With less than 10 days left until the self-assessment deadline of 31st January 2023, it is vital to understand the key dates and potential relief options for filing and paying taxes via self-assessment.
This article will cover the most important questions surrounding self-assessment, including the filing and payment deadlines, potential relief options for those who may not be able to meet the deadlines, and how AcuAccounts can support individuals in filing for self-assessment.
Regardless of whether you are a first-time filer or a seasoned pro, it is necessary to stay informed and remain on top of your UK tax obligations.
What is self-assessment in the UK and what is the deadline?
Self-assessment is a process that individuals in the UK use to report their income and taxes to HM Revenue & Customs (HMRC). The process can be overwhelming, especially for those new to it. Self-assessment generally applies to everyone, except for employees on payroll earning less than £100,000 a year.
The self-assessment tax deadline of 31st January 2023, applies to the period between 6th April 2021 and 5th April 2022. Individuals must file for self-assessment and pay any taxes owed for the income earned during this period by 31st January 2023.
If an individual has never submitted a self-assessment tax return before, they had to register for self-assessment by 5th October 2022. The deadline to submit the paper tax return was 31st October 2022. The 31st January 2023 deadline only applies if the self-assessment is filed online. The tax owed must be paid by 31st January 2023.
One option open to taxpayers who cannot meet the deadline for self-assessment is to request an extension on the deadline to file their return by contacting HMRC. A valid reason for the extension will be required. Another option is to apply for a Time to Pay arrangement with HMRC, which allows taxpayers to pay any taxes owed in instalments rather than in one lump sum.
Who needs to file for self-assessment in the UK?
Self-assessment applies to anyone self-employed, a company director, or a person who has income from other sources such as rental properties or investments.
Individuals falling into one of the following categories will need to file for self-assessment:
- Self-employed individuals
- Company directors
- Individuals with income from rental properties over £2,500
- Individuals with income from investments over £10,000 before tax
- Individuals with foreign income
- Individuals with income from trusts, settlements, or estates
- Individuals with capital gains
- Individuals with taxable income over £100,000
- Individuals with income over a certain threshold from savings or investments
- Individuals who receive child benefits and have an income over £50,000
Please note that directors of a company on payroll receiving a salary will have their taxes deducted through Pay As You Earn (PAYE) and may not need to file for self-assessment unless they have other income sources that fall into the categories mentioned above. However, we recommend consulting with an accountant before making a decision to not file.
The government website offers a helpful tool to determine if you need to file for self-assessment at https://www.gov.uk/check-if-you-need-tax-return
For more information, feel free to speak to our team at info@acuaccounts.com or call us directly on 0203 907 9027.
What documentation is needed for filing for UK self-assessment?
When completing a self-assessment tax return, individuals must have all necessary information and documentation showing details of income and any business or income-related expenses.
Before starting the process, individuals should ensure they have the following:
- Ten-digit Unique Taxpayer Reference (UTR)
- National Insurance number
- Details of any untaxed income from the tax year, including income from self-employment, dividends, and interest on shares
- Records of any expenses relating to self-employment
- Any contributions to charity or pensions that might be eligible for tax relief
- P60 or other records showing income that tax has been paid already
What are common mistakes when filing for self-assessment?
A common mistake that people make when filing their self-assessment tax return is claiming for expenses that are not allowed. It is critical to consider that only expenses “wholly and exclusively” for business use can be claimed.
Additionally, not keeping accurate records is another mistake that people make, in addition to not understanding their tax code and not including PAYE income. To check the tax code for the current year, you can visit the official website of HMRC, https://www.gov.uk/check-income-tax-current-year.
Furthermore, a common oversight is not claiming for all the expenses an individual is entitled to and not taking advantage of all the tax relief allowances, such as Personal Allowance, Marriage Allowance, Home Office Allowance, Trading Allowance and more. For example, if an individual is self-employed and uses their car for business, they can claim mileage expenses. Similarly, landlords can claim the cost of repairs and maintenance on their rental properties.
Self-assessment can be confusing and overwhelming for many business directors, entrepreneurs and self-employed. However, by understanding the basics of self-assessment and common mistakes to avoid, they can ensure that they are reporting their income and taxes correctly. Individuals must register for self-assessment, submit on time, and prepare all the necessary information and documentation. Additionally, they must be mindful of what expenses they can rightfully claim and how to make the most of tax-free allowances.
Do you have questions about your self-assessment? Any concerns about how to manage your taxes and business in 2023 or do you need help to submit your self-assessment tax return?
Have a look at our services and feel free to contact us. You can book a consultation at info@acuaccounts.com or call us directly on 0203 907 9027.
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