Who needs to file a self-assessment?
• You are self-employed and have earnt more than £1,000 this year
• You were a partner in a business partnership
• You earnt money from renting out a property
• You received income from savings, investments and dividends
If your unsure if you need to file a self-assessment, you can check here: HMRC SA Check
What is Self-Assessment?
Self-assessment is a system used to collect income tax from individuals, self-employed individuals, and businesses. It requires taxpayers to calculate and report their own income, gains, and liabilities, and then pay the appropriate amount of tax based on their calculations.
In the United Kingdom, for example, self-assessment is used by HM Revenue and Customs (HMRC) to collect income tax from individuals, self-employed individuals, and businesses. It is essential for taxpayers to be accurate and timely in their reporting and payment to avoid penalties and interest charges.
Self-assessment systems are used to ensure that taxpayers accurately report their financial information and meet their tax obligations. It places the onus on the taxpayer to be responsible for their tax affairs, and it is crucial to keep detailed records and understand the tax laws and regulations that apply to their specific circumstances.
Here’s a basic overview of self-assessment:
- Taxpayer Responsibility: Under self-assessment, taxpayers are responsible for determining their own tax liability, which includes assessing their income, expenses, and tax deductions.
- Tax Return: Taxpayers must complete and submit a tax return form to the relevant tax authority. This form provides a detailed breakdown of their financial situation, including sources of income, deductions, and any tax credits.
- Reporting Income: Taxpayers must report all sources of income, including employment income, self-employment income, rental income, dividends, interest, and any other earnings. They should also report any capital gains if applicable.
- Deductions and Allowances: Taxpayers can claim deductions, allowances, and tax reliefs they are entitled to in order to reduce their taxable income. These may include business expenses, charitable contributions, and other eligible deductions.
- Tax Calculation: Once the tax authority receives the tax return, they will calculate the taxpayer’s liability based on the reported information. The calculation takes into account tax rates, thresholds, and any applicable tax credits.
- Payment: Taxpayers are required to pay the calculated tax liability by the relevant deadline. This can typically be done online, through direct debit, or other accepted payment methods.
- Deadlines: Self-assessment tax returns typically have specific filing deadlines, often annually. Missing these deadlines can result in penalties and interest charges.
- Penalties: Non-compliance with self-assessment rules can lead to penalties, which vary depending on the extent of the non-compliance.
So, now you’ve discovered that you do need to file a self-assessment and haven’t yet registered. How do you do this? We’ve made it nice and easy for you, so you don’t need to go searching! Just Click here: How to register
Once you’ve registered, if you’re not sure what exactly is needed, we’ve put together a checklist for you.
If you need a helping hand, please get in touch and we will gladly help!
