Self Assessment Deadline Looms: Useful Info & Tips14th January 2016
It’s that time of the year again. No, we don’t mean diets, gym memberships and other New Year’s resolutions. Self assessment for the 2014-15 tax year must be filed and tax paid by 31 January 2016.
Some Fun Statistics Released by the HMRC
As the HMRC has just announced, the latest holiday season saw record numbers of people filing their tax return at the least expected times. 24,546 taxpayers submitted their Self Assessment return online on New Year’s Eve (2.8% more than the previous year) and 11,467 did so on New Year’s Day, including more than 600 who submitted the return between midnight and 10am. Christmas Day (2,044) and Boxing Day (5,402) submissions broke records too.
Records aside, the above numbers are obviously still a tiny fraction of the population. In the final days and hours before the deadline at the end of January each year, the number of submissions can reach several hundred per minute.
If you are like most people, your tax return has yet to be done. The following is some information and tips which may be useful.
What Is Self Assessment?
Self Assessment is a system for taxpayers to report their income to HMRC. It is called that because it is the taxpayers’ responsibility to correctly assess all their taxable income and calculate tax due, unlike other situations when tax is automatically deducted at source, e.g. for wages, savings and pensions.
Who Must Submit a Return
Some people wrongly believe that Self Assessment is only for self employed or very rich individuals. It is true that not all taxpayers need to submit a return. You generally don’t if your income is only from employment plus a small amount from savings. However, there are many other income sources and situations which make Self Assessment mandatory, such as the following:
- Self employment
- Capital gains, for instance when selling shares or property
- Dividends, interest and other savings income beyond a certain level
- Income from abroad
- Total income over £100,000 (or £50,000 if you claim Child Benefit), even when it is from employment only
- Being a company director or a trustee
These are just examples. A detailed overview is available on the official HMRC website. If you are not sure whether you need to send a tax return, you should always consult a tax advisor or contact HMRC directly.
Note that sometimes you need to submit a tax return even when there is zero tax to pay.
The tax year always runs from 6 April to 5 April.
After the end of each tax year, if your personal circumstances and income sources require it, you must submit a Self Assessment return and pay taxes by 31 January the following year. This applies to online submissions only; if you prefer to send a paper return, the deadline is 31 October (three months earlier).
How to Register for Self Assessment
In order to be able to file a tax return you must first register for Self Assessment. You will get a taxpayer reference and other necessary information from HMRC.
This process normally takes up to two weeks (but can take as much as four weeks, depending on your circumstances). It is therefore very important to start early. There is an official deadline for the registration (5 October), but usually you won’t pay a penalty for late registration as long as you submit your tax return and pay tax in time. Once you are registered you won’t need to register again in subsequent years.
Detailed instructions how to register for Self Assessment are available on HMRC website.
How to File a Tax Return
There are numerous options for filing your return and calculating the taxes due. Many taxpayers, choose to hire an accountant, but that is not mandatory. There are also various software solutions to help you. If you choose to submit the return online (rather than using the paper form), the interface will calculate the taxes automatically once you fill in your details and correct amounts for individual income sources.