Do I need to do a Self Assessment Tax Return?
What is Self Assessment?
It is getting close to the time that you need to be sending your personal self assessment tax return to HM Revenue and Customs. The self assessment tax return form is something that everyone must do if they meet the following criteria
Are self employed
A company director
Have income to pay tax on such as property income or capital gains tax
Are a higher rate taxpayer earning over £100,000
It is a way to ensure that you pay the correct amount of tax on your income. The tax return will gather all of your income together into one document and calculate the total income that you have earned, the tax paid and the tax due. You will then receive a refund or pay any tax that is due.
If you fall into those groups and you are not currently submitting a tax return you should register for self assessment.
When is it due?
The dates for filing a self assessment are 31st of October if you are filing a paper tax return and the 31st of January if you are filing the tax return online.
If you are newly registered for self assessment you will be given three months from the date that you receive your unique tax reference also called a UTR to file your tax return and pay any income tax and national insurance that is due.
What do I have to do?
When it is time to submit your self assessment you will receive a reminder from HM Revenue and Customs and Pisces. When you receive this you need to provide us with the following details of
Your income earned during the year
Any Capital Gains you have made in the year
Any benefits that you receive
Any payments to a pension scheme or charitable contributions
Details of any student loan payments that you have made
We need this information to cover the last tax year running from the 6th of April to the 5th of April every year.
What are the current penalties?
There are penalties that you will pay if your tax return is late.
If your tax return is submitted after the deadline of the 31st of January you will get a £100 penalty.
If it is 3 months late a further penalty will be a £10 penalty per day up to a total of £900.
If it is 6 months late a further penalty of £300 or 5% of the tax owed will be charged if that is more.
If it is 12 months late a further penalty will be added 5% of the tax due or £300 if that is more.
If you pay your tax 30 days after the deadline you will be charged a 5% penalty.
If you are 3 months late paying the tax a further 5% of the balance outstanding will be added as a penalty to your bill.
If you are 12 months later a further 5% of the balance outstanding will be added as a penalty to your bill.
What are the penalties after April 2023?
HMRC has announced a new penalty regime for tax returns coming into effect for the tax year starting April 2023. This new system will be points based and will not charge any penalties until a points threshold is reached.
Your penalty threshold depends on how frequently you have to make submissions.
If it is annually it is two points.
Quarterly it is four points
Monthly it is five points.
These points will stay on your record until you make a number of submissions on time
Once you reach your threshold you will get a £200 fine and another £200 for every subsequent deadline that you miss.
This new system will aim to be fairer for taxpayers and will apply a light touch for penalties by HMRC.
How can Pisces help?
We can help you stay compliant with your tax return making sure that you file on time and advising you when you need to pay your taxes.
We will help you prepare your tax return and guide you on the ways that they can be tax efficient.
If you are not currently registered for self assessment we can help you register and advise you what you need to do for your first self assessment submission.
The time is running out for submitting the self assessment due at the end of January 2022. If you need help submitting this tax return please arrange a call and we can discuss how we can help.