HMRC Self Assessment FAQ
I’ve been submitting a self assessment tax return for over five years now. At a time it was a rather daunting task for 20-something however, thanks to new cloud software such as Xero this process has been made simple and straight forward. While my tax affairs have become more complicated in recent years forcing me to hire an accountant.
For a long time I committed to becoming a ‘Jack of all trades’ and saved myself some serious cash by doing so. April marks the end of the tax year once again, which is exactly why I want to share with you the very basics of a self assessment tax return. I hope that by doing so I can help you to save time, money and hassle.
Who Needs To Complete A Self Assessment Tax Return?
Not everyone needs to complete a tax return. The majority of UK tax payers have their tax collected at source through the Pay as You Earn Scheme. This is where employers run a payroll scheme that deducts the correct amount of tax and national insurance each month.
The employer is then legally obliged to pay this amount over to HMRC every month or every three months depending upon their size. There are however many reasons as to why 7 million people in the UK need to submit a self assessment tax return to HMRC.
Below are the most common;
Income above £2,500 from Land or Property
Company Director or If you are self employed
Income from a pension and a salary 40% income tax payer and have savings income
Receive an income from investments that are not taxed at source.
Income from foreign sources Income subject to capital gains tax
Just remember this is just a few examples. If you are unsure as to whether or not you should be completing a self assessment contact HMRC directly.
When Does The Tax Year Start? And End?
The tax year runs from the 6th April until the 5th April each year.
When Do I Have To Submit My Tax Return?
I believe the deadline is very generous. HMRC give you until 31st January to submit and pay your return. That’s around 10 months!
Yet many still fail to meet that deadline and by doing so receive penalties for doing so. Many of us also leave it to the last minute. Causing unnecessary stress and running the risk of being unable to submit the return on time.
How Much Does Submitting A Self Assessment Cost?
If you’re willing to put in the graft and do all the work, record keeping and mathematics yourself then submitting your self assessment tax return to HMRC is totally free. However, remember time is money and it’s often all about finding the best of both worlds.
You can outsource your self assessment return entirely to a bookkeeper or accountant. This could cost anything from £300+ per year. It’s entirely dependent on the accountant you choose and your personal circumstances.
However, I found the middle ground for myself was using the cloud based accounting platform Xero. It cost less money than an accountant, but also required less work than doing the entire thing myself. Time vs Money for me personally it was a winner!
Where Can I Learn More About Self Assessment?
I remember when I first went into the world of self employment. It was a first for anyone in my family, and being young at times I found it confusing and hard to understand. HMRC knows this is often the case regardless of your situation which is why they host regular webinars.
Just remember that if you’re confused or for whatever reason don’t understand you should always contact an accountant or HMRC directly. They’ll be able to tailor the answer to your particular circumstances, ensuring that you’re always submitting your self assessment forms correctly. I hope this latest post has given you some insight into submitting your own self assessment tax form.
The most important thing to remember is to complete your form as early as possible, and keep on-top of your record keeping. This is going to really reduce the time it’s going to take you to complete your return whether you choose to use an accountant, cloud based accounting services or do it yourself.