Self assessment

Do I need to file a self assessment tax return?

If you meet any of the criteria below you must consider registering for self assessment. For detailed guidance click here If you do need to register, you must notify HMRC within 6 months after the tax year your become liabile. You must then submit a tax return electronically by 31 January the following year

  • Become a company director
  • become self employed
  • are in a partnership
  • receive UK property income
  • receive foreign income
  • beneficiary of a trust
  • sell/transfer a capital asset
  • UK residency position changes
  • receive income/capital from any sources not already mentioned.

When is the UK self assessment tax year

A tax year runs from 6 April to 5 April. A tax return must be filed electronically by 31 January the following year - any tax due must also be paid by this date.

How much tax do I need to pay?

This depends entirely on your personal circumstances. The UK tax code is extremely complicated. The legislation can be interpretaed in a number of differnet ways and it is not uncommon for a taxpayer and HMRC to disagree and end up in court asking a judge to determine who is right. The capital gains tax regime provides lower rates of tax compared to the self employed tax regime.

Tax penalties for not filing

HMRC have wide ranging powers and could, in the worst case scenerio, start a criminal prosecution for tax fraud. In terms of tax penalties - you could be fined 100% of the potential tax liability and charged interest thereon.

Tax penalties for filing late

If you have a reasonable excuse, HMRC will remove the penalties. What you think is reasonable might be at odds with HMRC and often these disputes are taken to a tax tribunal for an independant decision. If HMRC disagree with your excuse, the following HMRC tax penalties await you:

  • 1 day late - £100
  • 3 months late - £10 per day, a max of £900
  • 6 months late - £300
  • 12 months late - £300

Paying tax late

If you will struggle to pay you tax bill - HMRC may agree a time to pay arrangement with you depending on your personal circumstances. If you don't speak to HMRC and don't pay your tax the following interest charges appy:

  • 5% - if the payment is 30 days late
  • A further 5% - if the payment is 6 months late
  • A further 5% - if the payment is 12 months late

Self assessment error or mistake or unable to provide paperwork to support an expense?

Income tax penalties may apply. The rate at which the penalty applies ranges from 0% - 100% and is based broadly on 2 factors.

  • Who found the error. If it is HMRC, the starting point for the penalty rate will be higher. If you volunteer the information, the penalties could be as low as 0%.
  • The reason for the error. There are 3 buckets ranging from i) Not-deliberate ii) deliberate iii) deliberate and concealed. A lower penalty applies for (i) and a higher rate applies for (iii). The burden of proof sits with HMRC and is quite high. As an example, adding an extra 0 in an expense on your tax return may be considered not-deliberate but selling a property and moving the funds into a relatives account overseas could be considered deliberate and concealed.

How can a personal tax return accountant help?

  • Offering a range of tax preparation services
  • Preparing your self assessment online
  • Agree a fixed price
  • Provide a free consultation.

How much does a tax return accountant cost?

From £99 per year