If you receive income that doesn’t have tax automatically deducted then you are required to submit a self-assessment tax return each year.
Some common examples of income that is required to be declared on a self-assessment tax return are listed below:
As well as declaring your income, there are countless reliefs available to reduce your overall liability. Because of this, we strongly recommend using an experienced accountant, as the cost of using one will typically be a fraction of the amount of tax saved.
It is your responsibility to register for self-assessment once you start receiving any relevant income. Once registered for self-assessment, you will be required to submit a tax return each year, unless if you notify HMRC that you are no longer receiving any relevant income.
Payments on Account
If you submit a self-assessment tax return and less than 80% of your overall income is taxed through PAYE then you are required to make payments on account towards your expected self-assessment tax liability. This payment on account system can create cash flow issues, particularly in the case of first year self-assessments or in situations where self-assessment earnings are expected to decrease. It is though possible to reduce, or even eliminate completely, your payments on account towards future returns. However, if this results in you underpaying tax as a result, then HMRC can charge interest and penalties.
Below are the key dates to be aware of for all things self-assessment:
Return Period: 6th April to following 5th April
Return Due Date: 31st January following the return period for online returns and 31st October following the return period for paper returns
Payment Date: 31st January following the return period
Payment on Account Dates: 31st January and 31st July
The self-assessment system creates a level of flexibility that isn’t present under PAYE and as a result there is scope for tax planning based on individual circumstances.
If you would like a member of the team to get started on preparing your self-assessment tax return, then please click here.
Alternatively, to find out more you can get in touch with a member of the SAS team to discuss how we can help.
Phone: 0333 202 6441