by Acuaccounts | Dec 7, 2020 | accounting, self assessment, selfemployed, tax, tax return
Self assessment is how HM Revenue and Customs (HMRC) collects income tax not automatically deducted from wages, pensions and savings. People and businesses with other income must report it in a tax return.
Company directors, self-employed or members of partnerships need to file for self assessment. Likewise, if you have made additional untaxed income of more than £2,500 for example by renting out property, you will also have to file for self assessment.
When is the 2019/2020 self assessment due?
Your self assessment tax return for the tax year which started on 6 April 2019 and ended on 5 April 2020 is due by Midnight January 31st 2021 if you file online. The deadline for filing a paper return was October 31st 2020. Furthermore, the tax you owe will also be due on January 31st 2021.
If you have never submitted a return before, you will first need to register for Self Assessment. It can take up to 20 working days for receiving your Unique Taxpayer Reference (UTR) in the post.
There are different ways to register if you’re self-employed, not self-employed but need to declare income, or if you’re in a partnership. The registration for 2019/2020 should have happened by 5th October 2020. To register you need your National Insurance (NI) number and personal and business details.
Who needs to file for self assessment?
You will need to file for self assessment in the following cases:
- your self-employment income was more than £1,000
- you are a director of a company (unless it was a non-profit organisation, such as a charity)
- your income from renting property exceeded £2,500
- you earned more than £2,500 in untaxed income, for example from tips or commissions
- your income from savings or investments was £10,000 or more before tax.
- you need to pay Capital Gains Tax on profits from selling things like shares
- you or your partner’s, income was over £50,000 and you’re claiming Child Benefit
- you have income from abroad you need to pay tax on, or you live abroad but have an income in the UK.
- your taxable income was over £100,000
- if you earn over £50,001 in the 2019/20 tax year (£50,001 for 2020/21) and make pension contributions you may have to complete an assessment to claim back the extra tax relief you’re owed
- you are a trustee of a trust or registered pension scheme
- your State Pension was more than your personal allowance and was your only source of income
- you received a P800 from HMRC saying you did not pay enough tax last year.
You can check if you need to file a self assessment using the government website at https://www.gov.uk/check-if-you-need-tax-return
At AcuAccounts we work to integrate the information from your company or sole trader accounts into your tax self assessment return. We will also factor in income from other investments, land or property and overseas assets if applicable.
What documents do you need to file for a personal tax return?
In order to file for self assessment online you will need to prepare the following documentation:
- your 10-digit Unique Taxpayer Reference (UTR)
- your National Insurance (NI) number
- Details of all your 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 which might be eligible for tax relief
- P60 or other records showing how much income you received which you’ve already paid tax on
Self assessments can be filed either by yourself or by an authorised agent on your behalf, like AcuAccounts.
What is the difference between a personal tax return for self-employed and company directors?
As self-employed, you complete a self-assessment tax return and tell HMRC what profit you have made during that tax year and then you pay tax on this profit. Self-employed record expenses via the self-assessment and are taxed on profits.
In a similar fashion, limited company directors will run expenses through their limited company. A Limited Company pays tax from the moment it makes £1 in profit. However, directors can extract personal income from the Limited Company in the form of salary and dividends. This will be included in the limited company director self assessment, where the personal allowance applies.
How much tax can I expect to pay as a self-employed?
HMRC calculates Income tax for the self-employed on profits plus any other income. As self-employed you pay tax on any earnings that exceed the personal allowance. Business expenses from your self-employed work can be offset against your income from self-employment, reducing your tax bill.
The standard personal allowance for 2019/2020 was set at £12,500, which is the amount of income a person can get before they pay tax.
Can self assessment tax be paid in instalments?
You might be able to pay the bill in instalments, depending on whether you need to make payments against your latest bill or want to make advance payments against your next bill.
According to information on the HMRC website, you can set up a payment plan to spread the cost of your latest Self Assessment bill should you owe £30,000 or less or do not have any other payment plans or debts with HMRC.
It must be remembered that in case you don’t keep up with your repayments, HM Revenue and Customs (HMRC) can ask you to pay everything you owe. Not to mention you can set up a budget payment plan if you want to put aside money to cover your next Self Assessment tax bill ahead of time.
What is next?
You can file your tax return online on the HMRC website or get in touch with us to book a self-assessment consultation at info@acuaccounts.com or by calling us directly on 0203 907 9027.
by Acuaccounts | Oct 8, 2020 | latest news, tax
Please see our latest blog article for the more recent updates from the chancellor’s statement on November 5th, 2020
The chancellor announced on September 24th 2020 a series of measures as part of the Winter economic plan with the aim to protect jobs and support businesses over the coming winter months. Central to the plan is a new Job Support Scheme, the extension of the Self Employment Income Support Scheme SEISS and more flexibilities for businesses to help pay back loans.
We have outlined what you need to know as a business owner or self-employed and invite you to reach if you need further clarification or support in implementing these measures for yourself and your business.
The new Job support scheme starts November 1st 2020
- The Job support scheme takes the place of the current furlough scheme, due to end October 31
- Employees must be working at least 33% of their usual hours
- The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.
- The level of grant will be calculated based on the employee’s usual salary, capped at £697.92 per month.
- Currently confirmed to be available for six months ending 30 April 2021
- Less generous than the current Job Retention Scheme but highly flexible with employees being able to cycle on and off the scheme without the need to keep the same pattern each month. Each short-time working arrangement must cover a minimum period of seven days.
- Can be combined with the Jobs Retention Bonus (£1,000 one-off payment to employers for every furloughed employee who remains continuously employed through to 31 January 2021)
- The scheme applies to all employees, whether they have been previously furloughed or actively working. Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee
Here is an example of how the Job support scheme works:
To help you navigate the complexities and calculate how the scheme could best work for your business get in touch via email or phone.
Tax cuts and deferrals for businesses and self-employed
- 15% VAT cut for the tourism and hospitality sectors is extended to the end of March 2021
- If your business has deferred their VAT bills the New Payment Scheme gives you the option to pay back in smaller instalments where rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
- 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.
Some good news and not so good news for the self-employed
- The Self Employment Income Support Scheme Grant (SEISS) has been extended to cover three months’ worth of profits for the period from November to the end of January next year.
- However, the grant will cover only 20% of average monthly profits, up to a total of £1,875.
- The taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus.
If you have any questions around taxable grants or your next self-assessment tax return due to January 2021 book a call or send us an email
Bounce back loans have been extended
- More than 1.17 million ‘bounce back loans’ have been issued since the scheme launched in May and applications have been extended to the end of November
- Your business can borrow between £2,000 and £50,000 capped at 25% of your total turnover
- No interest will be charged and no repayments will need to be made in the first 12 months and after 12 months, all banks will charge a fixed 2.5% annual interest.
- Bounce back loans may be extended from six years terms to ten, which will cut monthly repayments by nearly half.
- Interest-only periods of up to six months and payment holidays will be available
If you are interested in applying for a Bounce Back Loan from £2,000 – £50,000 or have already taken out a loan and want to verify how these updates affect your cash-flow get in touch to book a financial assessment call.
Kickstart scheme to support employment for young people
- You can create 6-month job placements for young people who are currently on Universal Credit and at risk of long-term unemployment
- And organisation regardless of size can apply for funding. If you have fewer than 30 job placements to offer we can put you in touch with an organisation that can apply on your behalf
- Funding available for each job will cover the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions.
- The job placements created with Kickstart funding must be new jobs. They must not replace existing or planned vacancies or cause existing employees or contractors to lose or reduce their employment
- The roles you are applying for must be: a minimum of 25 hours per week, for 6 months and paid at least the National Minimum Wage for their age group. Roles should not require people to undertake extensive training before they begin the job placement
- The government will initially prioritise young people aged between 16 and 24 who are ready for an opportunity will be supported by their Jobcentre Plus work coach to enrol in the scheme.
To find out what the Winter Economic Plan means for your business get in touch via email or phone.
#Employer #Employee #Salary #Wages #PAYE #business #update #coronavirus #covid19 #income #support #SEISS
by Acuaccounts | Jan 14, 2019 | accounting, tax
If you’re not used to filing self-assessment tax returns, they can seem like a minefield. Here are a few tips from our team:
DO get yourself registered for the self-assessment system. You’ll need a Unique Taxpayer Reference (UTR) number, and they’ll only send it by post. It can take a while, so don’t wind up missing a deadline due to a delay with receiving the letter! You will also need an account and activation code for the Government Gateway site if you want to file online.
DON’T ignore the deadlines or assume it’s okay to be a few days late. If you reach February and still haven’t filed your return, you’ll be walloped with a £100 fine. That’s just for starters, of course.
DO let the taxman know if you’ve got a genuine reason for missing the deadline. If it’s not your fault, he might give you a little breathing room. Don’t count on catching him in a forgiving mood and make sure your excuse is a good one. A major illness might get you off the hook for a week or two.
DON’T assume that you’ve been asked for a tax return by mistake. It can happen but ignoring the demand just because it’s unexpected is always a mistake. If you can prove you don’t need to file a return, HMRC will back off. Until you do, though, they’ll be expecting your paperwork on time.
DO file your self-assessment return even if you know you won’t owe any tax this year. It doesn’t matter how little you earned, HMRC still wants to know about it.
DON’T assume that HMRC doesn’t care about your hobby selling stuff on eBay. If you’re doing enough of it, they’ll call it a business and expect a self-assessment tax return from you.
DO remember to file your self-assessment return, even if you folded your business this year. You need to make sure your books are up to date until the very last day you were trading.
DON’T think you can skip over the self-assessment pages about renting out property just because you make a loss on it. Whether you’re up or down on the deal, you’ve got to account for the money.
The biggest “DO” of all: Talk to AcuAccounts if you need help with your self-assessment return or can’t understand why you must file one. Making a mistake or missing a self-assessment tax return deadline could wind up costing you more than just the tax you owe.
Far too many people are paying more than they should, simply because the rules are too complicated. AcuAccounts tax experts are here to help you understand the self-assessment process, even if you’re due a tax refund and providing support throughout tax return service and tax code queries.
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