You need to complete a Self Assessment tax return each year. It doesn’t matter whether you own a multi-million-pound company or you’re a self-employed sole trader, you’re responsible for completing a tax return and for paying any tax that is due for that year too.
If you’re unsure of the process of completing a tax return, we’ve covered everything you need to know about how to go about a Self Assessment and when you need to complete them by to make your life easier.
You should complete a Self Assessment at the end of the year. You submit your tax return in correspondence with “tax years” not just the regular calendar year. The tax year in the UK runs from April - April. So, for example, the 2018/19 tax year started on 6th April 2018 and will conclude on 5th April 2019.
You submit your tax returns in arrears. This means that you don’t pay tax on the current tax year, you pay for the one before. So, for the 2018/19 tax year, you’ll pay your tax in 2020:
If you’ve never completed one before, register for your Self Assessment tax return by October 5th 2019.
As tax is going digital, you’d need to submit your tax return by midnight on 31st January 2020.
Pay any tax that you owe by midnight on 31st January.
If you fail to meet any of these deadlines, there could be consequences for your business. These are usually in the form of financial penalties that can potentially have serious detrimental effects on your business.
All business owners are required to fill in a tax return, no matter how big or small in size and worth their business is. HMRC will notify you when you need to fill in your tax return and should send one through to you. But, if you don’t want to wait around for HMRC to get in touch with you and know you need to complete one, there’s no harm in being proactive and getting it done.
5.5 million people are still yet to file their tax returns to meet the January 2019 deadline. This shows that people do leave it last minute and have the deadline hanging over their head. There’ll no doubt be plenty of last-minute panic hours before the deadline but in order to make sure that you get it right and don’t leave anything out we advise to get it done in plenty of the time and remove one less thing for you to worry about.
Having the HMRC chase you is very stressful and full of negative consequences.
It’s not just business owners either who need to fill out Self Assessment tax returns. Here’s a complete list of the people who are required to fill out a tax return:
Directors or business partners of a limited company.
Employees or OAPs with an income greater than £100,000.
Income or partner’s income is over £50,000 and claiming child benefits.
Income from taxable countries abroad.
A representative of somebody who has passed away within the year.
A minister of religion.
If you’ve received a P800 form stating that you didn’t pay enough tax last year.
If you fall into any of the categories above, you’ll need to declare your income to HMRC who will ask you to fill in a Self Assessment for the tax year.
There is a legal requirement from HMRC for you to keep records if you’re registered for Self Assessment. If they try and audit your tax return, they’ll need to check your records to legitimise your declaration and prove you’re paying the right amount of tax.
You can keep records both digitally or written. However, with the Making Tax Digital (MTD) plan due to be rolled out in April 2019 and fully introduced in April 2020, it may be better practice if you started to record them digitally from now on - in order to be compliant.
If you’re non-compliant and don’t keep any records, there’s a chance that HMRC may impose a fine on you. This fine can stretch from £300 for your first offence and up to £3000 if you’re a repeat offender.
The government advise that if you’re in Self Assessment but aren’t self-employed, then you should keep your records for at least 22 months after the end of the tax year. However, if you’re self-employed or if you’re letting property, you’re advised to keep your records for a minimum of six years.
For more information on the records you should keep, you can see the full legislation here.
Prepare Your Business for Making Tax Digital (MTD)
MTD is due to be rolled out in April 2019 to those who are VAT registered and earn over £85,000 per annum. The big switch will require your business to adapt the way it works and adhere to new legislation.
If you’re not aware of the new plan that HMRC is proposing and want to be clued up before your business may need to implement it, see our summary sheet that we’ve put together for everything you need to know. Download it below for free.