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Do I need to complete a Self Assessment Tax Return?

Knowing whether you need to complete a Self Assessment Tax Return can be tricky.

If you’re not sure if you need to do one, or not, here’s a little guide.

You must complete a Tax Return if:

  • You are a sole trader and the money you receive is more than £1,000
  • You are a partner in a business partnership
  • You are a company director
  • You have Capital Gains Tax to pay
  • You are employed and want to claim expenses of £2,500 or more
  • You receive income from:
    • Overseas that is liable to UK tax
    • Trusts, settlements and estates

 

Even if you pay tax each month through your PAYE code on your salary you may need to complete a Tax Return if you have income of:

  • £100,000 or more
  • £10,000 or more from taxed savings and investments
  • £2,5000 or more from untaxed savings and investments
  • £2,500 or more from property income after deducting allowable expenses (or £10,000 or more before expenses)

Or, if the following applies then you are subject to the High Income Child Benefit Charge and must complete a Tax Return:

  • Your income is more than £50,000
  • You, or someone in your household, claims Child Benefit
  • You are the higher earner

We can also complete your Self Assessment Tax Return for you and submit it to HM Revenue and Customs on your behalf, cutting out the stress and worry of having to do it yourself and allowing you to focus on doing the things you love.

For more information, please give us a call on 01905 777600.

Why it doesn’t pay to sit on your self assessment tax return

Why it doesn’t pay to sit on your self assessment tax return

 When you’re running a business, there’s a lot to consider and stay on top of. Daily deadlines, monthly deadlines, yearly deadlines, not to mention your responsibilities, as well as your employees’ responsibilities.

There are also work-related tasks and company-related tasks, such as filing your self assessment tax return, to consider. And, while HMRC may issue reminders at the end of the tax year, self assessment tax returns are yet another task that’s often completed by businesses at the last minute or late.

According to figures published by HMRC earlier this year, almost 10.7million taxpayers submitted their self assessment before January 31, with just over 30,000 people filing online in the final hour, between 11pm and 11.59pm. However, of the 11.4 million returns that were due, around 745,500 were still outstanding after January 31.

 

Aside from failing to meet a key business obligation within the agreed timescale, there are numerous reasons why businesses should complete their tax return on time or, where possible, early. We’ve listed three of them below:

  1. You won’t be fined

All late returns automatically incur a £100 penalty fine, which applies even if there’s no tax to pay or if the tax that’s due is paid on time. And if your return is more than three months late, the penalty can quickly become very costly. What’s more, HMRC are tightening the rules and the penalties are getting stricter, so it really does pay to get on top of, and stay on top of, your tax affairs.

  1. You’re less likely to make mistakes

Self assessment tax returns that are left to the last minute and then rushed through very often contain mistakes.

Miscalculating your tax means you could wind up paying too much or too little which, in turn, can leave you open to fines. You’ll also be liable for any interest on unpaid tax, if you’ve not paid enough.

  1. You’ll have a clearer picture of your business finances

Submitting your tax return early will enable you to see how your finances look sooner, rather than later. You’ll also be in a much stronger position to organise your cash flow accordingly so that you have the necessary funds to pay your tax.

Note: Just because you file your tax return early doesn’t mean you have to pay your tax bill at the same time. If you submit your return before December 31, you may be able to opt to have your unpaid tax collected through your tax code and PAYE system.

Got any questions or perhaps you’d like some advice or support in relation to submitting your next self assessment tax return?

We can take care of your self assessment tax returns, giving you peace of mind that you’ll never miss a deadline. We can also work with you to structure your affairs in the most tax efficient way to make sure you keep more of the money you work hard to earn.

For more details about how we can help, contact us on 01905 777600 or hello@ormerodrutter.co.uk.

Time’s ticking: Second Payment on Account due by July 31

You may recall that we explored the ins and outs of the world of Payment on Account in one of our recent blogs.

For those of you who may not have had chance to read it, click here.

For those of you who did see it, then you’ll most probably remember that we mentioned the fact that Payment on Account is made in two instalments.

Broadly speaking, Payment on Account is the payments individuals make towards their following year’s income tax and Class 4 National Insurance Contributions.

You may wonder why we’re writing another blog about these payments. Well, it’s to remind individuals that their second payment is due very soon – by midnight on July 31 to be precise.

Each of the payments equate to half of the amount due for the previous year. However, there are instances when it’s possible to reduce both of your payments, such as if you:

  • Think your tax bill is less for 2017/18 than 2016/17 because you had less self-employed income or;
  • Know you owe less this year than last year, having already done your tax return for the previous year

You’ll need a reasonable estimate of the amount you owe in order to bring your payments down. However, it’s important you take considerable care when carrying out these calculations, as individuals who reduce their payments too much often have to pay interest charges and a potential penalty if HMRC believe that their claim is fraudulent or negligent.

Word of warning – you must notify HMRC if you intend to reduce your payments. If you pay a lower amount without telling them first, you’ll show up on their systems as not paying enough. If this happens, then they’re more likely to contact you and you could be fined.

If you’re uncertain of what your payment should be for the forthcoming July 31 deadline, want to be certain that your figures are 100% correct or want to make sure that you meet the deadline, then it’s always best to seek expert advice.

We have 15 expert partners on hand, who can provide you with industry-leading advice on all financial matters, including your Payment on Account affairs. Contact them today on 01905 777600 or hello@ormerodrutter.co.uk.

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.

 


 

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