That scary time of the year has arrived… No, I’m not talking about Halloween and pumpkin spice lattes. I’m talking about your tax return deadline! For paper-based filers, the deadline for self-assessment falls on October 31st, 3 months earlier than the deadline for online filing.
Do you have income that needs to be declared in a self-assessment?
If you have earned other income apart from any PAYE earnings in the tax year up to the 5th of April, you must register for self-assessment. The threshold is £12,300 and this includes any self-employment income or capital gains. This can either be earned through trade or part-time hobby, e-commerce or it could be profit on the sale of a house or other asset.
Penalties for missing the tax return deadline
You must submit your paper filing for self-assessment before the 31st of October. If you were registered for self-assessment in the past, yet haven’t earned enough income in the current tax year to pass the tax-free threshold, you will still need to submit your paper tax return by the deadline, in order to avoid any fines for late filing.
The first penalty you will need to pay is £100 if your form is late. Then there will be a daily penalty until you file, although the penalties are capped, depending on how long it has taken you to register.
Deadline for paying your tax
The deadline for the balancing payment of tax is due on the same date both for paper filers as well as for those submitting their tax return online: the 31st of January the following year after the tax year is complete.
If your tax bill for the prior years was less than £1,000 you would only pay for the current tax year. However, if your tax bill in previous years exceeds £1,000, HMRC will require a payment on account towards the following year’s bill.
If this is the first year your tax liability exceeds £1,000, prepare to fork out a bit more than the usual in order to cover the portion that goes towards next year’s bill.
Tax filing for business owners
If you are a business owner, does any of this apply to you? Well, it depends.
When you are taking a conventional salary, HMRC will collect tax through PAYE, however, many small business owners prefer not to pay themselves a salary as it may not be the most tax-efficient way to pull money out of your business.
Most business owners prefer to take dividends alongside their salary. If you are taking dividends as well as a salary or just dividends alone, you will have to contact HMRC to change your tax code and you will have to prepare your self-assessment tax return.
If you are a person working in a trade such as construction or offer your services as a freelancer (photographer, social media manager etc.), then it would probably be best to work as self-employed and not incorporate with Companies House. This is due to the fact that self-employed tax filings are less complex than preparing accounts for a small business and if you do not have any employees, it’s usually more straightforward.
The great benefit of doing your own self-assessment is that you can capture expenses needed for you to do your work that other employees paid through PAYE, simply cannot. For example, if you are a make-up artist working from your own home, you could claim all of your make-up purchases as well as a part of the bills towards living expenses. And submitting your tax return yourself would ensure you know exactly what goes in and out!
How to complete your tax return
HMRC may send you a form in the post or you may print it yourself.
HMRC also have a short guide on how to fill in the tax return form. What you will need to prepare is the actual information that goes in.
For instance, capture any income and expenses by looking at your bank statements, invoices sent, receipts kept etc. On top of that, there are some additional expenses you can include, either in full, if it relates to your work completely, or you may apportion it to reflect the difference between business use and personal use.
HMRC have a guide on the expenses you’re allowed to claim.
You still have time to make the tax return deadline!
There’s still time to complete your paper-based filing before the 31st of October deadline. Just download the form from HRMC’s website and send by post to meet the deadline and I promise this Halloween will be less spooky than it needs to.
EvoTax is here to help!
In any case, if you feel overwhelmed by the amount of responsibility and organisation required to submit a well-put-together tax return, EvoTax is always at your service. Feel free to get in touch with us.