Self-assessment is applicable for the purpose of income tax. When tax returns are sent by an individual to the HM Revenue and Customs, a self-assessment statement is received stating the amount the tax payer owes. In case an excess amount has been paid in advance, such an amount will be refunded. Generally under this system, the self-assessment deadline followed is the last day of October (i.e.31st October) every year in case of tax returns filed by paper and 31st January in case of tax returns filed online. Self-assessment tax return is applicable in the following cases:
– Self-employed individuals (i.e.by those who either own a business or practice a profession on their own)
– Individuals who receive an income from any of the below mentioned sources:
- Income from rent
- Income from fees which is not covered under the pay-as-you-earn system
- Income from investments
- Income received by separated individuals
- Income received in case of dissolution of civil partnership
- Income arising out of share incentives
- Receipt of foreign pension
- Receipt of foreign income
Usually salaried individuals need not perform the self-assessment procedure as a certain amount of tax is deducted periodically from their monthly income, if the company is under the pay-as-you-earn system.
An insight to the self-assessment guide:
- Securing the self-assessment form
Self-employed persons and others who are not covered under the PAYE system, upon knowing that their income is liable to tax should get in touch with the income tax office. The self-assessment form may be availed immediately sometimes, though previously the self-assessment forms were sent by post to tax payers individually usually in the month of April. With the onset of the online tax system, the form can be picked up from the official website of the HMRC and filled in. The information thus furnished by the tax payer is utilised by the HMRC who determine the exact amount of tax due from the tax payer.
- Late filing penalties – HMRC rules
The HMRC has issued a new circular outlining a new set of rules for delayed filing and delayed payment of taxes effective from the 6th of April 2012 and applicable to self-assessment returns and payments due from the financial year 2010-2011 and onwards.
The late filing penalties are as follows:
- An instant penalty of £100 for filing the returns after the due date, irrespective of payment of tax.
- A penalty of £10 a day, in case of returns which are filed later than 3 months to a maximum of 90 days.
- A penalty of 5% on the tax amount due, in case of returns filed after 6 months but within 12 months from the due date.
- A penalty of 70% of the tax amount due in case of failure of submission on tax returns for more than 12 months or if the individual has purposely withheld any useful information pertaining to tax from the HRMC.
- The penalty may go up to 100% if the individual is found to have concealed any information asked by the HMRC and failed to submit the returns.
If the self-assessment deadline has crept up on you without you being aware, then you may need to find someone to help you with this. Yorkshire Accountancy are the people for the job and have years of experience helping out self employed individuals and directors alike, contact them today for a no obligation quote!