Last editedFeb 20222 min read
If you’re self-employed or you have a source of income that isn’t from your salary, savings, or pension, you’ll probably need to familiarise yourself with Self Assessment tax. But what is Self Assessment tax, who needs to pay it, and what does it entail? While Self Assessment may seem complicated, it’s much easier than it looks. Learn more about Self Assessment tax returns, right here.e
What is a Self Assessment tax return?
Self Assessment is the system used by the HM Revenue and Customs (HMRC) to collect income tax. Usually, income tax is deducted automatically from your wages, savings, or pension, but in cases where people or businesses have income from other sources, you’ll need to send a Self Assessment tax return so that HMRC can calculate the amount of tax that you need to pay.
Who needs to fill in a Self Assessment tax return?
You’ll need to send a Self Assessment tax return if – during the last tax year – you were self-employed as a sole trader (and earned over £1,000) or you were a partner in a business partnership. However, it’s not just self-employed people who need to file a Self Assessment tax return. You may also need to send a return if you have other sources of income, including:
Money from renting properties
Tips and commissions
Income from investments, dividends, and savings
Furthermore, you may need to file a Self Assessment tax return if you want to claim Income Tax relief, prove that you’re self employed (this may be necessary to claim Maternity Allowance and so forth), or receive Child Benefit.
How do you register for Self Assessment tax?
If you haven’t submitted a Self Assessment tax return before, you’ll need to register. Depending on whether you’re a sole trader/self-employed, registering a partnership, or not self-employed, there are a couple of different methods you’ll need to use to register. To find out more about exactly what course of action you need to take, see the government’s guidelines on the subject.
How do you make a Self Assessment tax return?
After you register for Self Assessment tax, you can send your return. You can do this online, using commercial software, or on paper forms. It’s worth noting that you must use commercial software or paper forms to send returns for a partnership, trust and estate, if you lived abroad (as a non-resident), if you’re a religious minister, if you receive income from a trust, if you’re a Lloyd’s underwriter, or if you’re reporting profits made from selling/disposing of multiple assets.
How do you make a Self Assessment tax payment?
Once the return has been sent, it’s time to make your Self Assessment tax payment. There are a wide range of ways to make payment, including:
Debit/credit card online payment
At a bank or building society
Cheque via post
When is the Self Assessment tax return deadline?
Self Assessment tax return deadlines vary from year to year. For the 2019-2020 tax year, the deadlines are as follows (but remember, if you’re filing Self Assessment tax for a different year, be sure to check the updated deadlines on the government’s website):
Register for Self Assessment tax – 5 October 2020
File paper Self Assessment tax return – Midnight 31 October 2020
File Self Assessment tax return online – Midnight 31 January 2021
Make Self Assessment tax return payment – Midnight 31 January 2021
If you make your Self Assessment tax return payment too late, you may face a penalty. For example, if your return is up to three months late, you’ll get a £100 fine. However, if it’s later than that, your fine will be steeper, so it pays to ensure your tax is filed on time, in advance of the Self Assessment tax return deadline.
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