The ever-changing world of self-assessment can be a minefield. With so much legislation to bear in mind, it can be an overwhelming and stressful experience to undergo each year.
Below, we outline the three main questions we encounter on personal tax, along with the answers that will hopefully make things clearer.
Do I need to complete a self-assessment tax return?
There are a number of different reasons for completing a self-assessment tax return. The following are the main reasons you may need to prepare a tax return:
- You receive money from renting out a property
- You are self-employed or a partner in a business partnership
- You receive foreign income
- You are a shareholder in a company and receive dividends
- Your adjusted net income exceeds £100,000 in the tax year
- You disposed of an asset in the past year
The above is not an exhaustive list, so if in doubt, get in touch and we can discuss your circumstances.
When does my tax return need to be filed?
Your tax return needs to be filed by the 31st January following the end of the tax year if you are filing electronically, or by the 31st October if you are filing by paper.
As an example, for the tax year which ended on 5th April 2019, the self-assessment tax return would need to be filed by either the 31st January 2020 online or 31st October 2019 by paper.
When is my personal tax due and why do I have to make payments on account?
The calculation of how much you owe and when tax is due can be a confusing one, especially when you have just started out. The basics are that tax is due on the 31st January after the end of the previous tax year.
Sometimes you may also be required to make payments on account. These are calculated based on your previous year’s tax bill and are payable on both the 31st January and 31st July.
You are only required to make payments on account if your tax liability in a tax year exceeds £1,000 after any adjustment for tax deducted at source.
For example, your tax liability for the tax year up to the 5th April 2019 might come to £1,500. You will have a balancing payment due of £1,500 on the 31st January 2020. You will then also be required to make payments on account of £750 on both the 31st January 2020 and the 31st July 2020 towards your 5th April 2020 tax liability.
The above is a brief summary of the main questions we are asked. If you have any questions regarding your specific circumstances please get in touch as we would be delighted to help.