Contractor Self Assessment Tax Return guide

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Introduction -contractor Self Assessment tax return guide 

This is our official HMRC Self Assessment tax return form (SA) guide for website members and visitors. Indeed, many of our website members are UK contractors and small business owners. Within this SA tax return guide for contracting professionals, there’s some excellent tax return advice (SA). We’ll go over the SA return in fine detail and explain how to fill this in. Basically, this’ll assist you when you complete your contractor Self Assessment (HMRC), if you submit your SA return yourself. Furthermore, our UK tax Self Assessment guide will help you understand the deadline for filing your tax return with HM Revenue & Customs (HMRC). In addition, it’ll explain what else you need to consider under SA and what to do when completing your contractor tax return.

The Self Assessment process is in place for UK residents who have underpaid tax over the tax year. Through the SA system, and as part of filing a UK tax return, they’ll pay over any outstanding tax due on their overall taxable income.

The SA system is also now used to:

  • Make student loan repayments for those that aren’t in full-time employment.
  • Clawback Child Benefit paid to parents who earn over £50K per annum.

In our UK HMRC Self Assessment guide, we’ll research what is HMRC SA and who does a Self Assessment tax return. We’ll take a detailed look into how to complete a tax return for contractors. Also, we’ll consider what to report on your contractor tax form to HMRC, the tax return deadline (UK) and how to pay your Self Assessment bill. Besides explaining how to register and file for Self Assessment, there’s also plenty of good contractor tax advice and Self Assessment tax advice, in terms of SA reporting to HMRC.

Initial thoughts 

SA tax return guide -who must file an SA tax return each year?

As part of this SA tax return guide for UK contracting professionals, let’s now consider who has to do a Self Assessment tax return? Most importantly, you must complete an SA tax return if:

  • You’re a director in a company.
  • You’re in self-employment.
  • As an individual, you receive income which isn’t taxed at source during the year. This includes dividends, rental profits, and foreign income.
  • As an individual, you have reliefs on which you can claim tax back. Tax reliefs include personal pension payments. In addition, they include donations under Gift Aid and investments under Venture Capital Schemes (EIS, SEIS, and SITR).

When you complete your SA tax return form, you should ensure that you don’t make SA errors. In addition, as part of your contractor SA tax return, you may need to be aware of how to make a contractor payment on account (POA).

What is an SA tax return form -the process, in brief   

Most limited company contractors don’t have a complex HMRC tax return. Therefore, what’s a contractor SA tax return? Furthermore, how do you complete your Self Assessment (HMRC)? Basically, most professionals with their own contractor limited company and small business owners have a salary, dividends, and perhaps some personal bank interest. When this is the scenario, your contractor tax filing isn’t too complex. However, your contractor tax return will take longer to complete if you have other income. Indeed, additional income could include rental profits, foreign income, investment income, Capital Gains Tax transactions, etc. This SA overview page from HMRC is very useful for an overall view of how the SA system works.

If you have a good contractor accountant, they’ll usually prepare your contractor SA tax return for you and provide any relevant tax return advice. If they do this, they should also submit your return to HM Revenue & Customs (HMRC) on your behalf. However, you must include all your taxable income and any reliefs on your contractor tax return.

To sum up, it’s good tax return advice in respect of your contractor SA return and up to you to:

  • Ensure that all other details on your tax return are correct; and
  • You submit your return accurately to HMRC.

Other initial thoughts

How to register for a Self Assessment tax return

In this HMRC tax return guide, it’s key to be aware you must register for SA with HMRC before you complete your contractor tax return. If you’re a director of your own company, your accountant will usually take care of this process. What’s more, they’ll provide advice on your tax return when needed. Once you register, you’ll receive a Unique Taxpayer Reference (UTR). The reference is two sets of five digits. Please make sure you keep this in a safe place.

In the future, HMRC will send you a notice to complete a HMRC tax return through the post each year. You usually receive this in April or May, just after the tax year-end on 5 April. If you do not receive this notice but are under the SA system or should be under the SA system, you still need to complete your contractor Self Assessment UK tax return.

Register to file your HMRC SA tax return form online

As a UK taxpayer, you must register for SA with HMRC once you know you need to file a HMRC SA tax return form. We now highlight as part of this Self Assessment tax guide, that most taxpayers file their SA tax returns online via the HMRC website. However, due to certain complexities most business owners and contractors pay their accountant to prepare and file their online tax return. Therefore, if you plan complete SA yourself, you must register for an online Personal Tax (Self Assessment) account with HMRC. When you register, you must provide your email address and choose a password.

As part of this process, HMRC send you an activation code through the post. This code goes to your home address and will typically arrive within seven working days. You must activate your account online with HMRC when you receive this. After you have done this, you can then use your HMRC SA login to access your online account with them and file your return online.

A paper tax return can also be completed and posted to HMRC. However, as mentioned earlier, most people file their tax return online nowadays.

Tax return (contractor) -complete your UK contractor Self Assessment tax return online

How to complete Self Assessment tax return (UK) 

Let’s now consider how to do Self Assessment tax (UK) and how to file your return with HMRC. As part of this HMRC Self Assessment tax return guide, it’s important to be aware that the more sources of income you have will determine how complicated your personal financial tax affairs are.

When you complete your SA tax return, there’s various sections to fill in:

  • Your gross salary from your primary employment. This section requires your gross salary and tax as shown on form P60. If you have your own business and pay yourself a salary, your accountant should have sent form P60 to you. Also, you’ll need a copy of the form P11D from your employer if you were provided with any Benefits in Kind. If you have your own company and receive benefits, your accountant should have sent a copy of form P11D to you in June or July.
  • The pay and tax details that you receive from a second job. Or the details of any income from previous employment. Basically, these details show on the end-of-year P60 form, P45 form or the final payslip for that employment. In addition, if this is the first year you’re due to complete Self Assessment (HMRC), you’ll need your salary and tax shown on your P45 form from your previous employer. You’ll have received a P45 form shortly after leaving your former employer.
  • Redundancy lump payment from a former employer.

Further items that may go on to your HMRC SA tax return 

  • You may ask is Universal Credit taxable on Self Assessment and the answer is yes. Indeed, you must report any amounts you receive under Employed Income Support and Universal Credit on your Self Assessment tax return. 
  • The details of any income (and expenses) you receive from Self-Employment.
  • Any details of income and expenses from any Partnerships. 
  • Any income from investments. This’ll include pensions.
  • Dividend income. It’ll include dividends from your own company. It’ll also include any other dividends which you may have received.
  • If you’re a landlord, the details for any property you rent out including the rental income and expenses.
  • Any interest that you receive on your bank or building society accounts. This interest doesn’t include any interest which you receive on ISAs.
  • Any foreign income.
  • Child Benefit income -part or all of this’ll need to be paid back if you or your partner earned over £50,000.
  • Any payments to charities under Gift Aid -if you claim tax relief. Claiming for these only affect your tax bill if your overall gross income is over £50,270.
  • Any payments you make personally to personal pension schemes. In addition, any employee pension payments via your salary where tax relief isn’t given at source. In both cases, you can claim additional tax relief on these.

SA tax return guide -including supplementary pages with your tax return

As part of this UK SA tax return guide, there’s some specific income or relief items that are reported on supplementary pages attached to your HMRC tax return. Indeed, these are reported separately as extra details are necessary (the tax return itself is limited to the number of boxes for each type of income). Therefore, these include:

  • Additional information (SA101).
  • Employment (SA102).
  • Self-employment (SA103S or SA103F).
  • Partnership (SA104S or SA104F).
  • UK property (SA105).
  • Foreign income or gains (SA106).
  • Trusts etc. (SA107).
  • Capital gains (SA108).

Tax rates

There are different tax rates in the UK depending on your level of income. Indeed, these are 20% up to £50,270, 40% between £50,271 and £150,000 and 45% above £150,000 in 2022/23. The 45% rate will apply to income over £125,140 in 2023/24.

Submit your contractor SA tax return 

File online

When you complete your SA return via the HMRC website using your own HMRC SA login, this’ll determine what tax you’re due to pay or what refund they owe you. Once you have filed, you can take a copy of your Self Assessment tax return for your own records. In terms of the HMRC Self Assessment processing time, once you’ve filed this, HMRC will update their systems within a couple of working days.

Where to post Self Assessment tax return?

Alternatively, if you want to submit a paper return, you can post it to:

Self Assessment

HM Revenue and Customs

BX9 1AS

If you have an accountant, they’ll provide advice regarding your tax return and answer any questions you have. In addition, they’ll also usually provide you with backup schedules for your contractor Self Assessment (HMRC) tax return and a copy of your final SA return. What’s more, they’ll also submit the tax return to HMRC on your behalf.

HMRC Short tax return

In some cases, you can complete a short tax return. HMRC’s advice here is the SA200 Short Tax Return is a more-simple version of the SA100 Main Tax Return. However, it should only be used if HMRC asks you to do this. 

Other considerations around filing UK contractor Self Assessment

Deadlines

When you file your SA return online, the UK HMRC Self Assessment tax return deadline is 31 January, after the end of the tax year. This is also the date you need to pay your tax bill. The annual tax bill is also known as the balancing payment, as this is the amount required to pay the balance of tax that you owe for the previous tax year.

Basically, for the tax year ending 5 April 2024, the tax return deadline (UK), and tax payment deadline is 31 January 2025. Likewise, for the tax year ending 5 April 2023, the deadline was 31 January 2024.

You can still fill in a paper return (SA100) by sending this through the post to HMRC. Basically, in this case, the deadline to complete and file your paper tax return is 31st October 2024. In addition, this is also the date you should have paid your tax bill.

If you submit tax returns or revised tax returns for past tax years, in some cases, you may need to file this on a paper tax return and send it through the post to HMRC, as the online option isn’t available. 

Payments on account

As part of this tax Self Assessment guide, it’s key to note that under the personal tax system, you may need to make `Payments on account’ (POA) by 31 January and 31 July each year. Furthermore, contractor POA are payments on account of the following year’s contractor Self Assessment UK tax bill. However, you won’t have to make payments on account if:

  • You’ve already paid more than 80% of your tax bill for the tax year. For example, you pay your tax through your tax code on your salary.
  • If the first option doesn’t apply, you’ll not need to make payments on account if your SA tax bill is less than £1,000.

Therefore, if you do not satisfy the above two conditions, you’ll be required to make payments on account of the following year’s tax bill.

UK contractor Self Assessment -paying your SA tax bill by the payment deadline   

As part of this guide on your tax return, please remember that SA is one of your limited company contractor taxes. However, this is a personal tax, rather than a company tax.

With regards to paying your tax bill, you should ensure HMRC receive any liability by the payment deadline. When you make your payment, the reference you quote is your UTR code with a capital `K’ at the end.

If you’re due a tax refund, HMRC will make the Self Assessment tax return repayment around two to three weeks after you have submitted your tax return to them. If you file your return after 30 December, HMRC will net this off your first payment on account for the following tax year if you’re due to make POA.

If you have a liability of £3,000 or less, you can ask HMRC to collect the tax you owe by adjusting your tax code. If you want to do this, the deadline for filing your tax return is 30 December. Please talk to your accountant if this is something that you’d like to do. 

As part of the tax return advice in this guide, the options available for paying your Self Assessment tax bill are:

  • Direct debit.
  • Approve a payment through your online bank account.
  • Make an online or telephone bank transfer (this is the most popular).
  • By debit or corporate credit card online.
  • At your bank or building society.
  • By cheque through the post.
  • Pay weekly or monthly.
  • Through your tax code.

There is a fee if you pay by corporate credit card or debit card. In addition, the fee isn’t refundable. However, there’s no fee if you pay by personal debit card. Furthermore, you can no longer pay by personal credit card.

Additional areas to consider 

Filing penalties 

There are various filing penalties in place if you miss the filing date or are late paying your SA tax. Basically, if you miss the 31 October or 31 January deadlines, HMRC automatically charge you a £100 penalty. Moreover, this penalty is chargeable regardless of why your return was delivered late. Furthermore, the £100 penalty applies if you’re up to three months late after the SA tax return deadline.

If you file after 28 February, there’ll be a 5% penalty on your actual tax bill. Further to the above, with regards to the first deadline, you have 90 days to file your tax return, after which it’ll cost you £10 a day in fines (up to 90 days -£900). In addition, there’s further penalties every six months (£300) and twelve months (a further £300) if you’re even later. Therefore, our tax return advice is to ensure that you file your return on time each year.

There are further penalties if you do not pay your tax bills to HMRC on time. In addition, there’s also interest when you pay your tax late. To sum up, this is a good guide from Ross Martin, which explains clearly how the penalties work for SA.

You cannot pay your contractor Self Assessment on time 

If you struggle to pay your personal tax bill on time, you should consider contacting HMRC and setting up a Time To Pay arrangement. Before speaking with them, you must think about a realistic plan. Generally, they’ll agree to a payment plan over 12 months; however, when this is put in place, you must ensure you stick to the plan to avoid further issues later.

If you need to speak to HMRC to set up a plan, you can use the Self Assessment payment helpline. The number is 0300 200 3822, and it’s open from Monday to Friday between 8am and 4pm.

Contact HMRC Self Assessment

HMRC -de-register Self Assessment -how to de-register for Self Assessment tax return

Let’s now consider how to deregister from Self Assessment. Basically, if you’ve been registered under the Self Assessment tax system, there’ll come a time in the future when you no longer need to be in the system. In general, you’ll no longer need to be within in the SA system if all your income is taxed at source (salaries) and you have no untaxed income (dividends, rental profits etc.).

If you no longer need to be in SA, you’ll need to know how to unregister for Self Assessment. The process to follow is contact HMRC Self Assessment and advise them of this and, after a few questions, they’ll de-register you from SA. A simple phone call to 0300 200 3310 can resolve this. They’re open from Monday to Friday between 8am and 6pm. When you call, please give them your SA tax reference or National Insurance number.

Contact HMRC with general SA enquiries 

As with the above section, you can contact HMRC for general tax return advice and general enquires on SA by calling 0300 200 3310. They’re open from Monday to Friday between 8am and 6pm. Once again, when you call, please give them your SA tax reference or National Insurance number. 

Final thoughts 

This SA tax return guide covers most aspects and should give you a good insight into how the HMRC SA tax return form system works. There is lots of useful UK HMRC Self Assessment tax return advice and if you need to send a tax return to HMRC, you must file this before the deadline. You only need to do your contractor Self Assessment accounting once per year, and it’s even better if you can file your SA return soon after the tax year-end. This way you’ll have knowledge that you’re up to date with your SA filing requirements and know that the task won’t reappear until the following year.

A further piece of advice is to open an online SA account with HMRC. As a result, you can log in with your HMRC SA login and keep an eye on your tax liabilities and any other SA areas.

As you can see, SA can be quite a complex area. Filing SA is part of your limited company contractor taxes and it’s relatively easy to get lost if you’re unsure. Hopefully, the tax return advice in this guide has given you a good insight into SA. Finally, if you’ve any questions or issues on SA, you should check these out with your accountant.

Link to Contractor Advice UK group on

LinkedIn    https://www.linkedin.com/groups/4660081/

Published On: January 4th, 2024 / Categories: First timer guide, Guides, Self-Assessment, Tax Guides /

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