A Self Assessment is a compulsory Tax Return issued by HMRC after the end of the financial year (5th April). This Return is a declaration of your earnings throughout the financial year. The Tax Return and any payment of tax and Class 4 NIC due has to be submitted to HMRC on or before 31 January each year. This time limit is for the online submission which we use. The 31 October deadline is for paper Returns.
When completed we will send the Return to you to confirm that it is complete and correct. In addition we will advise you of your liabilities to tax and NIC. Following receipt of your confirmation that the Return is complete and correct we will send the Return to HMRC online. HMRC will in turn send us confirmation that the Return has been received.
The Return and any payment of tax must be made on or before 31 January each year. Automatic penalties and interest will be charged for late payment. A 5% surcharge will apply if the payment is not received by 28 February. If the payment is still not received by 31 August another 5% surcharge will be due.
If HMRC send you a Return and you fail to send it back at some later stage they will issue a determination of the tax due. This is an estimate of the tax they think you owe. Only the submission of the Return can overturn the tax in charge.
HMRC have 12 months from the date of receipt of the Return to conduct an enquiry to check that the Return is complete and correct. Penalties of up to 100% of the tax lost are charged for the submission of incorrect Returns together with interest.
As a self-employed individual you have to pay Class 2 NIC of (currently) £3.00 a week; unless your profit for the year is below the Earnings Threshold. In such cases you can apply for exemption. Please ask us to send you the form to apply for exemption.
With effect from 6 April 2018 Class 2 NIC will be abolished and only the newly reformed Class 4 NIC will be due.
Who Needs To Do A Self Assessment?
- A Director of a Limited Company (although not in every case)
- A Self Employed individual
- A person working through the Construction Industry Scheme (CIS)
- A higher income earner (fall in the 40% tax band)
- Pensioners with complex tax affairs
- Individuals who receive income from land or property in the UK
- A Trustee or Personal Representative
- Non-resident landlord
Information Required to Complete Self Assessment
PAYE or Company Directors
- P45 – this contains details about your income and tax paid during a permanent position. If you leave your job during the tax year, your employer will issue you with the P45. You should keep part 1A of this form.
- P60 – this contains details about your income and tax. Your employer should give you this by 31 May after the end of the tax year (if you were in your job at 5 April).
- P11D – this contains details of certain reimbursed/taxable expenses and benefits in kind. Your employer should give you this by 6 July after the end of the tax year (if you were in your job at 5 April).
- If you have received dividends, copies of your dividend certificates or records of your net dividends received
- CIS Vouchers, payslips or a proof of income – the vouchers need to be originals as they are sent off to HMRC together with the Tax Return.
- Business expenses information, in order to calculate your tax liability. We can advise you on what business expenses and capital allowances that you can claim.
Land and Property Owners
- Bank Statements showing us how much rent is paid to you each month or a copy of your lease agreement.
- Expenses relating to your property rental. You will need to keep receipts for all your expenses in case HMRC request them. E.g. repairs done to the property, interest on your mortgage, legal and professional costs.