Updated: Jan 17, 2020
A Self Assessment is one of the most significant tax documents you’ll be dealing with when you’re self-employed, and if you’re not careful, it could be the one that causes you the most headaches. So let’s take a look at exactly what it is, whether you’ll need to file one, and why it’s important to stay on top of it.
What is a Self Assessment?
Simply put, a Self Assessment (or Form SA100) is HMRC’s way of finding out how much Income Tax and National Insurance you need to pay. Employees have their Income Tax deducted automatically from their employment income – this doesn’t happen for self-employed workers, or for some other types of income, such as pensions or income from savings and investments, which is where the Self Assessment comes in.
If you need to file a Self Assessment then you’ll need to complete it and submit it to HMRC (usually online) before the 31st January deadline. HMRC will use the information you provide to calculate how much Income Tax and National Insurance you’re required to pay (which must also be paid by the 31st January).
As well as our detailed business guide we can also provide a free consultation to advice you.
Do I have to file a Self Assessment?
As a general rule, anyone who receives income that isn’t taxed at source needs to complete a Self Assessment.
In the case of a sole trader, the income you receive from your trade doesn’t have National Insurance Contributions or Income Tax deducted from it, so you need to tell HMRC about that income on a Self Assessment form so they can calculate what, if any, tax you owe.
If you’re a limited company director, you’ll usually need to file a Self Assessment. Other examples of income not taxed at source can include rental income from any property you own, income from abroad, or investment (dividend) income.
The complete list of who needs to complete a Self Assessment is available on the Gov.uk website – the website also has an online tool that will tell you if you need to file a return.
When do I need to register for Self Assessment – do HMRC issue me a Self Assessment notice or do I need to contact them?
If you meet any of the criteria that mean you need to complete a Self Assessment, the first step is to register. You need to do this by the 5th October after the end of the relevant tax year. For the tax year that ran from 6th April 2017 to 5th April 2018, the deadline for registration is 5th October 2018.
Registering for Self Assessment isn’t an automatic process when you set up a limited company or register as self-employed, so you’ll need to notify HMRC of your situation. You can do this personally by phoning the Self Assessment Helpline on 0845 900 0444 or registering online. Alternatively, if you’re our client, we can register you as part of our personal tax service.
When do I have to complete a Self Assessment?
You have to file your Self Assessment by 31st January after the end of the tax year it applies to. Tax years run from 6th April to 5th April. You don’t have to wait, though. If you’re employed, you can submit your Self Assessment as soon as you receive your Form P60 from your employer.
If you run your own company, you’ll need to issue the Form P60 from your PAYE system or get your accountant to prepare it for you. If you’re a sole trader then you can file your Self Assessment as soon as the tax year ends. There are lots of reasons why filing your Self Assessment early is a good idea.
What happens if I don’t register and file in time?
If you fail to notify HMRC, you may face a fine or penalty and will have to submit Self Assessments for prior tax years where applicable. If you’re unsure whether you’ve registered, you can contact HMRC with your National Insurance number on hand to confirm one way or another.
If you fail to submit your return once you’ve registered for Self Assessment, you can incur some fairly significant penalties.
HMRC are becoming increasingly strict on deadlines and penalties for late returns, so we can’t stress enough how crucial it is to get your Self Assessment filed on time.
We take the pain out of Self Assessments
We’re experts at looking after life’s numbers, so you can trust us to make your Self Assessment as worry-free as it can be. Our expert chartered certified accountants will take care of you.