Yep, the countdown is on for the 31st, the dreaded Self Assessment tax return. Tax can be complicated, and well, boring but we’re here to help you get ahead of the deadline with our top tips.
If you receive income that isn’t taxed at the source, then you’ll need to complete a Self Assessment. For example, if you’re a sole trader, in a business partnership or a company director you’ll need to file one.
Self Assessment is just how HMRC works out how much Income Tax and National Insurance you need to pay on what you’ve earned that year. When you’re employed, Income Tax is deducted automatically from your wage, but this doesn’t happen for self-employed people or for other types of income like pensions, investments and dividends.
You’ll have to pay Income Tax on earnings that are over the personal allowance on your income (£12,500) but it depends on how much you’ve earned within the year. Below is a table that shows the % of your earnings you’ll have to pay Income tax on:
There are National Insurance contributions too… This is calculated by HMRC after you’ve submitted your Self Assessment, they’ll say exactly how much you owe for National Insurance and Income Tax.
If this is your first Self Assessment, you would have already registered with HMRC by the 5th of October to tell them that you need to submit a Self Assessment tax return. HMRC would have sent you your Unique Taxpayer Reference (UTR) number in the post, which you’ll need for the return.
You’ll also need to bring a few documents about the income and costs of your company throughout the last year. This includes:
You have a couple of options.
If you need any help with your tax return or submitting your pension contributions, please reach out to our friendly team on our online chat or through email.