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An inside guide to self assessment for company owners

According to HMRC, ‘tax doesn’t have to be taxing’, but for many company owners, especially those who are new to business, the world of tax can be a real challenge to master.

There are numerous ways in which companies have to make sure their financial affairs meet HMRC’s latest standards and regulations, which include completing their self assessment.

However, if you’re new to the process or don’t fully understand it, submitting your self assessment tax returns accurately and on time can be complex, as well as time-consuming.

Alex Dyer, Partner, shares some of his expert advice on the best way to go about completing your next self assessment: 

Make sure you have all of the right details to hand

When submitting self assessment, you’ll be asked to provide a range of financial information, including details of your:

  • Wages
  • Dividends you’ve received
  • Other income, such as your savings, bank interest or overseas income
  • Received director’s fee
  • PAYE withheld (P60)

Where possible, make sure you locate these details before you sit down to complete your self assessment. It’ll save you a lot of hassle and make the process far more straightforward if you have everything you need all in one place, save having to search around for it mid-submission.

Give yourself plenty of time to complete it 

It’s clear from the list above that completing your self assessment isn’t something you can do in a matter of minutes or treat as a last-minute job.

They’re extremely thorough and take time to complete, especially if you want to make sure that you get them right first time around or if you’re new to them.

Giving yourself sufficient time to complete each stage of the process will help make sure that you don’t make any mistakes and that HMRC receive your submissions in good time.

Once you’ve completed each section, get into the habit of going back and double checking for any errors and make sure you’ve ticked all of the relevant boxes. If you fail to tick all of the necessary boxes, then you may find that your self assessment tax return is rejected, which is the last thing you want.

Know your dates

As with most things in business, planning and preparation pays off and the same can be said for your self assessment.

If you want to submit yours in good time and give yourself plenty of time to complete them accurately, then make sure you know when they’re due in advance.

It’s important you make a note of HMRC’s deadlines, as missing them could result in you receiving a fine. Key dates include:

  • 5 October 2017– register for self assessment if you’re required to file a self assessment for the first time
  • 31st October 2017 – deadline for filing paper personal tax return
  • December 30, 2017 – deadline for filing an online tax return with HMRC if you want tax to be collected through PAYE code
  • January 31, 2018 – deadline for submitting online (£100 fixed penalty, 5% of tax due if outstanding after 30 days, daily penalties after 3 months) and paying tax owed.

 Don’t be afraid to ask for professional help

The world of tax can be incredibly daunting, especially if you’re new to it or figures aren’t your forte. And the fact late or inaccurate self assessment submissions can result in penalties can make the whole process feel even more daunting.

One way in which you can relieve yourself of this pressure, as well as benefit from peace of mind that your self assessment is all taken care of, is to ask an accountant to prepare, complete and submit the forms for you.

If you’ve decided that you’d like to go down this route, then make sure you enlist the help of an accountant who’s ICAEW-certified, as it’s a clear sign that they’re industry-leading professionals, who work to the right standards and follow the latest practices.

Here at Ormerod Rutter we have been ICAEW certified  for a number of years. In that time we have completed 1000’s of self assessment tax returns for our clients whilst offering a personal and hassle free experience. 

For more information or to talk to us about how we can help you with your next self assessment, contact us today on 01905 777600 or hello@ormerodrutter.co.uk.


 About the author

Alex started his career with Ormerod Rutter almost 20 years ago. He has a diverse range of clients of all sizes. His enthusiastic and personable style, combined with a keen, hands on approach is something his clients find valuable.

 


 

Payments On Account: Everything you need to know

What are Payments on Account?

Payments on Account are a method of paying towards future self-assessment tax bills. They are payable twice a year and each payment is normally 50% of the previous year’s tax liability.

Payments on Account are payable by midnight on 31 January and 31 July.

How does it work?

The first instalment is due on the 31 January. This amount will be 50% of your previous tax year’s tax liability. This is the same day that a balancing payment must be settled for the previous tax year.

The remaining 50% will be due by 31 July.  This enables your tax liability to be spread out throughout the year.

How about an example?

You owe £4,000 on earnings between 6 April 2015 and 5 April 2016 (excluding Class 2 National Insurance).

This amount will need to be settled by 31 January 2017. On top of this, a payment of £2,000 will need to be paid at the same time and again on 31 July 2017.

This means that when you file your self-assessment tax return for 2017 you will have already paid £4,000 towards it.

If you have overpaid, you will be due a refund. If you have underpaid, this difference will need to be settled by 31 January 2018.

Are Payments on Account voluntary?

If the tax bill from the previous year was over £1,000 then Payments on Account are required. However, if more than 80% of that year’s tax liabilities have been paid at source (e.g. through PAYE) Payments on Account are not required.

Can Payments on Account be reduced?

It is not unusual for earning’s to fluctuate year to year. If this is the case and earnings are forecast to be lower for the next financial year; an application can be made to reduce the Payments on Account via HMRC.

It is worth noting that if earnings remain the same and do not decrease after you have reduced the Payments on Account, that the difference will need to be settled by the preceding January plus any interest accrued.

Have a question on Payment on Account? Leave a question or comment below and we can offer you expert advice.

At Ormerod Rutter we understand that finances and tax can sometimes be confusing. We have 15 expert partners to hand that can offer expert advice on all financial matters, no matter how big or small. We pride ourselves on having big firm capabilities and family firm personality. Have a question or want to discuss your personal or business finances? Give us a call on 01905 777600.

* Please note that all information contained in this article is for informative purposes only and that we cannot be responsible for any errors or omissions.*

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