Self-Assessment Tax Returns – the basics
Tax is usually deducted from wages and pensions (via PAYE). People and businesses with other income must report it in a self-assessment tax return – the system HMRC uses to collect income tax outside of PAYE.
The deadline for filing your self-assessment tax return online is 31st January or 3 months after the date on your HMRC notice to complete a tax return if that’s later.
Who needs to complete a self-assessment tax return?
If your accountant or HMRC haven’t already advised you that you need to complete a self-assessment tax return, and the reasons why, then here are some reasons why you may need to complete one:
- You are an employee but want to claim tax relief on expenses of more than £2,500 per year
- You let property or a room in your home and receive income from renting (above certain limits each year)
- You have taxable foreign income from overseas savings, investments, pensions, or employment
- You are self-employed and have an income of more than £1,000 per year
- You are an employee earning in excess of £100,000
- You are not a UK resident but receive property income in the UK
- You have income from savings and investments of more than £10,000
- You work in a business as a partner
- You or your partner receive child benefit and your income is over £50,000
There may be cases where none of the above applies to you and HMRC send you a letter stating you need to complete your self-assessment. If this is the case, your accountant can liaise with HMRC to understand why and in some cases update HMRC’s information if they believe you do not need to complete a self-assessment.
What is the deadline for completing a self-assessment tax return?
The deadline for submitting your self-assessment tax return is 31st January. This is the same each year.
If an accountant is completing your self-assessment tax return on your behalf, they likely start to request the information they need to complete your tax return several months in advance of the 31st January deadline.
We ask clients to get their records to us by 31st October to ensure we have plenty of time to work efficiently and work directly with clients on their personal tax situation ahead of the HMRC deadline.
In return for providing us with records by 31st October, we plant a tree in return (ask us about our Green Returns initiative).
What is needed to file a self-assessment tax return?
Securing the right documentation for submitting your tax return is key. Incorrect documents or mis-entering of information could have quite a big impact on any potential tax liabilities.
Here are some of the key documents required to file a self-assessment tax return:
- P60 – ‘End of Year Certificate’,
- P11D – ‘Expenses of Benefits’,
- P45 – ‘Details of employee leaving work’,
- P2 – ‘PAYE Coding Notice’
- Information about any redundancy or termination payments
- Certificates for any Taxed Award Schemes
- Any lump sum payments not included on your P60 or P45
- Employee Share Scheme or Share-Related Benefits records
- Benefits records
- Tax deduction certificates from the bank
- Building society passbooks
- Dividend counterfoils or investment brokers’ schedules
- Personal pension contributions certificates
If you work for yourself, you may need these additional documents:
- Your profit or loss account or your business records
- Your bank statements
What are the fines for late tax returns?
You’ll get a penalty if you need to submit a self-assessment tax return and you miss the deadline for submitting it or paying your bill.
Here are the 22/23 fines for late tax returns:
1 day late after deadline – £100 for one day after deadline
Up to 3 months late after deadline – £10 for each additional day (capped at 90 days), plus £100 initial fine – maximum of £1,000
6 months late after deadline – Either £300 or 5% of the tax due (whichever is higher), on top of the penalties above
12 months late after deadline – An additional £300 fine, or 5% of the tax due, plus the above penalties.
Fines for late payments – In addition to penalties for filing a tax return after the deadline, you may also receive a penalty for paying your tax bill after the deadline, plus interest on the outstanding amount.
30 days late after deadline – Charge equal to 5% of the tax outstanding
6 months late after deadline – A further 5%
12 months late after deadline – An additional 5%
Appealing a penalty – You can appeal against a penalty if you have a ‘reasonable excuse’ for filing a late return or a late payment.
These fines are subject to change so here is the link to HRMC self-assessment penalties and fines.
What happens if you miss the deadline but have a reason?
In HMRC’s terminology, if you have a “reasonable excuse” for not submitting your tax return or paying your bill you can appeal against any penalty.
Need help with your tax return?
Running a business is hard work but our team are on hand to support clients with all their tax and accounting needs. Book your free consultation, in person or on the phone, so we can understand your requirements a little more and you can find out more about BAS.