How to Complete a Self Assessment Tax Return - FAQ
We understand you probably aren’t an accountant, so at first glance completing your tax return may appear to be a rather daunting process. However, this article answers some of the most commonly asked questions we get asked when it comes to filling out your Self Assessment tax return.
For peace of mind, many contractors do rely on their accountant to submit their Tax Return on their behalf. Here at Nixon Williams we offer all our clients a personal tax return as part of our fixed monthly fee, however if you aren’t a client of Nixon Williams we offer a hassle free, low cost Self Assessment tax return service, starting at just £100 + VAT for a simple tax return, for example if you don’t have rental income. If you would like to learn more about our self-assessment Tax Return service you can do so here, or alternatively you can get started here.
1.Who needs to complete a Tax Return?
A Self Assessment Tax Return must be completed by any individual who are paid either outside of the PAYE scheme, or have received additional untaxed income on top of their PAYE. In most cases full-time employees pay tax and NI before they receive their monthly salary as they are operating through the PAYE Scheme. This means they would not be required to file an annual tax return.
However, you will need to submit a tax return if in the last tax year if any of the below applies:
- You are a director of a company
- If you have received income from land or property in the UK
- If you have received taxable foreign income in excess of £300 a year
- If you have received income from a trust or settlement
- If your annual income exceeds £100,000
- If you receive £10,000 or more from taxed savings and investments
- If you are higher rate taxpayer and receive £2,500 or more from untaxed savings and investments
- If your income is over £50,000 and you or your partner have received Child Benefit payments
- If you have Capital Gains Tax to pay
Any parents who collectively earn over the £100,000 threshold annually and claim child benefit are obliged to complete a Self Assessment tax return, including any individual who earns more than £50,000 on the PAYE Scheme.
2.When does it need to be completed?
The deadline for the paper-based version of the tax return is Midnight 31st October, and Midnight 31stJanuary for online submissions. If you miss the above deadlines you will incur a penalty charge from HMRC To illustrate: If you are in the 2015/2016 financial year, all paper tax returns must be submitted by 31stOctober 2015, if you would prefer to do your tax return online then you have until midnight on the 31 stJanuary 2016. If you miss the 31st January deadline just by an hour you occur an automatic £100 fine
3.What do I need to have prepared when completing my tax return form?
If you have chosen to seek advice or assistance from an accountant, then they will provide you with a list of what you will need. However, for the purposes of this page we have complied a brief list to help you get started.
You will need to state what your turnover is for the financial year. This is calculated by totaling up all sales plus all invoiced amounts.
- Any Additional Income
You must declare all additional income to HMRC. Additional income can come in many forms, the most common are working part-time (whilst running your business), and if you if you are new to contracting, your earnings from your previous employment over the financial year. Your P60/P45 will detail the total figure of how much you earned in your previous employment.
- Bank Interest
Interest gained on all of your bank accounts must also be declared.
- Property Income
If part of your income is through renting out property, this should also be declared to HMRC. This will also include any business expenses relating to the property.
- Business Expenses
Expenses must be wholly and exclusively for business purposes, and will be included in your tax return. These business expenses must have occurred throughout the year and must be deemed as an allowable expense. We have created a Contractors Guide to Expenses which we recommend you take a look at before starting our Tax Return Questionnaire.
- Tax Details
Details of information which relates to any tax which has already been paid, through any means in the tax year.
4.How do I start my Online Tax Return?
If you have never completed a Self Assessment tax return before, it can seem like a daunting task, but don’t worry a good accountant should be able to help you. If you would like to appoint us to complete your tax return application on your behalf, you can do so by completing our self assessment tax return form.
5.What happens if I miss the Deadline?
It’s not the end of the world if you file your tax return late, however even just a minute past the deadline and you could be looking at an automatic penalty of £100, however if after 3 months the tax return has still not been received the penalty amount will increase. If you are late filing your Tax Return, HMRC site has an online calculator which can give you an indication of what additional fees you will have accrued. You can calculate the estimated penalties here.
6.Do I need to keep copies of my Tax Return?
Always keep copies of your tax returns, as this enables you to track things such as expense receipts and invoices. If there is ever a need for a HMRC investigation (which could look into information from up to six years previous), then having this information to hand will make the process a lot easier. Having digital back-ups of all returns, receipts and invoices is also advisable. Online accountancy portals will also have back-ups of all important documentation.
If you have any further questions about completing your tax return please get in touch with a member of our New Business team on 01253 362062 or email firstname.lastname@example.org. Alternatively, for only £100+vat, we can submit your HMRC tax return on your behalf. To get started please complete our online Tax Return Questionnaire.