Self-Assessment is the system that allows individuals to report their income, gains or losses to HM Revenue & Customs (HMRC) for a given tax year through a Tax Return.
The tax year runs from 6 April to 5 April of the following year.
Generally, you are required to complete a tax return if in a given tax year, you:
- were self-employed as a sole trader and earned more than £1,000 before expenses,
- were a partner in a partnership,
- had a total taxable income exceeding £150,000,
- paid capital gains tax, or disposed of an asset that increased in value,
- had income over £60,000 and you or your partner received child benefit
You may also need to send a tax return if you have any untaxed income from sources such as renting out a property, tips, commission, savings, investments, dividends, and foreign income or gains.
If you have not previously completed a tax return and are now required to do so, HMRC must be informed of this by 5 October following the end of the tax year in question in order to avoid unnecessary penalties.
The tax return online submission deadline is 31 January following the end of the tax year in question. If you also have a tax liability for the given tax year, you must settle the amount by the same deadline along with potential payments on account for the next tax year.
If your tax return is submitted late, you will be charged an initial £100 penalty. After being 3 months late, you would incur daily penalties of £10 for up to 90 days. When a tax return becomes 6 months or 12 months late, a penalty is charged on the greater of £300 or 5% of the tax liability.
If your tax liability is not settled by the deadline, HMRC will charge a penalty equal to 5% of the tax liability which remains outstanding at 30 days, 6 months and 12 months.
At Simmons Gainsford, we can advise you on whether you are required to complete a tax return. We can also assist you with notifying HMRC as well as preparing and submitting your tax return to HMRC.
Please do get in touch if you require assistance: 01825 746 888 / mail@sgllp.co.uk