This is the most asked question in the population when it comes to dealing with self-assessment tax returns. So, to answer this question, you need to figure out some things about yourself very clearly. First, the type of business you belong to, such as sole trading, partnership, joint venture, etc.
You must be aware of all your income sources, as you might have to complete a self-assessment tax return for any of your supplementary incomes. It may not be your primary source of income, and a very small per cent of your income comes from that source, yet it is essential to pay the tax on it.
If you mistakenly skip paying taxes and the HMRC comes to know about that, you may have to pay the penalty, which could be hard for your pocket. Don’t worry; we have discussed the eligibility for completing the self-assessment tax return in detail below.
Do I Have To Complete a Self Assessment Tax Return?
It is a basic rule that any person who received an income which has not been taxed at the source must file a self-assessment tax return.
For sole traders, the money that they make from that business cannot be taxed under the Income Tax or National Insurance Contributions. Hence, you need to register yourself for the self-assessment tax return and inform the HMRC about your income. the HMRC then calculate the tax you owe on your income so that you can clear it.
Not just sole traders, the people who hold shares and dividends of the private limited company also make huge money. The directors of private limited companies also need to file a self-assessment tax return to clear the taxes they owe to the HMRC.
Some other popular examples of income which cannot be taxed as a source include grandson charity, rental income that you receive from the properties that you own, income from overseas, income received from fixed deposits and so on.
You may check the list available on the official website of the UK Government to see whether you fall in any of the categories that come under the self-assessment tax return.
When do I need to fill in a Self Assessment?
You need to start preparing for the self-assessment tax return from the beginning of the year itself as you need to track all your income are made sure that you have the exact numbers and documents present with you. The deadlines for all the instalments at any advance payments are declared by HMRC at the beginning of the financial year itself.
A tax year typically runs from 6th April to 5th April. The deadline to file the Self-Assessment tax return is typically 31st January after the end of the tax year it applies to. It is not necessary that you have to wait for the last day. In case you are employed, you are allowed to file the Self-Assessment tax return as soon as you receive your Form P60 from your employer.
If you are running your own company, you are required to issue Form P60 from your PAYE system. You may even take help from an accountant if you get stuck anywhere.
What happens if I don’t file my Self Assessment in time?
In case you have not paid the taxes that you owe to the HMRC, you even failed to notify. You will have to pay the penalty or interest because of the delay in payment. You can contact the HMRC and enquire about your penalties with the help of your National Insurance Number. There can you significant penalties if you don’t make the payment post-registration.
So, now that you know what factors determine your eligibility for filing a self-assessment tax return or not. You prepare a list of all your income sources and see if any of those falls in the taxable category according to the HMRC guidelines. If yes, buckle up and start collecting the documents you will need to file a flawless self-assessment tax return or you can take help from 123Financials a certified accounting team.
Read the guidelines HMRC issued and ensure you are prepared for the tax season. HMRC even offers an option to pay in instalments and later if you run short on funds. The pay later option might come with some interest, but you need to inform the HMRC about it. If you don’t inform the HMRC that you are going to pay later, a penalty will be imposed.