Self Assessment is the system used by HMRC to collect Income Tax from self employed people as well as those that receive other untaxed income from the UK like dividends from your own company, dividends from other companies, and income property. There are thresholds for some of these income types, and you can check if you need to send a Self Assessment here.
This process can feel overwhelming and confusing, especially if you’re filing for the first time, so we’ve broken down our top advice for filing a Self Assessment Tax Return here.
First time Self Assessments require more time.
The first step to completing your Self Assessment is checking if you have a Self Assessment online account. If this is your first time filing a Self Assessment or you did not send a tax return for the last tax year, you’ll need to register online. After registering, you’ll receive a letter with your Unique Taxpayer Reference (UTR) usually within ten days and an activation code for your account.
If this is your first time filing a Self Assessment, it’s important that you give yourself at least an additional twenty days before the deadline to complete your Self Assessment. This ensures you have time to receive your UTR and activation code in the mail.
Read more about registering for your Self Assessment here.
If you’ve filed Self Assessments in the past, check that you still have access to your account.
Even if you filed a Self Assessment in the last tax year, GO NOW to check that you still have access to your account. It will take seven to ten days to receive a new activation code in the mail if you require one, and missing Tax Return deadlines can have costly consequences.
Stay on top of deadlines.
There are four different deadlines to be aware of when you’re filing your Self Assessment Tax Return. We’ll be using dates for the current tax year – 6 April 2020 to 5 April 2021. You can check the HMRC website to see what the current dates are.
| Register for Self Assessment | 5 October 2021 |
| Paper Tax Returns Due | Midnight, 31 October 2021 |
| Online Tax Returns Due | Midnight, 31 January 2022 |
| Payment of Owed Tax | Midnight, 31 January, 2022 |
| Payment of Owed Tax (second deadline if you have to make advance payments towards your 21/22 tax bill. These are called “Payments on Account”) | Midnight, 31 July, 2022 |
Missing these deadlines could result in a fine from HMRC. There’s a late filing penalty of £100 if your tax return is up to 3 months late, and this penalty will increase if your return is later. You’ll also be required to pay interest on late payments.
You are able to appeal a late filing penalty if you believe you have a reasonable excuse. Some examples of reasonable excuses accepted by HMRC are:
- Your partner or another close relative passed away shortly before the deadline
- You had an unexpected stay in hospital
- Your computer or software failed just before or while you were preparing your return
- You experienced delays related to a disability you have
Visit the HMRC website here to read more about what will and will not be accepted as a reasonable excuse.
Save as you go.
We love surprises, except when it’s a surprise tax bill you weren’t prepared for. To avoid any nasty surprises on the 31st of January, we recommend saving for your tax bill throughout the year. If you’re self-employed, you can use HMRC’s ready reckoner tool to get an estimate of your Self Assessment income tax based on weekly and monthly profit estimates. You can then set aside an appropriate amount each month so you can go into the new year with confidence.
Don’t panic. Get help.
Luckily, HMRC understands that this is a potentially nerve wracking task for self-employed business owners. They have a playlist of videos to walk you through the process of filing a Self Assessment, from explaining why you’ve been sent a tax return, registering and signing in to your online account, and paying what you owe. See all of HMRC’s resources here.
Dealing with HMRC doesn’t have to feel stressful and overwhelming. You deserve to feel confident about every aspect of your business, including filing your returns. If you’re still feeling confused, or you have a more complex tax situation, then we recommend seeking specialised guidance from an accountant or tax adviser.
Fearless Financials can either complete your tax return for you or offer a coaching and review service to help you face all of your financial fears and upskill your tax knowledge. Read more about how we work here and get in touch for a chat today.