Self Assessment season is here: What you need to know
It’s that time of year again: Self Assessments (SAs) are due at the end of the month. Across the land the self-employed and tax agents are busy preparing tax returns ahead of the deadline - or, if you've already submitted, you’re sitting back smugly.
If you’re facing your first SA season as a business owner, it can be a pretty daunting admin task to face. Don’t stress though - everyone else is in the same boat.
We’ve got the full rundown of what a Self Assessment is, when you need to do one and what you need for it.
What is a Self Assessment?
An SA form is how you report your earnings and expenses to HMRC if you’re self-employed, a business owner, a director of a limited company or a landlord. HMRC looks at the details of your self-employment, the income you’ve made and any expenses to work out how much tax you need to pay.
Once you’ve worked out how much tax you owe, you can pay either on HMRC’s online portal or by post. All SA tax bills are due by the 31st January of the following tax year - this can creep up though, so it’s best to stay well ahead of the deadline to avoid a last-minute scramble.
Who needs to do a Self Assessment?
There’s a fair amount of people that fall into the SA net. Anyone that counts themselves as self-employed will need to register for Self Assessment. If you’ve got a business or you’re a freelancer, chances are you’re already familiar with the SA process.
A less obvious one is someone earning over £100,000 in income could need to fill out an SA, though this depends on a few factors. Also, any additional income like money from dividends or a rental property is taxable, and you’ll need to complete an SA if you have either of these.
The rise of the side hustle in recent years has caught some people out when they earn over the £1,000 tax-free allowance. Side hustles are taxed like a normal business, so if you’re doing well in this area then you should sign up for Self Assessment to make sure you’re not caught out owing tax later down the line.
Are there any tax breaks for SA taxpayers?
It depends on the type of self-employed income you’re making. If you need to buy anything for your business, you could qualify for capital allowance or trading allowance. Business rates relief is available for those running a business from their own home, and if you need to drive to visit clients then you may be eligible for business mileage allowance.
Landlords can claim most of the running costs of a property as expenses. If you rent out a furnished room in your house, you could qualify for rent-a-room relief.
If you’re not sure whether you’re eligible for any tax breaks, you can always ask your tax agent to work this out for you. Get in touch if you want to hear more.
What are the timelines/deadlines?
If you’ve started up a business or another income stream, the deadline for registering for SA is the 5 October the following tax year.
Paper tax returns are due by the 31 October each year, whereas online tax returns are due the 31 January. You’ll also need to get the tax paid by 31 January. For example, if you were submitting an online tax return for the 21/22 tax year you’d need to file and pay your tax by 31 January 2023.
If you’re eligible for your taxes to be taken automatically from your wages and pension instead, you can submit an online tax return by 30 December. An example of this could be when you’re over the £1,000 tax-free earnings threshold, but not by much so spreading the tax payment evenly across the year makes more sense.
If you’re due a refund for any reason, there’s no deadline for claiming this back. Failing to meet these submission and payment deadlines can result in fines and interest charges - so get it done well in advance when possible!
What do I need to complete an SA?
If you’re starting from scratch, you’ll need to register for SA for the first time. You only need to do this once. Create a Government Gateway account on HMRC’s website and register for SA - after this, you’ll be given your Unique Taxpayer Reference (UTR) which you’ll need for your returns.
Once you’ve gotten the admin out of the way, you can focus on putting together your proof of income, outgoings and any expenses you want to claim back. From this you can work out how much tax you owe - don’t forget to account for any student loans or higher rate tax bands.
How do I pay my tax?
There’s plenty of options to pay your SA tax that’s due. The quickest way is to pay online through HMRC’s portal, where you can pay by debit card. You can also pay by bank account transfer, through a local Post Office or over the phone.
If you’re doing well in your business and you’ve got a couple of Self Assessment years behind you, HMRC will ask you to have ‘payments on account’. This is when you pay tax in advance to split up the lump sum into smaller payments and become less of a liability.
If you’ve been asked to pay in advance, it’s usually done in two lump sums throughout the year. The first payment will be due 31 July, and the second by 31 January. This often catches people out who are new to the world of Self Assessments; if you’re looking for advice, we can help you understand your tax requirements.
Helpful links
Here’s some useful info for filling out SA forms:
HMRC’s guide to Self Assessments is a great starting point.
You can register for Self Assessment here.
Need to pay your tax bill? You can do that on the Gov.uk website.
If you’re looking for advice on pensions, life insurance policies and the like with SA, HMRC has a guide for that too.