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If you haven’t already completed your self-assessment tax return, now is the time to start getting organised. We have started counting days down from 01st November 2021 for filling of the tax year 2020-21 tax returns, which are due on 31-01-2022.
Many UK residents will be completing a tax return for the very first time. Even if you’ve completed a tax return before, changes in your circumstances can make a tax return more complex. As you approach the filling date, it can feel like a difficult process; here’s what you need to know about completing your self-assessment tax return.
Who needs to file a self-assessment tax return?
You would need to send a tax return if you were a self-employed sole trader during the previous tax year (6 April 2020 to 5 April 2021). Sole traders are only required to complete a self-employed tax return if they have earned £1,000 or over.
Individuals with untaxed income or capital gains may also need to file a self-assessment tax return. Examples could include foreign income, dividends, and investments or savings. Other individuals who will need to complete a tax return include:
Landlords: If you earn property income, you need to file a tax return. Your other income from employment and self-employment will also become part of the same tax return as tax is calculated on total income from all sources.
There are several categories of landlord tax to consider, including income tax, capital gains, stamp duty land tax. Income tax and NICs are paid through the self-assessment process, whereas stamp duty and capital gains are paid when you purchase or sell a property. Separate rules apply if you rent a room in your house or run an Airbnb.
High-income individuals who receive child benefit: If any spouse or partner earns above £50,000 and you receive child benefit, you are required to pay a High-Income Child Benefit Charge. You are also required to pay if someone else receives child benefit for the child living with you. To pay this charge, you’ll need to file a self-assessment tax return.
The deadline for paper tax returns was 31st October 2021. The deadline to complete online tax returns is on 31st January 2022. It’s advisable to start preparing your tax return well in advance of the deadline. Non resident landlords and UK domiciled nationals who are not resident in UK for tax year 2020-21 would need help of accountant to file their tax returns.
If this is the first time that you are filing a self-assessment tax return you’ll need to complete the HMRC registration process. Once you’ve filled in the correct form you’ll receive a Unique Taxpayer Reference number.
You can register as self employed and will be automatically regitered for self seessment tax return. If you are a landlord, pensioner or have any untaxed income you can use form SA1 to register for self assessment. Non Resident Landlords need to send form NRL1 along with form 64-8 to get their income without tax deduction from estate agents.
Remember: HMRC will not entertain form NRL1 if you havent appointed tax agent to deal with your tax returns in UK.
Once you’ve received your unique taxpayer reference number you’ll need to create a Government Gateway Account. Your UTR will be sent to you by mail along with instructions about setting up your online account. Regardless of whether you are filing a paper return or an online return, you’ll need the following info:
- National Insurance number.
- Pensions or charity contributions (it may be possible to claim tax relief on these).
- Info of untaxed income, including self-employment income or dividends tax.
- P60 documents, or docs that show tax that you’ve paid already.
- Details of expenses.
You’ll be able to complete your tax return using the above info. Go through the form, and complete only the sections that apply to you. Once you’ve filled in all the relevant sections, check your form carefully before you submit. Remember to save a copy of your tax return for your records.
There are more complex rules for pensions charge for higher rate tax payers and having employment income of more than £190,000.00. Non resident individuals cannot use HMRC online facility to file tax return and they would need help of an accountant or tax agent.
According to GOV.UK, ‘Grants and payments from schemes to support businesses and self-employed individuals during coronavirus (COVID-19) are taxable.’ Individuals will need to report the following grants on their self-assessment tax return:
- Self Employment Income Support Scheme (SEISS)
- Coronavirus Job Retention Scheme
- Coronavirus Business Support Grants
- Eat Out To Help Out
- Self Isolation or Test And Trace Payments
- Coronavirus Statutory Sick Pay Rebate
You can include your SEISS payments in the section entitled ‘Self Employment Income Support Scheme Grant’. Other coronavirus grant payments should be included in the box entitled, ‘any other business income’.
If you are an employed individual who has received furlough payments you’ll need to input your income tax and earnings from your P60. Your P60 document already includes details of furlough payments, so you will not need to enter these separately.
Tax returns are not always straightforward to complete, it largely depends on your personal circumstances. The events of COVID-19 has left many individuals with complicated tax returns to file. Many UK residents started the year as employed, then were placed on furlough, before eventually seeking self-employment.
While you can complete your tax return alone it’s much easier to do so with the help of an accountant. There are several benefits to working with an accountant including:
- Ensure that your tax return is filed correctly with no mistakes.
- Take the stress out of completing your tax return.
- Your accountant can ensure that you don’t miss out on any tax relief or reductions.
- Get your tax return filed promptly, avoiding late charges.
As Tax accountant we offer advice and guidance on all types of tax eligibility whether it’s dividend tax, property income, or tips for sole traders.
Missing the self-assessment tax return deadline incurs a £100 fine. Once the deadline has passed, individuals who have not yet filed their return will have an extra three months to do so. If you have still not filed and paid your tax return by May 1st 2022 you’ll incur a fine of £10 per day, until the return is complete. The additional fine is capped at £900 (90days).