If you are self-employed, a partner in a business, a shareholder receiving dividends, or are earning any untaxed income in addition to your wage, you will need to submit a Self Assessment tax return by the deadline for the completed tax year. Here’s everything you need to know.

What is Self Assessment?

Self Assessment is a system used by HMRC to collect Income Tax. Income Tax is usually deducted automatically from wages and pensions, but those who have other means of income need to report it in a tax return.

Who must submit a Self Assessment tax return?

You must submit a Self Assessment tax return if, in the tax year in question, you received income that was not taxed at source that an individual needs to declare to HMRC. Examples of such income include:

  • Self-employed individual or partner in a business earning more than £1,000.00
  • Dividends, if you received more than £2,000.00
  • Rental payments from letting a property
  • Tips and commission
  • Investments, savings, and dividends
  • Foreign income
  • Certain support payments or COVID-19 grants

If your only income is from your wages or pension, you do not need to submit a tax return. 

You can also choose to submit a tax return to claim certain Income Tax relief.

When is the Self Assessment tax return deadline?

The tax year runs from the 6th of April to the 5th of April the following year. You must send your Self Assessment tax return by the relevant deadline.

The deadline for submitting paper tax returns is midnight on the 31st of October, but the deadline for online tax returns is midnight on the 31st of the following January, which is also when you need to pay the tax you owe.

For example, for the tax year that ended 5th April 2021, paper tax returns needed to be submitted by the 31st of October 2021, but online returns and payment of the tax that is owed aren’t due until the 31st of January 2022.

However, you may receive a notice to file a tax return during the tax year. In which case, you will need to submit your return within 3 months of the date of issue on the notice.

If, on the completion of your tax return, the tax due to HMRC exceeds £1,000.00, then you will also need to make payments on account of next year in two instalments. The first 50% instalment is due on top of the current year by the 31st of January. The second payment on account is due by the 31st July.

What happens if you miss the tax return deadline?

If you miss the Self Assessment tax return deadline or the deadline for paying the tax you owe, you will usually have to pay a penalty. However, this penalty may be able to be appealed if you have a reasonable excuse.  

If you miss the deadline but submit your return within 3 months, then the penalty will be £100. If you are between 3 and 6 months late paying your bill, then you will be charged an additional £300 or 5% of your bill, in some cases. Payments made more than 12 months later are subject to a further £300 or 5% of your bill in addition to all previous penalties. In severe cases, the penalties can be even higher than this.

You can hire an accountant to manage the process for you

One of the easiest ways to stay compliant and make sure that you always meet the Self Assessment tax return deadline is to hire a personal accountant who can manage the process for you, including calculating what you owe and making sure everything is submitted on time.

Self Assessment can be stressful, especially when the tax return deadline is approaching, but an accountant can help to take away a lot of that stress, leaving you to focus on what’s important – your business.

If you are interested in getting support with your Self Assessment tax return, please do get in touch with us.