Self-Assessment Tax Return – Guide
A self-assessment tax return is known as the SA100 and is the main tax return the HMRC uses to collect tax from individuals, and should be used to file tax for income, capital gains, interest, pensions, annuities, charitable giving and to claim tax reliefs and allowances.
This tax return allows the HMRC to collect tax from taxable income from those where it does not apply through the more widely used methods – that of deductions from salary. It mainly applies to people who are self-employed but also covers a range of income streams, which do not fall under the salary method. You need to send a self-assessment tax return, if in the last year; you qualify under one of the following criteria:
- You are self employed
- Your income was over £100000
- You made £2500 in untaxed income from other methods – the most common being rented property or investments
- You made profits from selling shares, a second home or assets that may be liable to Capital Gains Tax
- You were a company director
- You or your partner made over £50000 and you claim Child Benefits
- You received income from abroad that you will need to pay tax on
- You live abroad and have a UK income
- You were a trustee of a trust or registered pension scheme
- You received dividends from shares and you’re a higher rate taxpayer
If you’re new to self-assessment, you’ll need to register with HMRC and you can do this online at their website. You will need to do this by the 5th of October following the end of the tax year you need to send a return for – the tax year being the 6th of April to the 5th of April the following year. You should leave yourself enough time for the registration process, which can normally take up to 4 weeks, and to subsequently fill in and return your form by the HMRC deadline, which is the 31st of October for paper returns or the 31st of January to complete the online return through the HMRC service on the Gov.UK website.
When you register, you’ll be given an activation code by HMRC, which will allow you to set up an online account and make you eligible to complete an online return. There are slight variations depending on whether you register as a Sole Trader or a Partner – or other. Once registered, you must fill out the return and send it to HMRC either by paper copy or via the online service on the HMRC website by the deadlines applicable to the form of submission. You can of course get professional assistance for this from an accountant.
As mentioned, the deadline for a paper submission is the 31st of October and for an online submission it is the 31st of January. You can of course fill out an online submission if you miss the paper deadline. The initial penalty for a late submission is £100. Additional penalties for late submission occur the longer a submission is left outstanding, accumulating £10 a day for the first 90 days, and a subsequent £300 or 5% of the tax due at both the 6 month and 12 month thresholds. So the longer you leave a submission outstanding, the more you will have to pay, and if left, the bill to the taxman can be potentially significant. HMRC does have a small set of acceptable reasons for a late submission where they will waive the penalty – such as a fire or the death of a partner, for example – and these are judged on an individual case by case method if one was to appeal against a penalty.
Ways to File
Completing a tax return and filing it to HMRC can seem like a daunting task, especially if you are new to the process, but there are many ways in which this can be made easier. The first and easiest way to do this is to pass the process on to an accredited accountant. While you will obviously have to pay for this, passing it on is clearly the easiest option. If that seems like an unnecessary cost, then filing online has many advantages to filing a paper copy. It’s quick, easy, and secure, you’ll have an extra 3 months to complete the return and file it to HMRC, and you don’t have to complete it all at once as you can save your details and return to it later. This is especially handy if, mid-form, you realise you have the incorrect data at your disposal or need to dig out an old bank statement. The online process also has notes and help to-hand, onscreen, to guide you through the process. If you do decide to file a paper return, you can download both the form itself and notes to help you complete the form from the Gov.uk HMRC website.
Before You Begin
Before you begin to start completing your tax return you will need some documents. If you’re employed you will need a P60 ‘End of Year Certificate, a P11D ‘Expenses or benefits’ or P45 ‘Details of Employee Leaving Work’ documents, and your ‘PAYE Coding Notice’. All of the applicable documents should be provided by or be attainable from your employer. If you work for yourself you will need your profit and loss account or your business records, as well as your bank statements, building society passbook, dividend counterfoils or investment brokers’ schedules. Also, your personal pension contributions certificates.
The return itself is relatively easy if you follow the online notes – if online – or the downloadable guide – if on paper. You will initially have to fill in the usual identification information such as your name, address, NINO, D.O.B and your unique UTR number which you will receive from the HMRC when you register. The second page will ask you what supplementary pages you will have to fill out by inquiring which ones you require under the headings ‘Employment’, ‘Self-employment’, ‘UK Property’, etc. These are attributed to you online or you must request them if you tick ‘yes’ to any of the sections specified.
The Income section deals with interest and dividends from UK banks, building societies or companies; pensions and state benefits – not including Child Benefit for high income; Other Income – such as commissions, freelance income and casual earnings, or benefits from pre-owned assets; Tax Reliefs etc. This should be filled out as instructed by following the prompts and notes within the form. Organisation and judicious bookkeeping you will find, at this stage, speeds the whole process up considerably, as, although not difficult to calculate, the form asks for a variety of different variables to be input. Student Loan contributions and people who are high-earners (above £50000) who claim Child Benefits may want to pay particular attention. Minor queries can, of course, be ironed out by a professional accountant or by getting in touch with HMRC, and simple mistakes can be edited, or, if posted and sent, re-submitted with your tax recalculated for the period submitted for.
Finally, do not forget to pay what you owe. This to is to also be paid by the 31st of January,
There are instructions for how pay your Self Assessment tax bill on the Gov.Uk website.
If you need some more assistance or simply don’t have the time to do this yourself then why not see how we can help with your self-assessment and get in touch.