If you’re self-employed or undertake freelance work, you are responsible for paying your tax directly to HMRC. Typically, if you’re employed, your employer will do this on your behalf, but if you work for yourself, you need to do it yourself.
We are self-assessment tax return experts and have extensive experience in helping our clients submit their tax returns on time and in order. If you’re unsure what a self-assessment is and whether you need to complete one, or if you need more guidance on how to do it, keep reading as we explain the process to help you get it right and avoid any penalties.
What is a Self-Assessment Tax Return?
A self-assessment tax return is a form you complete to inform HMRC of your income, taxable profit to pay tax on, and expenses. They then use this to tell you how much tax you need to pay, and you then pay them directly either in a lump sum or monthly.
If you are employed by a company or a person and they pay your wages or salary, they will calculate your tax for you and it will be paid automatically on a monthly basis. What’s left after this is what you get paid. You’ll be able to see how much tax you’ve paid on your pay slip or by contacting HMRC.
This isn’t the case if you’re self-employed or undertake work independent of your job, so you need to complete a self-assessment. Doing so ensures you’re paying the right amount of income tax and National Insurance on your additional earnings.
Who Needs to Complete a Self-Assessment Tax Return?
If you fall into one of the following categories,
- You are self-employed, a sole trader, or a freelancer, and your income exceeds £1,000
- You are a landlord and your income exceeds £2,500
- You are a partner in a business
- You earn money from any investments or savings you have
- You claim Child Benefit and your income exceeds £50,000
- You earn more than £100,000 on PAYE
Sometimes, HMRC will send you a self-assessment form through the post. Even if you didn’t earn any taxable income in a tax year, you still need to complete the self-assessment, although the returns are typically withdrawn or nil returns are filed.
How to Fill in a Self-Assessment Tax Return?
There are a few options on how to do a self-assessment tax return. You do it yourself online, you can submit your tax return through the post, or you can get in touch with us and we can do it on your behalf. If you choose to do it yourself, you run the risk of submitting the wrong data or filing your return late, both of which can incur hefty fines from HMRC. With this in mind, it’s always advised that you enlist the help of professional accountants to ensure you don’t get penalized for avoidable errors.
Before you start – whichever way you choose to go about it – there are a few things you will need:
- A Unique Taxpayer Reference (UTR) – you get this when you register as self-employed with HMRC
- National Insurance number
- Bank statements, invoices, and relevant receipts showing your income and how much money you earned
- Expense records
- A P60 showing how much tax you’ve paid through your employer (if you work for someone else alongside being self-employed or freelancing)
When you have all these documents, you can fill in the forms and send any evidence you need to. After this you will receive your tax bill from HMRC. If you don’t have all the documents you require, we can help you source the correct information you need.
Important Self-Assessment Dates
HMRC sets a strict self-assessment deadline. If you miss any of the deadlines, you may incur penalties. Important dates to be aware of for the 2021-2022 tax year are:
- Registering as self-employed/for a self-assessment on the Gov website: 5 October 2021
- Sending a self-assessment by post: 31 October 2021
- Doing an online self-assessment: 31 January 2022
- Pay your tax due: 31 January 2022
The tax year runs from 6 April to 5 April. This means if you started doing freelance work at any point during that timeframe in 2021/2022, you need to send a self-assessment tax return and pay due tax by 31 January 2022.
Late Self-Assessment Penalties
It’s important that you send your self-assessment tax return on time and that it’s right. If not, you will incur penalties. If your self-assessment is one day late, you will be fined £100 – even if you have no tax to pay. If you are three months late or more, you will be charged £10 per day, capping out at £900. For those who are six months late, you will be fined either another £300 or 5% of your due tax depending on which value is higher. This will be repeated if you’re 12 months late, but HMRC can also charge you 100% of your due tax at this stage.
You can find out more about late tax returns here.
How to get Self-Assessment Tax Return Help
The easiest way to do a HMRC self-assessment and pay your due tax without incurring penalties is to let us do it for you. We will submit your tax return in three days – the fastest in the UK! Simply get in touch with us to learn more about self-assessments and how we can take the hassle of out of the process for you.
Claim now
