For experienced contractors, Self Assessments are part of the financial calendar. For first-timers, though, it can be a daunting prospect.
It’s important to know exactly what’s required long before you need to file, as you’ll be required to keep certain records,provide documentation, and to get in touch with your advisers, employers, or other parties to make sure you’ve got all the information you need.
To register, you’ll need your National Insurance number and your personal and business details (if applicable).
As a general rule, Self Assessments are for anyone who receives income that isn’t taxed at source.
In the case of a sole trader, the income you receive through your invoices doesn’t have National Insurance contributions or Income Tax subtracted from it, so you must tell HMRC about that income on your Self Assessment so they can calculate what tax, if any, you owe.
Other examples of income not taxed at source can include rental income from any property you may own, income from abroad, or investment (dividend) income.
If you’re the director of a limited company you must complete a Self Assessment.
For example, if you went freelance and set up your own business in June 2018, you’d need to submit a Self Assessment for the tax year, which runs from 6th April 2018 until 5th April 2019. You’d need to register by 5th October 2019 to submit your Self Assessment (and pay any taxes) by 31st January 2020.
If you miss the registration deadline you may face a penalty. However, if you can prove to HMRC that you had valid reasons for not registering in time, and you still manage to submit your Self Assessment and pay any tax due by 31st January, these penalties can be reduced or even removed entirely.
Once you register for Self Assessment will be sent a Unique Taxpayer Reference Number (or UTR Number) by post. This is a ten-digit number that HMRC allocates to those who must complete a Self Assessment to help streamline the process.
once you’re registered, you’ll be reminded to submit a Self Assessment every year until you inform HMRC you no longer need to complete one. This could be because you return to full-time employment or move abroad etc.
Your employer (even if it’s your own limited company) must provide you with a P60 Form at the end of the tax year. You should use the information on the P60 to record the income from your employment and the tax you paid in the year on your Self Assessment.
If you’re a sole trader, you need to declare your income from self-employment minus your allowable business related expenses
If you’re running your own limited company and are paid dividends, you need to declare these dividends on your Self Assessment.
You’ll need all the vouchers for dividends issued in the relevant tax year.
In addition, if you have shares in any other company that issued you with a dividend, you’ll need the relevant dividend certificates
If you receive any income from overseas, that needs to be declared also
If you own rental property then you’ll need details of all the income you’ve made through it in the previous tax year. If you want to claim any allowable expenses related to the property, you’ll need to provide records of what you spent.
If you received any pension income, you’ll need a record of the details. Usually your pension company will provide you with a P60 form with this information.
Payment on account
A payment on account is an advance payment towards your tax bill. If this is your first Self Assessment then you’re unlikely to have made any. When you complete a Self Assessment HMRC will let you know how much you need to pay including any payment on account.
These payments are made at the end of January and July each year.
You’ll need to gather all the relevant information on the interest you’ve received from banks or building societies. You’ll need to contact them directly for all the relevant certificates of interest you don’t already have.
Redundancy lump payment / unemployment benefit
If you left a full-time job or claimed unemployment benefit (such as Jobseeker’s Allowance) in the last tax year, HMRC needs to know about it. You should have been given a P45 form or a P60 form from the benefit Provider or employer.
A P11D form is used to inform HMRC about any taxable benefits provided by your employer, such as a company car or private medical insurance. If you received any taxable benefits from any employer in the relevant tax year, they should have provided you with a P11D form detailing them and you’ll need this in order to complete your Self Assessment.
If you’ve made any profits disposing of things like property or shares, you’ll need to have these details at hand also as you may be liable for Capital Gains Tax.
AccountsNet will prepare and submit your return from only £70+VAT, ensuring that deadlines are met and there are no errors likely to cost you money in extra tax or fines.