Self Assessment Tax
Self Assessment Tax
George Bull (Head of Tax, Baker Tilly) gives expert video advice on: What is self-assessment tax?; Who does self assessment apply to?; How do I assess my own tax? and more...
What is self-assessment tax?
Earlier the country of Britain was called as a 'Nation of Shopkeepers', but now it is called as a 'Nation of Tax Collectors'. If an individual has to make a tax return to the England revenue department then he has to fill in all the figures and assess his own tax liability. If you get to the England Revenue Department before the 30th of September and provide your tax information, they will calculate the correct amount of tax to be paid by you. However, after that date the individual himself has got to complete the tax return as well as self assess the tax that should be paid by him.
Who does self assessment apply to?
Self-assessment apply to anybody who is self employed, anybody who receives property or investment income, and is a high rate tax payer. It might also apply to employed people who have more than one job, so the pay as you earn (PAYE) system means they don't actually pay the correct amount of tax by weekly or monthly throughout the year.
What forms do I need to fill in?
When you're starting an employment, you need to give enough information to your employer for them to get the right code number from HM Revenue and Customs, and from the Tax Office. If you're beginning in self-employment, you need to approach the Tax Office quite quickly after you've started and ask for form CT41G. That's a very important form. It helps HM Revenue and Customs register you for income tax on your self-employed income, for National Insurance, and also perhaps for Value Added Tax if your turnover is going to exceed the VAT registration threshold.
What is a Tax Return?
A tax return returns is the form published by the HM revenue and customs, which people have to complete, to tell the tax man about all their income and gains, all the allowances and reliefs they are entitled to. If they file it online or in paper form by 30 September, then the tax man will work out how much tax is due. After that date, the return has to be filed with a computation of the tax payable, and that must reach the tax man by the 31 January, after the tax year.
What deadlines do I need to be aware of?
The first deadline to remember is April 5th. That's the day on which the UK tax year ends. So, the UK tax year runs from the sixth of April to the fifth of April in the following year. Working through the calculation of liability, the next date to watch out for is September 30th. That's the date by which tax returns have to be filed with the revenue; electronically or in paper format. If you want the inland revenue to work out the tax figures for you, the next date after that is January 31st, which is after the end of the tax year. That's the absolute latest date for getting your tax return into the tax man, and if you leave it that late, then you have to calculate your own tax figures as well. There are two other very important dates. They are July 31st and, again January 31st. These matter because they are the dates on which you pay tax. On the thirty-first of July, you pay, if you're self-employed, an estimate of your liability for the year, and on the thirty-first of January, you pay any catch-up payment that you need to make to account for all your tax for a particular year.
Are deadlines flexible at all?
No, they're not. The dates of the tax year are fixed, the payment dates are fixed and the tax return filing deadlines are fixed. If you miss a tax payment, HM Revenue and Customs will charge interest on late paid tax. If you miss a tax return filing deadline, they will charge you a penalty.
What penalties might I be culpable for?
There are two sorts of penalties. The most common flat rate or fixed penalties for late filing of returns, is typically 100 pounds. If HM revenue and customs think that you have deliberately completed your tax return incorrectly and they charge you extra tax as a result of that, they may also charge you a tax related penalty, a percentage of the extra tax which you had to pay.
Can I fill in my Tax Return online?
You can fill in your Tax Return online by going to: www.hmrc.gov.uk. That will take you through to the electronic part of the site, where there are instructions on what to do.
Do I need an accountant?
You don't need an accountant for self assessment tax. The way the tax return has been designed is intended to make it as easy as possible for anybody to complete. Having said that, the British tax system is extremely complicated and people's affairs may not be simple. Taking those two together, a large number of people find it helpful to instruct a tax accountant to help them complete their tax return each year.
Is there anywhere else I can go for help filling in my self assessment tax form?
The Revenue and Customs Guidance Notes available on the Internet, or in paper form, provide people with a lot of guidance in filling in your self-assessment tax form. Some trade and professional bodies will also provide help to their members in completing tax returns. If you receive income from trusts, from bank accounts, and various other sources, you will get a certificate from those organizations showing you how much to put on your tax return. You can, of course, instruct a tax accountant to help you complete the tax return as well.