Self-assessment is one of the methods that HMRC deploys to collect income tax. But the process can be confusing and time consuming for individuals and businesses. Unfortunately, if you do not file the returns on time, it can lead to costly penalties. At Hammersmith Chartered Accountants, we understand how complex the process is. So, we endeavour to spare you from the headache.
When you engage us, the first thing we do is to liaise with your bank, stockbroker and building society. They should help us gather the data required for your annual returns filing.Thereafter, we calculate the amount of tax you owe and file returns on your behalf. We also go a step further to advise you when the next payment is due. In some cases, we will advise on what needs to be done in the future to reduce the tax bill.
We are experienced in tax filing and so we will advise you on the important records you need to keep to make the process easier. Besides, we will introduce you to appropriate tax- saving ideas depending on your special circumstances. Also, if HMRC selects you for investigation, you can count on us. We will represent you and ensure that you get cleared.
Why You Need Us
Most people in the UK do not understand what self-assessment is all about. This can be explained by the number of taxpayers that are fined each year. They pay hefty penalties for filing their returns late. The reason the penalties is that most of them will have outstanding returns months after the end of the exercise. The matter is made worse by the ever-changing legislation. When HMRC changes regulations it becomes difficult for most people to file the returns on time. If you find yourself in any of these situations, you should not worry. We will do the donkey work for you. We will compute the amount due and file the returns on your behalf. We will also study your ventures and advice on how you can minimize the tax liability. You can trust us to act as your agent. Also, we will deal with HMRC and represent you if you become their subject of interest.
If you did not send returns last year, the first thing we will help you do is to register. How you will do this depends on many aspects. Most importantly is whether you are a sole trader or self-employed. You need documents such as receipts and bank statements. These are documents that can help you minimise errors while filling the tax returns.
We use advanced software to file returns online. It ensures that they are error-free and allows us to submit them on time. Note that HMRC must receive the tax returns before the deadline. For people in self-employment, or those running a sole trader business or partnerships the deadline will be 5th of October 2019. Those who plan to submit paper returns have up to 31st October 2019 midnight. But you are one of those people that make advance payments, you have up to July 31st the following year. Note that tax owing for 2019 should be paid by 31st January 2020.
Things to Note
It is critical to remember that anyone filing returns later than the stipulated date will pay a fine. However, if the person has a good reason for being late, they can file an appeal to allow HMRC to consider it. Some people may prefer to have the tax collected from wages and pension. Such people must submit the return online by 30th December. Trustees of non-resident company and registered pension schemes may only submit paper returns. They cannot submit their returns online.
If you run a partnership limited company, the returns should be filed within 12 months of your accounting date. But if you intend to submit paper returns, it should be done within 9 months from the accounting date.
Anyone sending the tax return later than the stipulated deadline will incur a penalty of £100. This is if they submit the returns within 3 months after the deadline. Those who pay the tax bill later will pay the fine and accruing interest. Note that all partners will be required to pay the penalty if the tax return is late.
HMRC calculates the tax owed based on the report filed. And again, the tax one pays depends on the tax bracket your income falls in.
From this discussion, it is clear that the process is complex and could be a source of sleepless nights. So, you need some help from an experienced accountant. At Hammersmith Chartered Accountants we can partner with you. We will ensure that you carry out a credible self-assessment and submit the returns on time. It does not matter the kind of business you do. Also, if you sold properties like a house or shares, you will need to pay tax. The trouble is that you may not know the exact amount of money you should pay as tax. We will help you compute the amount that must be paid.
Filling the Returns
Before you commence the process, you must get the documents you will need to file returns. Documents such as receipts and bank statement are vital. It makes it easier for you to file returns.
What You Need Before Starting the Process
- The UTR number
- National insurance number
- Details of the untaxed income (income on dividends, share or self-employment)
- Records of expenses if you are self-employed
- Documents showing contributions to pension and charity for tax relief purposes
- Records showing the amount of income you have so far received but on which you have paid tax on (P60)
Who Should Fill The Self-Assessment Tax Return?
- Anyone in self-employment but whose income is more than £1,000
- If you rent out the property and collected an income exceeding £2,500. However, if you the income you received from the rented property is £1,000 – £2,500 you must contact HMRC.
- Anyone earning untaxed income above £2,500. This is the money that may be received in terms of tips and commission.
- If the income from investments and savings exceed £10,000 before it is taxed.
- Capital gains when you sell things such as your second home or shares.
- If are a director of any firm or company that is not a non-profit making or charity.
- If you are claiming child benefit from a partner whose income is over £50,000.
- If you live in the UK and earn income from abroad. Also, anyone living abroad but who earn their income in the United Kingdom.
- Anyone whose taxable income is more than £100,000.
- A person who earned more than £50,001 in the 2019/2020 financial year but made pension contributions may fill the assessment forms to claim the owed tax relief.
- Anyone who is a trustee of a pension scheme
- If the state pension is the only source of income but it exceeded your allowance.
- If HMRC sent you a P800 claiming that the tax you paid the previous year was insufficient
- Anyone contemplating making voluntary class two National Insurance Contribution. The contribution may be made to qualify for the benefits like the state pension.
Any person who pays tax via the PAYE system and earns less than £100,000.
Registering For A Self-Assessment
If this is the first time you are submitting your returns, you should consider registering for self-assessment. If you are not self-employed or self-employed but feel that you should declare your income, you will need to visit Gov.uk website and get registered. If you are successful, you will receive a UTR (Unique Taxpayer Reference) number upon registration. The next thing you will need to do is to have a Government Gateway account set.n Instructions on how you can do this are contained in the letter that contained the UTR details.
Once everything is done, you will receive an activation code. Use the code to set- up to a Gateway account. Note that anyone who has submitted tax returns before will need the old UTR. The number helps in setting up the account before they register themselves.