If you run a business in the UK, receive income from property or meet other HMRC requirements, you will need to complete a special tax return each year. What exactly is Self Assessment, how do you prepare one and how much time do you have to complete it?
What is Self Assessment?
Self Assessment is nothing more than a tax return. It is submitted once a year to inform HMRC of the taxable profits you have made. This is used to work out how much tax you should pay.
When do you need to submit a self-assessment?
The obligation to complete a self-assessment does not apply to everyone. However, if you are, you must complete this declaration:
- self-employed (registered as self-employed) and earn more than £1,000,
- a partner in a partnership,
- a company director, and your income is not taxed under Pay As You Earn (PAYE),
- earning income such as:
- rental income from property,
- commissions,
- income from savings, investments, and dividends,
- foreign income,
- receiving child benefit (in some cases).
The obligation to complete a self-assessment does not apply to everyone. However, if you are, you must complete this declaration:
Not everyone is required to complete a self-assessment. However, if you are, you must complete this declaration:
It is also possible that the tool on the GOV.UK website tells you that you are not required to file a tax return, but you receive a notice from HMRC stating that you are. In this situation, you must ask HMRC to remove the requirement to file a tax return.
The same applies if HMRC imposes penalties for late submission of a Self Assessment but the tool shows that you were not required to submit a return. If HMRC waives the requirement, the late filing penalties will automatically be waived.
However, you must apply for the cancellation of the liability first. If you submit the return first, HMRC will not be able to carry out both actions automatically (cancellation of liability and cancellation of penalty). In such cases, an appeal will be required.
How much time do you have to submit a Self Assessment?
There are penalties for failing to file a tax return, so it is in your best interest to meet the deadline. The exact deadline depends on when HMRC issues the notice and whether you file your return on paper or online.
When the tax return or self-assessment notice is issued:
- Before 31 July 2021 – you must file your return by 31 October 2021 (paper) or 31 January 2022 (online),
- between 1 August and 31 December 2021 – you must submit the return 3 months after the date of the notice (paper) or by 31 January 2022 (online),
- between 1 September and 31 October 2021 – you must submit the return 3 months after the date of the notice (paper) or by 31 January 2022 (online),
- after 31 October 2021 – you must submit the return 3 months after the date of the notice (both paper and online).
If you owe less than £3,000 for a given year and want the tax to be collected through the 2023/24 PAYE code, you must submit the 2021/2022 return by 31 October (paper) or by 30 December 2022. Note that the deadline is 30 December, not 31 December!
