Self-Assessment is way certain taxpayers need to report their income and pay tax to HMRC. Most employees will not be required to do a self-assessment because their tax is deducted under Pay As You Earn (PAYE). However, if you receive other income, have employment expenses or benefits, you may need to report under self-assessment.
If you are self-employed you will need to be within the self-assessment regime, complete a tax return and pay your tax. You can submit an electronic return or a paper return.
The tax return deadlines are:
You need to register by: 5th October
Paper tax returns need to be submitted (received) by: Midnight 31st October
Online tax returns need to be submitted by: Midnight 31st January
You need to pay your tax by: Midnight 31st January
These deadlines apply to your taxes for the previous tax year, for example 31st January 2021 is the deadline to submit your 2019/20 tax return: The tax year runs from 6 April to 5 April.
The following people are likely to have to submit returns:
- Self-employed persons
- Company directors
- Those earning more than £100,000 a year
- Those with savings or investment income greater than £10,000 before tax
- Those receiving overseas income
- A higher earner (>£50,000) claiming child benefit
- Those earning £2,500 or more in untaxed income
There is a £100 automatic penalty for late submission or payment.
If submission is more than three months late, you could be charged an extra £10 a day up to a maximum of £900.
If submission is more than 6 months late you could be charged a penalty of the greater of 5% of the tax liability or £300.
If submission is more than 12 months late you could be charged a behaviour-based penalty, the maximum of which is 100% of the tax liability of the income is UK-source.
There is a similar penalty regime for late payment of tax where interest will be charged. Penalties can also be applied where returns contain inaccuracies which lead to an underpayment of tax.
If you have not previously made an online tax return, you will need to register with gov.uk first in order to be provided with a unique taxpayer reference (UTR), which can take up to 20 days.
How you register depends on whether you are:
- Employed and earning over £100,000
- Self-employed / sole trader
- A partner in a partnership
You will need to download and submit form SA100. You will need to complete your return and send it to HMRC to arrive before 31 October.
The information you need to complete your return will depend on whether you are self-employed, a partner, a property investor, hold investments (i.e. stock and shares) or receiving earnings and benefits from employment.
The basic information you will need to gather includes:
- Accounts from your sole trade
- Partnership accounts and/or details of taxable partnership income
- A P60 (providing details of annual income) from your employer
- If you have left employment, a P45 (providing details of income within the tax year)
- Employer details of benefits which are provided on forms P11D or P9D
- Accounts for rental income and expenses
- Details of investment income – dividends, interest etc.
You must pay your tax by 31 January following the end of the tax year. There are a number of payment methods which can be found on HMRC’s website. In all cases you will need your unique taxpayer reference (UTR) to ensure payment is allocated to the correct account.