Every year, on 31st January, those that are self-employed need to fill in their self-assessment tax return. This is the date by which you are required to deliver all of your information as part of your tax return. Missing this deadline will result in a hefty late payment penalty from HMRC.
Anybody that classes themselves as self-employed, a sole trader earning over £1,000 or a partner in a business partnership, needs to complete a self-assessment tax return.
We have pulled together a handy guide of everything you need to know when it comes to your self-assessment tax return and the best ways to avoid those late payment fines. Take a look below.
Signing up for an online account & registering for self-assessment
The first thing you will need to do if you have not already is to sign up for an online HMRC account and register for self-assessment. You will then be sent all of your login details, which you will need to keep to hand in order to log in and submit your return, as well as pay any outstanding tax on your account.
With the introduction of the Making Tax Digital Scheme, you will be able to use your accounting software in order to submit your self-assessment form. This will be a function that will start to be rolled out across a multitude of different accountancy platforms, but it is currently available on the more popular software such as Sage and Quickbooks.
Once you have sent your tax return, your tax will be calculated and you will receive a notice to pay your tax bill. You’ll be able to do this by logging in to your self-assessment account and checking your outstanding balance. You can then pay your bill with a credit or debit card.
Ensuring you are submitting your tax return correctly
Submitting your tax return is relatively simple, as long as you make sure you have the following to hand:
- Any charity donations
It also handy to have any other financial documents relating to your business on hand, just in case you find they are relevant when completing your return. These could be income from things not related to your business directly, such as property income.
If you use software to keep your accounts and everything is stored digitally, you’ll find this process a lot smoother to complete. If you have paper documents, it is still easy to do online but requires a bit more manual labour.
What happens if you miss the deadline?
There a few deadlines you need to keep an eye on throughout the financial year, with the 31st January deadline being one of the biggest.
If you miss any of your tax return or payment deadlines, you run the risk of hefty fines. If your tax return is up to 3 months late, you will receive a £100 fine on top of your tax bill. If you continue to miss payments, you will also be charged interest, increasing your outstanding balance even further.
It is best to get your tax return sorted a few weeks in advance of the deadline date. This ensures that if you have made any mistakes or if processing times are delayed, you’ll still reach the deadline with time to spare.
For more information around your self-assessment tax return, you can find guides and advice over on the HMRC website.
To take advantage of more of our business tips and advice, head over to our blog where you will find everything from a guide to hiring your first employee to how to choose the best opportunities for your business.
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