Taxation of Individuals
Most people pay tax on their income through the PAYE scheme operated by their employer and do not need to complete a tax return. But if you fall under one or more of the categories set out below you will need to complete a tax return after every tax year. This needs to be sent to HMRC together with any tax payment that is due. This is called Self Assessment. Each tax year begins on 6 April and ends on 5 April the following year e.g. 6 April 2014 to 5 April 2015.
Who needs to complete a tax return?
- Anyone who is self employed
- Anyone who is a company director
- Those who are both employed and self employed e.g. run a business in the evenings and weekends, for example ebay traders, tutors, coaches
- Those who earn income from savings and investments over £10,000
- Those who earn income from property over £10,000 before allowable expenses
- Those who earn income from property over £2,500 after allowable expenses
- Those who earn income from abroad e.g. rent from a property abroad
- Those who earn income over £100,000
- Those who have sold an asset during the tax year e.g. a second home, or a rental property
- Ministers of Religion
If you are unsure whether you need to complete a tax return, please contact us for advice.
If you need to complete a tax return, you will need to be registered with HMRC for self assessment. You will then receive a Unique Taxpayer Reference and can choose to submit your tax return on paper by 31 October or submit on-line by 31st January. For example for the tax year 6 April 2014 to 5 April 2015, a paper tax return needs to be sent in by 31st Ocotber 2015 OR an on line return can be submitted by 31 January 2016.
If you choose to submit your return on line, you will need to be registered for on line submission with HMRC.
Penalties for late tax returns
HMRC have introduced new penalties. If you miss the 31st January deadline by a day, you will receive an automatic £100 fixed penalty, even if you have no tax to pay or have paid the tax you owe. If you are over three months late, you will also start to incur penalties of £10 for each additional day that you are overdue up to a maximum of £900.
If you are six months late, you also incur an additional minimum £300 penalty. bringing the total penalties to £1,300.
Clayton Accountants can deal with HMRC on your behalf, taking the headache out of self assessment. We can ensure you are registered correctly with HMRC and get your returns submiited on time, with no penalties to pay.