Before we get into any details, you must be wondering what self-assessment tax is. That is if you don’t know it already. It is a way through which you report your income & paying tax to the revenue and customs department. Those who are employed don’t have to worry about it, as their wages deduct it. So, it isn’t an issue for them. But those who are working for themselves, have to pay this personal tax by filing a complete tax return. Most of the self-employed people start freaking out at that time of the year, but it isn’t that big of a deal if you understand it completely.
Let’s start with the ways through which you can submit the self-assessment tax return. There are two ways; by post or online. Choose whichever method that is to your ease and go ahead with it.
Who Needs To File Self-Assessment Tax?
The following people are eligible to file a self-assessment tax:
– Earning more than £100,000 a year
– Company founders and directors
– £2,500 or more in untaxed income
– Receiving income from a foreign land
– Making over £50,000 with a child benefit claim
If you are among one of these, then you are eligible to pay the personal tax. If you received the form through the post, then proceed by completing and submitting it. Otherwise, you can quickly get the online version from the government’s website. Be sure that you submit before the deadline. Those who do not submit their self-assessment before the government’s mentioned date have to pay a substantial penalty. What’s more, is that those who exceed the three-month limit, are charged per day, and you can already assume the amount charged will then be hefty.
How To Submit?
If you don’t send an online tax return, you will have to register yourself first. There are various ways and categories through which you can register. You should be among one of the mentioned categories:
– Self Employed
– Sole Trader
– In A Partnership
– Earn over £100,000 (not self-employed)
When you are registered, you can submit your form to the government’s relevant taxation department. You must have all your proper paperwork, as required before you submit. Though the documents required are mentioned, but some of the required forms include:
– A P60 from your employer showing your total income and the tax paid. It is for only those who are employed
– A P45 for those who have left a job the same tax year
– Summary of your expenses and additional income
– Statement of your investments and savings showing the interest you have earned
– Documents supporting your self-employment status; including income, bank accounts, reports and receipts
All of these documents and the necessary documents of the year, as prescribed by the relevant department have to be submitted together. Don’t worry, it isn’t a gruelling process, and it will be easy if you have everything sorted. Having an accountant to help you will always be a wise decision.
Shoaib Aslam is the co-founder of Pearl Chartered Accountants, a UK-based chartered accountancy firm that has multiple locations across London. They are experts in helping startups and established businesses with all aspects of growth, strategy, scaling up, accounting and tax planning. Connect with him on LinkedIn, Twitter, Facebook or Instagram.