Introduction to Self Assessment
Self assessment is a system used by HMRC to collect income tax from individuals who have earnings that are not subject to PAYE, such as the self-employed, company directors, and those with rental income. It requires taxpayers to report their income and claim any allowances or reliefs they are entitled to.
The self assessment process involves completing a tax return, which can be done online or by post, and paying any tax due by the relevant deadline. Failure to submit a tax return or pay tax on time can result in penalties, so it is essential to understand the process and deadlines.
Self Assessment Deadlines
The deadline for submitting a self assessment tax return is 31 January following the end of the tax year, which runs from 6 April to 5 April the following year. For example, the deadline for the 2022-2023 tax year is 31 January 2024.
It is also important to note that taxpayers can make payments on account towards their tax bill, which are due on 31 January and 31 July each year. These payments are based on the previous year's tax liability and can help to avoid a large tax bill at the end of the year.
Self Assessment Forms
The main self assessment form is the SA100, which is used to report income from all sources, including employment, self-employment, and investments. There are also supplementary forms, such as the SA102 for employment income and the SA103 for self-employment income.
Taxpayers can complete their tax return online using the HMRC website or by using software from a third-party provider. The online system will guide taxpayers through the process and help to ensure that all relevant information is included.
Self Assessment Penalties
Failure to submit a self assessment tax return on time can result in a penalty of £100, which will increase by £10 per day for up to 90 days. Further penalties can be imposed if the return is still not submitted after 6 months and 12 months.
In addition to penalties for late submission, taxpayers can also face penalties for late payment of tax. These penalties can be up to 5% of the unpaid tax, plus interest on the outstanding amount.
Self Assessment Tips and Advice
To avoid penalties and ensure that their tax return is accurate, taxpayers should keep accurate records of their income and expenses throughout the year. This can include receipts, invoices, and bank statements.
Taxpayers can also seek advice from a tax professional or accountant if they are unsure about any aspect of the self assessment process. This can help to ensure that their tax return is complete and accurate, and that they are taking advantage of all the reliefs and allowances they are entitled to.
Frequently Asked Questions
What is the deadline for submitting a self assessment tax return?
The deadline is 31 January following the end of the tax year, which runs from 6 April to 5 April the following year.
How do I complete a self assessment tax return?
You can complete your tax return online using the HMRC website or by using software from a third-party provider.
What are the penalties for late submission of a self assessment tax return?
The penalty is £100, which will increase by £10 per day for up to 90 days, and further penalties can be imposed after 6 months and 12 months.
Can I make payments on account towards my tax bill?
Yes, you can make payments on account, which are due on 31 January and 31 July each year, based on the previous year's tax liability.
Do I need to keep records for self assessment?
Yes, you should keep accurate records of your income and expenses throughout the year, including receipts, invoices, and bank statements.
Can I get help with my self assessment tax return?
Yes, you can seek advice from a tax professional or accountant if you are unsure about any aspect of the self assessment process.