Do I need to fill in a Self-Assessment tax return?

Yes, if:

  • Your self-employment income was more than £1,000.
  • Your property rental income was more than £2,500 (you will need to contact HMRC directly if it was between £1,000 and £2,500).
  • You earned more than £2,500 as untaxed income, for example from tips or commission.
  • Your income from savings or investments was £10,000 or more before tax.
  • You need to pay Capital Gains Tax on sale of assets, on which you have made a profit, for example sale of shares or property.
  • You are a director of a company (this does not apply to non-profit organisations, such as charities).
  • You or your partner’s income was over £50,000 and you are claiming Child Benefit.
  • You received income from abroad, on which tax is payable, or you live abroad but have received UK income.
  • If you earned over £46,351 in the previous tax year 2018/19 or will earn £50,001 in the current tax year 2019/20 and make pension contributions, you may have to complete a tax return, to claim back the extra tax relief you are owed.
  • You are a trustee of a trust or registered pension scheme.
  • Your State Pension was more than the annual tax-free personal allowance and was your only source of income.
  • You received a P800 tax calculation from HMRC advising you paid too much to too little tax.
  • You can also complete a Self-Assessment tax return if you want to make voluntary Class 2 National Insurance Contributions (NIC) to help qualify for benefits, such as the State Pension.
  • You do not need to complete in a Self-Assessment tax return if you are an employee who has paid tax through the Pay As You Earn (PAYE) system, unless you earnt over £100,000.

How to register for a Self-Assessment tax return?

  • If you have never submitted a tax return before, you will first need to register for Self-Assessment with HM Revenue and Customs (HMRC).
  • There are different ways to register if you are:
    • self-employed
    • not self-employed but need to declare income
    • if you are in a partnership
    • Once registered, HMRC will send your Unique Taxpayer Reference (UTR).
    • Your UTR is required in order for Avar to complete and submit your SATR online.
    • If you have submitted Self-Assessment tax returns in the past and your original UTR has been cancelled.  You will need to contact HMRC and advise them of your status and to reinstate your old UTR to file tax returns.

What are the Self-Assessment deadlines?

  • You submit tax returns for each tax year, as opposed to calendar years.
  • A tax year runs from 6 April of one year to 5 April of the following year, for example, the 2018/19 tax year is: 6 April 2018 to 5 April 2019.
  • You need to register for Self-Assessment by 5 October 2019 if you have never submitted a return before.
  • You will need to submit your tax return by midnight 31 October 2019, if filing a paper tax return.
  • You will need to submit your tax return by midnight 31 January 2020, if filing online.
  • The tax liability due must be paid so that HMRC receive cleared funds by midnight 31 January 2020.
  • You may also be required to pay a second instalment by 31 July 2020.
  • If you fail to meet one or more of these deadlines, you may be charged interest and penalties.

What information will I need to fill in a Self-Assessment tax return?

  • Do not worry if you have not filled in a Self-Assessment tax return before.
  • We know it can be daunting and are here to help and assist.
  • Before we start processing of your tax return, we will need the following:
    • your 10-digit Unique Taxpayer Reference (UTR)
    • your National Insurance number
    • details of all income received within the tax year, including income from self-employment, dividends, bank interest and shares purchased
    • records of expenses relating to self-employment
    • contributions to charities or pensions, which might be eligible for tax relief
    • P60 or other records showing how much income you received, on which you have paid tax on.

When do I need to pay?

  • The deadline for tax payable is 31 January and 31 July.

Can I pay my tax liability in instalments?

  • Yes, you can make payments by instalments, which must be agreed with HMRC in advance.
  • You will have to contact HMRC in advance and set-up a payment budget plan to make regular payments on a weekly or monthly basis. You can also choose to stop paying for up to six months.
  • The only restriction is you must be up to date with your previous Self-Assessment payments.
  • However, you cannot use this process to pay for previous tax years. We can advise you on how to deal with tax arrears.

How do I pay my tax liability?

  • There are various procedures to pay your Self-Assessment tax liability. The length of time you have in which to pay depends on the method of payment you choose.
  • If you are going to be making payments near or quite close to the deadline day, it would be wise to choose one of the faster options to minimalize your chances of being penalised.

Here is a list of the quickest way to pay your tax liability:

  • Online or telephone banking.
  • Clearing House Automated Payment System (CHAPS).
  • Debit or corporate credit card.
  • In person at your bank or building society.
  • You can however arrange for a bank transfer, Direct Debit or send a cheque.

If you miss your deadline

  • If you miss the deadline to register,
  • Submit
  • or pay your tax liability
  • You will receive a fine
  • If you are up to 3 months late filing or paying your liability, there is a penalty of £100.
  • If it is later than this, the penalty will increase.
  • If you have a reasonable excuse you may be able to appeal the penalty with HMRC.

Payment on Account

  • Unless your last Self-Assessment tax liability was less than £1,000
  • or you have already paid more than 80% of all the tax owed,
  • You will be asked to make ‘Payments on Account’ towards your next tax liability.
  • National Insurance Contributions (NIC) and Capital Gains Tax are not included in your Payments on Account and will need to be paid in full by the 31 January deadline.
  • ‘Payments on Account’ are made up of two payments,
  • each of which is half of your previous year’s tax liability
  • and are due by 31 January and 31 July.
  • For example, if your tax liability for 2019/20 was £1,500, during the 2020/21 tax year you will make two payments on account of £750 each.
  • When you come to submit your 2017/18 tax return, these two payments on account will be deducted from your tax liability.
  • So, if your 2017/18 tax liability was £3,000,
  • £1,500 (two payments on account) will be deducted and you will have to pay £1,500 as a balancing payment,
  • Plus, an extra £1,500 as your first payment on account for the 2018/19 tax year.
  • If your tax liability is less,
  • HMRC will refund the overpayment.
  • If you know your tax liability will be lower, you can contact HMRC and ask for a reduction on your payments on account.

What if I cannot afford to pay my tax liability

  • If you are unable to pay your tax liability,
  • You will need to contact HMRC as soon as possible by calling Business Payment Support Service on 0300 200 3825
  • This service is for all taxpayers and not just for businesses.
  • HRMC will look at how much you owe,
  • Including, your income, expenditure, assets, savings and investments
  • and decide whether you eligible for the additional time to pay.
  • If you do not pay on time, you may incur interest and penalty charges.
  • You may be given additional time to pay or offered to pay by instalments.
  • This is known as a Time to Pay Arrangement.
  • Tax is a priority debt, so if you are unable to pay your tax liabilities, it is important to take action straight away and contact the Business Payment Support Service.
  • If you do not and simply refuse to pay, HMRC will take enforcement action against you.
  • This can include directly collecting what you owe through your earnings,
  • bank account, pension, or through repossession, or via a debt collection agency.
  • You could also be faced with court action and risk being made bankrupt or having your business closed down.