Self Assessment Tax Return guide

Introduction

This is the official HMRC Self Assessment tax return form (SA) guide for CAUK members and visitors.

This guide will help you understand when the deadline is, what you need to think about and what you have to do, when you complete your tax return.

Please note, the Self Assessment process is in place, for individuals who have unpaid tax over the course of the tax year. Through the SA system, and as part of filing a UK tax return, they can pay over any unpaid tax that is due on their overall taxable income.

The SA system is also now used to:

  • Make student loan repayments for those that are not employed full time.
  • Claw back Child Benefit paid to parents that earn over £50K per annum.

Who has to file a self assessment tax return

Please note, you will need to complete an SA tax return if:

  • you are a director in a company;
  • you are in self-employment;
  • as an individual, you receive income which is not taxed at sourced during the year, such as dividends, rental profits, foreign income;
  • as an individual, you may have reliefs that you can claim tax back on. Reliefs include personal pension payments, donations under Gift Aid and investments under Venture Capital Schemes (EIS, SEIS and SITR)

As part of completing your SA tax return form it is important that errors are not made. In addition, you may need to be aware of payments on account, if these may apply to you.

What is a Self Assessment tax return form -the process, in brief

Most contractors do not have a complex tax return. Therefore, what is an SA tax return and how can you complete this? The majority of contractors and small business owners will have a salary, dividends, and perhaps some personal bank interest. When this is the scenario, your return will not be too complicated. However, if you have other income such as rental profits, foreign income, investment income, Capital Gains Tax transactions etc your return will take longer to complete.

If you have a good contractor accountant, they will usually prepare your SA tax return for you. If they do this, they should also submit your return to HM Revenue & Customs (HMRC) on your behalf. However, it is your duty to make sure that you include all of your taxable income and any reliefs on your tax return.

To sum up, it is also up to you to:

  • make sure that all other details on your return are correct; and
  • you submit your return accurately to HMRC

How to register for a Self Assessment tax return

You will need to register for SA with HMRC before you can complete your tax return. If you are a director of your own company, your accountant will usually take care of this process.

Once you register, you will receive a Unique Taxpayer Reference (UTR). The reference is two sets of five digits. Please make sure that you keep this in a safe place.

Going forward, HMRC will send you a notice to complete a tax return through the post each year. You normally receive this in April or May, which is just after the tax year-end on 5 April. If you do not receive this notice, but you are under the SA system, or you should be under the SA system, you still need to complete your tax return.

Register to file your HMRC SA tax return form online

Today, most taxpayers file their SA tax returns online via the HMRC website. If you plan to do this yourself, you need to register for an online Personal Tax (Self Assessment) account with HMRC. As part of this process, HMRC will send you an activation code through the post. This code will go to your home address, and it normally arrives within seven working days. When you receive this, you need this to activate your account online with HMRC. After you have done this, you can then file your return online.

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

Completing your Self Assessment tax return online

The process   

How complex your tax return is, will depend on how complex your personal financial affairs are.

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

  • Your primary employment 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 will need a copy of the form P11D from your employer, if you were provided with any Benefits in Kind. If you have any benefits through your own company, your accountant should have sent a copy of form P11D to you in June or July.   * As an aside, if you have worked at several different employers in the past and have various pension schemes from former employers dotted around, something that you may be interested in is pension consolidation.
  • The pay and tax details that you receive from a second job. Or, the details of any income from previous employment. These details show on the end of year P60 form or final payslip in the tax year. If this is the first year that you are to complete Self Assessment, it could be your salary and tax show on your P45 form from your previous employer. You will have received A P45 form shortly after leaving your former employer.
  • Redundancy lump payment from a former employer.
  • Any amounts received under Employed Income Support and / or any Universal Credit.
  • The details of any income (and expenses) that you receive from Self-Employment.
  • Any details of income and expenses from any Partnerships.

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

  • Any income from investments, this includes pensions.
  • Dividend income. It will include dividends from your own company. It will also include any other dividends that you may have received.
  • If you are a landlord, the details for any property that you rent out, these details include the rental income and expenses.
  • Any interest that you receive on bank or building society accounts. This interest does not include any that you receive on ISAs.
  • Details of any Capital Gains transactions, including any claims for Entrepreneur’s Relief -a gain or loss on the sale of a second home, a business or other chargeable assets.
  • Child Benefit income -part or all of this will need to be paid back if you or your partner earned over £50,000.
  • Any payments to charities under Gift Aid -if you are claiming tax relief. Claiming for these will only affect your tax bill if your overall gross income is over £50,270.
  • Any payments that you have made personally to any personal pension schemes. You can claim for tax relief on these.

As part of your personal tax return preparation, and on an ongoing basis where appropriate, you could consider making use of the transfer of the marriage allowance. Please note, this is only beneficial in certain scenarios however you could benefit from this.

Submit your Self Assessment tax return   

When you complete your SA return yourself via the HMRC website, this will work out what tax you are due to pay, or what refund you are due.

Alternatively, if you are to submit a paper return, HMRC will usually send you a tax calculation through the post.

If you have an accountant, they will usually provide you with backup schedules for the tax return, as well as a copy of your completed return. They will also submit the tax return to HMRC on your behalf.

Including supplementary pages with your tax return

There are certain income items etc that are reported on supplementary pages that are attached to your tax return. These are reported separately as extra details are required to show the full picture (the tax return itself is limited to the number of boxes for each type of income). 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)

Other considerations   

Deadlines 

The HMRC Self Assessment deadline, when filing online with HMRC, is 31 January that follows the end of the tax year. This is also the date that you need to have paid your tax bill by.

Therefore, for the tax year ended 5 April 2022, the tax return deadline filing date, and tax payment due date, is 31 January 2023.

You can still fill in a paper return (SA100) by sending this through the post to HMRC. In this case, the Self Assessment tax return deadline to complete and file this by is 31 October 2022. Please note, in this scenario, this is also the date that you need to have paid your tax bill by.

If you are submitting tax returns or revised tax returns for past tax years, in some cases you may need to file this on a paper tax return by sending it through the post to HMRC as the online option is not available.

Payments on account 

As part of the personal tax system, you may also need to make what is called `Payments on account’ by 31 January and 31 July each year.

These are payments on account of the next year’s tax bill.

You will not need to make these if:

  • your last SA tax bill is less than £1,000; and
  • You have already paid more than 80% of the tax that you owe. For example, you have paid your tax through your tax code on your salary. Alternatively, your bank has already deducted interest on your savings.

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

Paying your tax bill   

With regards to payments, the above means that HMRC should receive any liability in their bank account, by the relevant date. When you make your payment, the reference that you quote is your UTR code with a capital `K’ at the end of this.

If you owe £3,000 or less, you are also able to ask HMRC to collect the tax you owe by adjusting your tax code. Please talk to your accountant if this is something that you would like to do.

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

Please note, there is a fee if you pay by corporate credit card or corporate debit card. The fee is not refundable.

There’s no fee if you pay by personal debit card.

You cannot pay by personal credit card.

Penalties 

If you miss the 31 October or 31 January deadlines, HMRC will automatically charge you a £100 penalty. This penalty is chargeable regardless of the reason why your return was delivered late.

The £100 penalty applies if you are up to three months late after the SA tax return deadline.

You also have until 28 February to pay your tax bill before a 5% penalty is chargeable on it.

Further to the above with regards to the tax return deadline, you have 90 days to file your tax return in after which point it will cost you £10 a day in fines (up to 90 days -£900).

There are further penalties every six months (£300) and twelve months (a further £300), if you are even later.

Furthermore, there are also penalties if you do not pay your tax bills on time. There is also interest too for late when you pay your tax late.

If you cannot pay your tax on time

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

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.

How to deregister for Self Assessment tax return

If you have been registered under the Self Assessment tax system and, in the future, there comes a time when you no longer need to be in the SA system, you will need to inform HMRC of this.

A simple phone call can resolve this. When you call, please tell them your SA reference or National Insurance number.

You will no longer need to be included in the system if all of your income is taxed at source (salaries) and you have no untaxed income (dividends, rental profits etc).

Final thoughts 

In this SA guide, we cover most aspects and it should give you a good insight into how the HMRC SA tax return form system works. If you need to send a tax return to HMRC, it is very important that you file this before the deadline, and, it is even better if you can file this earlier after the tax year end.

As you can see, SA is quite a complex area, and it is relatively easy to get lost if you are not sure. Hopefully, this guide has given you a good insight into SA. If you have any particular questions yourself, you should check these out with your accountant.

Link to Contractor Advice UK group on

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

Published On: March 14th, 2021 / Categories: First timer guide, Guides, Self-Assessment, Tax Guides /

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