Self-assessment tax returns.
It's one of those things that gets mentioned a lot, and everyone assumes that everyone else knows what it means.
And maybe that's the case. Maybe everyone who needs to know, knows.
But then again, maybe not. If you're anything like us, you might be wondering about the who, what and why of tax returns.
So, if you're not sure what one is, or if you're getting in a flap over whether you need to complete one, don't panic. Here's our very basic guide to tax self-assessments.
Skills required: none.
The (very) basics
First up: not everybody needs to do a tax self-assessment.
If you do, HMRC usually contact you in April or May (just after the financial year end).
If you pay tax through PAYE, you don't need to file a tax return. The system will have already deducted the right amount of tax from your salary.
Simply put, the purpose of a tax return is to make sure everybody has paid the right amount of tax. If you're not a PAYE taxpayer, you need to declare your last year's income and pay the right amount of income tax.
However, tax returns also work in the opposite way. You can claim back the tax or VAT on certain business expenses. This applies to things like mileage allowances, specialist clothing or equipment, subscriptions to professional bodies, or household expenses if you work from home.
Even if you don't need to file a tax return, you can still get tax relief on some expenses. There’s more information on what you can claim as expenses here and on HMRC's website.
The who
Although HMRC get in touch with you, it's a good idea to know if you're one of the ones they'll be getting in touch with. If you don't complete a tax return when you're meant to, you could face a £100 fine.
If you're any of these, and you haven't had a letter from HMRC, you should contact them today:
- You're self-employed.
- You're a company director, minister, Lloyd's name or member.
- Your annual income is £100,000 or more.
- You have income from savings, investment, or property.
- You or your partner get child benefit and your income is over £50,000.
Not taxing
You've got just ten days to get yours sorted. If you haven't started it yet, don't leave it until the last minute. It can take a day or so to get set up on the HMRC website, and that threat of a fine for late submissions is an ever-present.
For more information, visit the HMRC website.
rules and regulationsrunning a businesstax