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Self assessment is a system which involves people who meet certain criteria completing tax returns every year. All income is declared on the return, along with any capital gains. If there are tax reliefs or any allowances to be claimed, these will also be included.

The criteriatax tribunals

Not everyone has to complete a tax return, but if you fulfil certain criteria you may need to contact HMRC and let them know. If you are self-employed, you must register for self assessment and complete a return every year. Company directors also have to complete a return, as do ministers of religion.

If your income is greater than £100,000, you will have to complete a tax return to ensure that you have paid sufficient tax on your income, even if you have had tax deducted through your tax code. With incomes of up to £150,000 you will pay tax at a rate of 40 per cent, but above this amount you will pay 45 per cent.

Investment, savings and property income can be taxed through PAYE, within certain limits. Once the income reaches those boundaries, you will have to complete a tax return with details. If you want to claim any tax reliefs or expenses which are above £2,500, this will have to be dealt with through your self assessment tax return. Some reliefs can only be claimed through a tax return and this includes Venture Capital Trusts and the Enterprise Investment Scheme.

Following the introduction of the High Income Child Benefit tax charge, you must complete a tax return if your income is above £50,000. There are other tax return criteria which may apply to you.

Deadlines and penalties

You can complete a paper copy of your tax return or you can submit it online. If you fill in a paper version, you must send it to HMRC by October 31. If you decide to register for the online services of HMRC and submit your return over the internet, the deadline is January 31. If you miss the deadline for a paper return, you still have the option to complete and submit the return through the website.

Once you have missed this deadline you will be issued with a £100 fixed penalty. Daily penalties will follow, with a maximum amount of £900. Penalties will then be added until the tax return has been submitted.

 

 

About The Author

Karl Bilby

We work very closely with our expert accountants to bring you the latest factually correct tax and accounting news. We also enjoy writing about small business news that we hope you find useful!

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