Let’s talk about self assessment

We’re just over two a months into the new tax year and you may have received notification from HM Revenue & Customs of the requirement to complete a tax return for the year ended 5 April 2023.

For anyone who’s gone through this process year after year, that letter won’t have come as a shock, but there will be many who are facing the prospect of having to complete a tax return for the first time – and that can feel daunting.

Individuals who come under the self assessment rules need to submit an annual self assessment tax return electronically to HM Revenue & Customs by 31 January each year. They may also need to make payments of tax on 31 January and 31 July each year.

There’s often confusion regarding the requirements for self assessment registration, so let’s break this down. Individuals must complete self assessment tax returns if they are:

·       Self-employed (with income of more than £1,000).

·       A partner in a business partnership.

·       Earn more than £100,000.

Individuals may also need to complete self assessment tax returns if they:

·       Rent out property.

·       Have income from savings or investments.

·       Have foreign income.

·       Dispose of an asset for a chargeable gain.

·       Are liable to pay the High Income Child Benefit charge.

·       Have income tax reliefs to claim.

HMRC must be notified by 31 October following the end of the tax year if an individual is not a self assessment taxpayer, but where there is a requirement to complete a tax return.

Failure to submit tax returns or pay tax on time may result in individuals having to pay interest and/or penalties – so yes, it’s worth dealing with your tax return in advance and not leaving this until the last minute.

However, it is possible to submit returns on a provisional basis and then submit an amended tax return at a later date.

The requirement to complete tax returns annually will gradually disappear for many individuals (in particular the self-employed and property owners) over the next few years with the phased introduction of Making Tax Digital, and I’ll be discussing this further in a later blog post.

If you’re unsure as to whether you will need to submit a tax return for the year ended 5 April 2023, please get in touch.

Photo by Christin Hume on Unsplash.