Tax Returns and Self Assessment
Who said Tax doesn't have to be taxing?
Tax returns can be completed for:
Individuals and sole traders
You are a sole trader if you run your own business as an individual and earn a self-employed income. Being a sole trader means you can keep all of your business’s profits after you have paid your owed tax and national insurance (NI). This means a tax return must be completed if you have earned over the tax threshold. As a sole trader, you are personally responsible for any business losses.
Partnerships
A profit-sharing agreement will determine how partners split any taxable profits or losses in a partnership. A partnership tax return (SA800) must be completed, as well as a tax return self-assessment for each partner. The partnership does not pay tax in its own right; instead, the individual partners are taxed, meaning a tax return must be completed by each partner if earnings exceed the tax limit.
Limited Companies
Share-based businesses are typically profitable ventures and indicate that the company and its owners are separate entities for legal purposes, have finances that are distinct from personal ones, and have stockholders and shares. If a director of a limited company has earned more than the taxable threshold, they are required to file a tax return.
The self-assessment system is extremely strict on penalties, and the investigation powers of HMRC are extensive. This means it is very important that:
- Returns are correctly completed
- They are filed on time
- All backup records are retained for the appropriate period
Hayvenhursts can assist you with your tax return self-assessment, which ensures you are doing everything you need to do within the required self-assessment deadline. As well as the completion of your tax return, we can assist with:
- Advice on your tax liabilities for both business and personal taxable income
- Guide you on any untaxed income, including pensions, shares, etc.
- Help you with any capital gains tax you may owe
- Advise you on any foreign income tax owed
- Assist with any extra income tax that may be owed
- Assist with any property income or rental income tax you may owe
- Negotiating with the collector if necessary
- Identifying suitable tax strategies
- Complete the necessary tax calculations and online tax return on your behalf
- Deal with all correspondence from HMRC, removing the worry from you
- Advise you on any outstanding tax returns and any potential late filing penalty
Next Step:
Contact us if you need any help or for further advice. If you have any questions about our tax services or if you would like a free and no-obligation consultation with one of our tax return experts, get in touch with us today at 02920 777 756.
At Hayvenhursts, we will take the worry and stress out of filing your tax return and completing a self-assessment form, meaning you will have peace of mind and can focus on running your business.
Our Comprehensive Guide to Understanding the Tax Return and Self-assessment Process
Including registration, deadlines, payment options, and helpful tips.
In the UK, the annual self-assessment tax return year follows a unique timeline, running from April 6th to April 5th of the subsequent year. This determines the period for which HMRC will assess your income and tax obligations, so it is crucial to comprehend and consider when navigating the UK tax system. If you are an individual residing or earning income in the UK, understanding the tax year cycle is crucial when preparing your return and the self-assessment processes.
There are a significant number of individuals completing a self-assessment return in the UK, and over 12.1 million people are involved in the annual tax reporting procedure in the UK. Demonstrating the widespread nature of tax obligations and the necessity for individuals to comply with HMRC regulations and to complete their return on time. The data shows that a sizeable segment of the UK population considers self-assessment and tax compliance to be essential components of their financial responsibilities. This emphasises the importance of accurate and timely submissions to avoid penalties and guarantee regulatory adherence.
The specific criteria determining the obligation to file a tax return in the UK are crucial for individuals and businesses to understand. These criteria, based on income thresholds and individual circumstances, dictate whether you should complete the self-assessment process. People can ensure HMRC compliance, prevent potential penalties for non-filing, and accurately report their financial information to HMRC by being aware of the criteria and fulfilling the process. Understanding these criteria is foundational to determining your tax obligations and responsibilities within the UK tax system.
At Hayvenhursts, we can advise you if you should complete a tax return and self-assessment and can help you with the completion of it if you need us to. We can also offer crucial national insurance, business income, personal income, capital gains, investment income, allowable expenses advice, and much more. Our team is made up of qualified accountants who are all tax experts and highly experienced in tax and self-assessment returns.
What is the difference between a tax return and a self-assessment?
HMRC (Her Majesty Customs) uses the self-assessment system to collect income tax. Income. Tax is normally deducted automatically from wages and pensions if on PAYE, and any additional income must be reported on a self-assessment tax return by individuals and businesses.
Registration and process summary
When registering for self-assessment in the UK, individuals can choose to file their sources of income either through HMRC’s online service or through a paper form. For online submissions, the deadline is typically the 31st of the following year. The online method is useful for many people as it provides immediate processing, showing the owed or refund amounts in real time. If choosing a paper return, the form should be sent to the designated address at HMRC for self-assessment. This method may take longer to process, as it requires manual processing by HMRC staff.
What is making tax digital?
The first phase of the programme involved digitising taxation for VAT and was put into effect in April 2019. It is currently projected that the progressive implementation of digital taxation for income tax will begin in April 2026.
What are the benefits of making taxes digital?
Making Tax Digital supports HMRC’s plans to digitalize the tax system. Making tax digital will:
- Make it simpler for people and companies to file their taxes on time and correctly through online filing
- Clients can use software to integrate tax management within a variety of business operations
- Encourage the digitalisation of tax for businesses to help them achieve productivity and efficiency gains by submitting an online return
- Lessen the quantity of tax lost as a result of mistakes that could have been prevented because of:
- Improved accuracy in digital records
- The support and integration offered by most accounting software
- Direct submission of digital records online for HMRC reduces lost paper tax returns sent by post and late tax returns
Commercial software is now available to help individuals file their UK tax returns. With everything in one location, the software accommodates various scenarios, making the process easier for everyone to handle. Commercial software also guarantees calculation accuracy and facilitates the process of claiming allowable deductions and reliefs, which all add up to more accurate tax return submissions. Using commercial software is a good option when you are completing a self-assessment in the UK if you are not familiar with tax procedures or are looking for a more streamlined approach.
What are the deadlines and penalties?
Understanding the deadlines for filing tax returns in the UK is essential to avoiding penalties. For online submissions, the deadline is typically January 31st, allowing for immediate processing by HMRC. If you choose to file your taxes on paper, the deadline is earlier, on October 31st, and HMRC staff will process your return as soon as it is received. Daily penalties can result from missing these deadlines, as well as payment deadlines, so it is critical to submit on time to avoid any financial consequences. The benefit of submitting online is that you have proof that you have done it, and there is no fear that it will get lost.
It is crucial to understand the consequences of missing the tax return deadlines. In the UK, there are strict penalties for filing tax returns after the deadline, which change based on the length of the delay. Penalties can affect your finances and result in additional expenses. They can take the form of fines or interest charges. For this reason, being aware of and planning for your submission deadline and giving yourself plenty of time to ensure everything is done on time is essential to avoid these fines and keep your good standing with HMRC. It is important to adhere to submission deadlines to avoid financial repercussions. For instance, if you do not file your tax return by the deadline, you may be subject to fines that rise with the amount of time you delay filing.
Let Hayvenhursts remove the stress and headache of your business or personal tax return and self-assessment. Our friendly, professional, and qualified accountants will make the process easy for you and ensure you are always aware of the deadlines.
Payment options and assistance
In the UK, taxpayers can use the Payment on Account system, which allows them to spread their tax liabilities into two instalments. For instance, if your tax bill is £2,000, you would make two payments of £1,000, with the first due by January 31st being an advance payment and the second instalment due by July 31st. This system can help individuals manage their cash flow more effectively by dividing the tax payment over two periods.
As well as this, HMRC offers a valuable service known as ‘Time to Pay’, which offers assistance to individuals who cannot pay their tax bill in full by the deadline. This service allows taxpayers to negotiate a direct debit payment plan with HMRC, agreeing on how the outstanding amount will be settled over an extended period. If you think you might have trouble paying your tax bill, you should get in touch with HMRC as soon as possible to talk about your options and avoid paying penalties for paying after the deadline.
Taxpayers in the UK should inform HMRC of any changes in their income by the deadline of October 5th. By providing updated information on your income, you ensure that your tax assessment is accurate and based on the most current financial data. Ignoring income fluctuations could cause inconsistencies in your tax calculation, which could lead to an incorrect balancing payment. To maintain compliance with tax laws and prevent any needless fines, changes in income must be communicated to HMRC promptly.
Considerations for self-assessment
One important point to consider when thinking about self-assessment in the UK is that higher-rate taxpayers can use the self-assessment process to claim relief from pension tax. For example, if a person makes pension contributions to a personal pension plan and is in a higher tax bracket, they can claim additional tax relief on those contributions by disclosing the information on their self-assessment. For those who qualify, this presents a great opportunity to maximise their pension savings while taking advantage of tax benefits, which can result in a lower tax bill.
Furthermore, after finishing the self-assessment process, people in the UK have access to a variety of payment options to pay their tax bills. For instance, they can opt to send a cheque, bank transfer, pay with a debit card online, or, in certain circumstances, have the money deducted using the Pay As You Earn (PAYE) system. The goal of this payment option flexibility is to accommodate the various financial situations and preferences of taxpayers, guaranteeing a simple and effective way to pay taxes.
Furthermore, it is critical to keep self-evaluation accurate to avoid fines and guarantee adherence to HMRC guidelines in the United Kingdom. With the self-assessment system, people have the freedom to make adjustments to their tax returns up until the deadline for the subsequent year. This feature emphasises the value of being meticulous and diligent when filling out the self-assessment tax return by offering a safety net for taxpayers who might need to amend their submissions owing to errors or updated information.
Our tips and recommendations
When it comes to managing your tax obligations in the UK, it is crucial to be aware of the risks associated with late filing and late payment. If you miss the deadline for submitting your tax return or fail to settle your tax bill promptly, these financial implications can significantly impact your overall tax liability with fines and penalties.
For most people, hiring an accountant to complete their annual tax return is a wise decision. Accountants specialising in tax returns and self-assessment can provide valuable expertise in handling the complexities of the self-assessment process. Not only can they ensure that your tax returns are accurately completed and submitted on time, but the fees you pay to accountants for their services are tax-deductible in the UK. This tax relief on the cost of professional assistance can be an added benefit for individuals seeking expert support in managing their tax payments effectively.
If, however, you prefer a more independent approach to managing your tax returns, there are resources available online that offer user-friendly tools, such as tax calculators, to assist you in your submission process. These tools can help you accurately assess your tax liability, deductions, and potential refunds, providing an additional layer of support in ensuring that your tax return is completed correctly.
If you would like to speak to one of our tax return and self-assessment specialists, call us today at 02920 777 756 to book your free and no-obligation consultation.