Self-assessment is a tax system utilized by Her Majestys Revenue and Customs (HMRC) to collect income tax. Tax is deducted at source from individuals and businesses. Many taxpayers are not aware of what self-assessment tax returns in the United Kingdom are. This article will provide the information required to support submissions.
Eligible parties: If you are an employed or a self-employed citizen, you are eligible to send a tax return if you earned more than £1000 as an individual or as a partner in a business. However, if your only income is from wages and pension, you do not need to send a return. If you have rental, savings and investment, tips and commission income, you need to send a return. This applies if you worked between 6th April and 5th April the previous year.
Penalties for non-compliance: If you submit your tax return 3 months late, you will be penalised up to £100. You will also be charged interest. However, you can appeal for a penalty waiver if you have a valid reason for default.
Registration and sending a return: As a new taxpayer, you need to register as a self- employed, employed person or a partner in a business. You will be billed upon filing your tax returns. For the purpose of keeping accurate self-assessment tax returns, you need to keep records. There are no specific ways to keep these records; they can be manual or automated. They need to be complete and accurate.
Assistance regarding self-assessment: If you are not able to file returns, you can employ an accredited accountant to do it on your behalf. If you are stuck while filling the returns, they can provide the necessary help that you may need and can also assist with general inquiries.
Return for a deceased person: If you have a deceased person whose taxes need to be filed, the first thing you must do is to report the death to HM Revenue and Customs (HMRC). You will be advised accordingly. You need to specify the date of death as well as the name and address of the deceased. If HMRC requires you to fill in the taxes of that person, you will need details such as bank statements, dividend vouchers among others.
Consequences of overpaying or underpaying: If you overpay, you will receive a refund from HMRC and if you underpay you will be penalised.
As a taxpayer, you need to prioritise paying tax; otherwise, HMRC will take action against you. This could be through the forced collection by engaging a debt collection agency or a court action could be taken against you. Your business could be at risk of being closed down. It is important to take your tax returns seriously and a good accountant can take the pressure off by managing the process for you.