Click here to
Get an instant quote

Self-assessment – a beginner’s guide

People who run their own businesses, whether as a company director or a self-employed individual, have to go through the self-assessment process each year, as do those who are trustees or who receive any foreign income. Most people who are employed ordinarily have all of their tax sorted out through their tax code and do not need to undergo self-assessment but for some with more complicated tax affairs, it may be necessary to complete a tax return. If in doubt, it is simple to contact HMRC and ask whether self-assessment is required for a specific individual.

What does the self-assessment process involve?

Self-assessment involves filling in a tax return every year. Those who are self-employed or run businesses need to register with HM Revenue and Customs when they set up initially and receive a special number known as a Unique Tax Reference, or UTR. HMRC will then send an annual notice informing the individual that a tax return is required. This letter is normally received around the beginning of the new tax year, in April or slightly later, and the individual can then choose to fill in a paper tax return or to complete the return form online.

Deadlines differ according to the method used

When filling the form in online, there is a longer deadline than for those who choose to complete a paper return. Paper tax returns generally need to be completed and received by the October 31, with the deadline fixed at midnight, while online versions are required to be filed by midnight on January 31, extending the deadline by three months and taking it into the next calendar year. There are penalties for those who fail to meet the deadlines, with an initial late payment fine of £100 and further fines and interest charges possible if an individual continues to delay completing the return.

Completing a paper tax return is extremely straightforward, with plenty of helpful notes included on the form, further information available online and a telephone helpline in addition. Filing returns online is also easy but requires registration with HMRC Online Services. Certain types of tax return, such as partnership tax returns, require the use of commercial software to complete but generally, the free online service for self assessment provided by HMRC will be all that is needed. One advantage of completing returns online is that any tax owed is calculated there and then, rather than waiting for a letter as with paper returns.

What happens after self-assessment is completed?

After completing the self-assessment process, a tax bill will be received if anything is owed. The amount that is owed must be paid to HMRC before the official deadline, which is usually the same as the final date for filing online returns. There are many different ways of paying a tax bill, including online options using a credit or debit card. Direct debits are also possible, and the money can also be paid through the Post Office, banks, by post or through an individual’s PAYE tax code.

Posted by Louise
September 27, 2013

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URL

Leave a comment