After the dust finally settles from New Year, many people and businesses will have to start preparing for April and the end of the tax year in the UK, and around the corner is the Self-Assessment deadline in the UK.
The term ‘How to pay self-assessment tax’ garnered over 8000 searches in January 2022, so we thought we would provide our readers with an in-depth write-up to help your process.
“When it comes to taxes, there are two types of people. There are those that get it done early, also known as psychopaths, and then the rest of us!” (thanks, Jimmy Kimmel)
Tax returns are always a bit tedious -but very necessary, so let’s get cracking!
What is a Self Assessment?
Self Assessment is a system HM Revenue and Customs (HMRC) uses to collect Income Tax.
Tax is usually deducted automatically from wages, pensions and savings. People and businesses with other income (including COVID-19 grants and support payments) must report it in a tax return.
How do I get started?
If you’ve never submitted a return before, you’ll first need to register for Self Assessment.
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.
It usually takes about 20 days to register, so by the time you’re reading this, you will only have nine days to fill out your return. The following advice is for the return itself and not registering.
What are the Self Assessment deadlines?
You submit tax returns for tax years, not calendar years. And you do this in arrears.
For example, for the 2020/21 tax year – running the 6th of April 2020 to the 5th of April 2021 – you would:
need to register for Self Assessment by the 5th of October 2021 if you’ve never submitted a return before
submit your return by midnight the 31st of October 2021 if filing a paper tax return
submit your return by midnight the 31st of January 2022 if filing online
pay the tax you owe by midnight on the 31st of January 2022.
Once you register, you’ll get sent a Unique Taxpayer Reference (UTR), which you will need when you file your return.
You’ll get a penalty of £100 if your tax return is up to three months late. And you’ll have to pay more if it’s later than that, or if you pay your tax bill late. HMRC will also charge interest on late payments.
Filling out the Self-Assessment form:
Many of the questions in the Self Assessment tax return form are similar. If it’s the first time you’re submitting one, it may be worth reading through everything first before you start to fill it in.
That way, you can see what information goes in each section and complete the task more quickly.
When working online, tax calculators will work out how much you owe. The amount will depend on your income tax band. The tax will be deducted automatically from wages and pensions for some people.
You’ll need to fill in a different section if you have additional income, such as a second property that you rent out.
There’s also a different rate for Capital Gains Tax if you need to pay it – if you sell shares or a second home, for example.
The good news is that you can start sorting out next year’s tax return from the 31st of January this year! If you’re looking to streamline all of your contracts and feel like you would benefit from a centralised document management system – Signable could be the thing you’re looking for.
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Using digital signing means less stress worrying about the status of your documents and more ease adding a signature to a document. When it comes to tax returns – make sure you have your finger on the pulse with all documents and invoices.
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