If you are self-employed, you will have to register for self-assessment. Under this system, you will complete an annual tax return that provides HM Revenue & Customs (HMRC) with your income and expenditure for the year. You will also calculate your own liability to tax.
Self-assessment has many relevant dates throughout the year, which must be adhered to. Some of these may be relevant to you, depending on your circumstances, but failure to meet the deadlines will result in penalties being charged.
The start of the tax year
The tax year begins on 6th April, and anyone who completes a paper tax return will receive a copy around this time. You may receive notification that you can print your own copy, along with relevant pages, from the HMRC website. If you file online, you will receive notification that your tax return is due.
Payments On Account (POA)
If you are self-employed and have an untaxed income above £1,000, you will be expected to pay POA. The payments are based on the previous year’s tax bill, or an estimate of the current year’s income. The yearly amount is split into two payments, with the first on 31st January and the second 31st July. If you have any tax due for the previous year, this will also have to be paid by the January deadline.
Registering with HMRC
If you are self-employed, you must have registered with HMRC by 5th October following the tax year of self-employment. This is so that you can be allocated a Unique Taxpayer Reference number and have a tax return issued to you. For instance, if you started self-employment on 1st December 2014, you must notify HMRC by 5th October 2015. If you have income that hasn’t been declared, or Capital Gains that exceed £11,100 for the year 2015-16, you must notify HMRC by 5th October.
Collecting levies through your tax code
If you owe less than £3,000 in tax, you may be able to have it collected through your PAYE tax code. Your self-assessment tax return has to be submitted before 30th December to do this.
Completion of tax returns
If you complete a paper copy of the return, you must submit the finished form before 31st October. If you miss this date, you can still fill out an online tax return, but this must be done by 31st January.
There are other dates during the tax year that may be relevant to you, so if you want to make sure that you avoid any late filing or payment penalties, contact us today.