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HMRC Self Assessment – HM Revenue and Customs (HMRC) uses the Self Assessment system to collect Income Tax from individuals and businesses with income not automatically taxed, such as self-employment earnings, rental income, or investment gains. This topic covers HMRC self-assessment and HMRC Tax Return.

Timeframe for Self-Assessment:

The tax year in the UK runs from 6 April to 5 April of the following year. For the tax year ending 5 April 2024, the key deadlines are:

• 5 October 2024: Register for Self-assessment if you’re a new taxpayer.
• 31 October 2024: Submit paper tax returns.
• 31 January 2025: Submit online tax returns and pay any tax owed.

Eligibility for Self-Assessment:

You must file a Self Assessment tax return if, during the tax year, you:

• Were self-employed or a partner in a business.
• Received £2,500 or more in untaxed income, such as renting out property.
• Had savings or investment income of £10,000 or more before tax.
• Made profits from selling assets (e.g., shares, property) and must pay Capital Gains Tax.
• Were a company director (unless it was a non-profit organization and you didn’t receive pay or benefits).
• Had income from abroad that you needed to pay tax on.
• Lived abroad and had a UK income.
• Your taxable income was over £100,000.
• You or your partner’s income was over £50,000, and you claimed Child Benefit.
• Received income from a trust.

This list isn’t exhaustive. If you’re unsure about your requirement to file, consult HMRC or a tax professional.

Submitting a Self-Assessment:

You can submit your Self Assessment tax return:

• Online: Register for HMRC’s online services to file electronically.
• Paper: Complete a paper tax return and post it to HMRC.

Filing online is generally more efficient, offering immediate calculation of tax owed and an extended deadline compared to paper submissions.

Ease of Submission:

The complexity of completing a self-assessment tax return varies based on individual circumstances. For straightforward financial situations, many find the process manageable using HMRC’s guidance. However, if you have multiple income sources, complex investments, or are unsure about certain tax rules, seeking professional advice can be beneficial.

Role of Accountants:

Accountants can assist with:

• Accurately completing and submitting your tax return.
• Identifying allowable expenses and potential tax reliefs.
• Ensuring compliance with tax laws and regulations.
• Representing you in dealings with HMRC.

Engaging an accountant can provide peace of mind, especially in complex tax situations.

Penalties for Late Submission:

Failing to submit your tax return or pay any tax owed by the deadlines can result in penalties:

• Late Filing Penalties:
  • Missed Deadline: £100 penalty.
  • 3 Months Late: £10 daily penalties, up to a maximum of £900.
  • 6 Months Late: Additional £300 or 5% of the tax due, whichever is higher.
  • 12 Months Late: Further £300 or 5% of the tax due, whichever is higher; in serious cases, up to 100% of the tax due.
• Late Payment Penalties:
  • 30 Days Late: 5% of the tax unpaid.
  • 6 Months Late: An additional 5% of the tax unpaid.
  • 12 Months Late: A further 5% of the tax unpaid.

Interest is also charged on late payments. These penalties can accumulate, so timely submission and payment are crucial.

GOV.UK

If you have a reasonable excuse for missing a deadline, you can appeal against a penalty. Examples include serious illness or bereavement. Appeals should be made within 30 days of the penalty notice.