensure that you don’t miss any deadline and end up paying penalties. Call us at +44(0)2035002646 to know how we’ll help you.

About the Author:

Nik Patel , A specialist accountant and tax adviser for freelancers, contractors and small businesses. Expert in business growth and development strategies. A renowned tax expert for owner managed businesses and contractors.