According to HMRC, more than 10 million self-assessment tax returns were completed in 2016/17 - a figure which looks set to rise as levels of self-employment continue to increase.
If you registered as self-employed in 2017/18 or need to submit a tax return for the first time, the deadline for registering is just around the corner - on 5 October 2018.
This is so you can report untaxed income you earned in 2017/18 above certain thresholds.
HMRC has issued a reminder for its customers to check whether they need to complete a self-assessment tax return, and make sure they register before the deadline.
Angela MacDonald, director-general of customer services at HMRC, said:
"January may seem a long time away, but if you've not done self-assessment before and you're now required to, you need to register.
"It's really easy to do and doesn't take long. If you're not sure if you need to do self-assessment or not, go to GOV.UK and all the information you need is there."
Who needs to complete self-assessment?
While most self-employed people are already aware they need to complete a self-assessment tax return, this isn't the only reason you might have to file one.
You may need to fill in a self-assessment tax return for various other reasons, including if:
- you've earned £2,500 or more in untaxed income, such as from rental property, savings or investments
- you've earned £10,000 or more before tax from savings and investments
- you received profits from chargeable assets (subject to capital gains tax)
- you have received dividends
- you're a limited company director or shareholder
- you have an annual income of more than £100,000.
Registering
If you're filing online for the first time or did not send a tax return last year, you'll need to register for self-assessment by 5 October.
There are different ways to do this depending on whether you're self-employed, not self-employed, or filing for a business partnership.
Self-employed individuals filing a return for the first time can register online on HMRC's website.
You'll receive a 10-digit unique taxpayer reference when you register for the first time, which you'll need to make a note of for sending any future returns.
Filing
You can choose to file your return either online or on paper - but with around 93 % of people completing it online in 2016/17, it usually makes sense to make the most of technology.
Online returns for 2017/18 must be completed by midnight on 31 January 2019. Alternatively, if you're among the minority of people who will be completing a paper return this year, the deadline isn't far away, on 31 October 2018.
You can use HMRC's guidance to find out which forms you'll need to fill in and how, or speak to us for advice.
You'll usually need the following records to hand:
- P60, P45 and P11D forms
- your business records
- profit and loss account
- bank statements
- personal pension contributions certificates
- gift aid donations.
Paying
Once you've completed your return, HMRC will calculate the tax you owe. This includes any tax you owe for the previous tax year, which is known as a balancing payment.
You'll need to pay this, along with your first payment on account, by 31 January.
Your second payment on account needs to be paid by 31 July.
Penalties for late returns
You'll face a penalty of £100 if your tax return is up to 3 months late, which will increase the longer you leave it. There are also fines if you pay your tax bill late.
You can appeal against a penalty with a reasonable excuse, but these are limited and only apply when you took reasonable care to meet your tax obligations.
In general, it's best to prepare your return as early as possible to avoid any risk of missing the deadline - or leave it to us, and we'll ensure it's completed on time.
We can help with your self-assessment tax return.
