Self Assessment Tax Returns – The Purpose, The Reason
This Article outlines:
- What the purpose of a self-assessment tax return is.
- Who is required to complete one.
- What the deadlines are.
- What is the penalty for not submitting.
- How to submit.
What is the purpose of self-assessment tax returns?
This is a system employed by HMRC to collect income tax. Tax is usually deducted automatically from wages and pensions. However, there are situations where tax is not automatically deducted. For example, you may be a sole trader, a director of a company only taking dividends or someone who has net income of over £100K and is also on PAYE (Click here to learn more about when you have net income over £100K).
Who must complete a tax return
- Sole traders and have earned more than £1000 before taking into account any tax relief.
- If you are / were in a business partnership during the tax year.
- You had total taxable income over £100K.
- You had to pay Capital Gains Tax when you sold or disposed of something that increased in value.
- You had to pay the High-Income Child Benefit Charge.
Additionally, you may need to complete a tax return if you have any untaxed income.
For Example:
- COVID-19 grants or support payments.
- Money from renting a property out.
- Tips and commission.
- Income from savings, investments and dividends.
- Any foreign income.
Self-assessment tax returns are there to ensure you are paying the right amount of tax. The returns will take into account the income tax band you are in, whether you have been taxed at source, your net income from employment and other sources, expenditure, any CIS tax suffered, capital gains tax and more.
Deadlines
The deadline for submitting your self-assessment tax return is the 31st of January of the following year. For example, if you are required to complete a self-assessment return by the 31st January 2024, this will relate to the period 06 April 2022 to 05 April 2023.
The deadline to tell HMRC if you need to complete a self-assessment tax return is the previous the 05 October. For example, if you are required to complete a self-assessment tax return by the 31st January 2024, you will be required to register for self-assessment by the 05 October 2023.
Penalty for not submitting on time
You will attract a penalty of £100 if you miss the deadline for submitting or paying the tax bill. You will pay a late filing penalty of £100 if your tax return is up to 3 months late. This will increase if you are past three months late. In addition, you will be charged interest on late payments.
You are able to appeal against penalties if you have a reasonable reason.
How to file a tax return
You are able to file a tax return on HMRC’s website or by filing in a tax return (the appropriate one for your circumstances). However, over-casting or under-casting your income / expenditure can lead to serious consequences with HMRC.
JSR make filing your tax return easy and simple. By providing the information to your dedicated tax specialist, the team will ensure you are paying the right amount of tax for your circumstances. Additionally, they will be able to advise you on anything that might be “missing” from the return which may result in less tax to pay.
JSR also make payment of any tax due and receipt of any refunds due a simple step by step process.
By Mark Lawson
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