Self-Assessment is a system HMRC use to collect income tax in certain circumstances (listed below). Usually income tax is automatically taken if you are in paid employment.
You must send a tax return if, in the last tax year (6 April to 5 April), any of the following applied:
you were self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on);
you were a partner in a business partnership;
you had a total taxable income of more than £150,000;
you had to pay Capital Gains Tax when you sold or ‘disposed of’ something that increased in value; or
you had to pay the High Income Child Benefit Charge.
You may also need to send a tax return if you have any untaxed income, such as:
money from renting out a property
tips and commission
income from savings, investments and dividends
foreign income
If any of these circumstances are applicable, you need to tell HMRC by the 5th October if this will be your first self-assessment. You can find out how to do that here.
How to prepare for your self-assessment?
You’ll need to keep accurate records in order to complete your self-assessment correctly. This could be receipts or invoices along with bank statements highlighting your business income and expenditure. It’s always a good idea to have separate bank accounts for this reason.
You’ll also need to know your allowable expenses to pay the right amount of tax. Allowable expenses are classed as costs incurred wholly and exclusively for the business. You can find out more about allowable expenses here.
When and how do I submit my self-assessment?
Once you have registered for self-assessment, you’ll need to file your return and pay any tax owed by 31st January 2025. (For the 2023/2024 period).
You can file any time from April 6th up until the deadline. This can be a savvy move as you will have time to plan how to pay your liability, and get a clearer picture of your finances.
It will also mean the tax return headache won’t be hanging over you during the festive period.
You can file your self-assessment tax return online using the HMRC website. You’ll also be able to file a paper return if wanted, and you’ll find information about how to do this in the same place.
Should I use an accountant to help me?
It’s beneficial to use a professional to put together and file your tax return, especially if this is the first time you are doing it.
Tax Returns can be complex, and an accountant will ensure that you are making the best use of your allowances for tax efficiency.
The penalties for late payments or incorrect tax returns can be hefty, so for peace of mind an accountant can guide you through this.
If you need help registering or filing your 23/24 tax return, the team will be happy to help.
This article was written by Theresa Cientanni - Practice Director and Founder of Soldi Partners.
If you have any questions? Get in touch and we will be happy to chat!
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