A Self Assessment tax return is the means by which you calculate your personal tax due, inform HMRC of the tax due and pay the tax.
It entails you preparing a self-assessment Tax Return (called an SA100) each year.
You will be obliged to prepare an SA100 if:
- You are Self-employed
- You are a Director of a company
- You are A Trustee
- If you have foreign income
In most circumstances, employees will not need an SA100 as their tax is taken care of inside their tax code. However, if an employee has other income which has not been taxed or expenses that have not been claimed then it may be that a tax return is needed.
HM Revenue & Customs impose strict deadlines for the lodgement of these returns and the payment of any tax due.
Paper returns must reach HMRC by the 31st of October following the year end; if this date is missed then a return must be lodged online.
Tax Returns must be lodged by the 31st of January following the year end.
Below is a summary of the penalty regime for self-assessment
Late Penalty
1 day £100
3 Months £10 per day up to a maximum of 90 days (as well as the £100 as above)
6 Months whichever is the higher of £300 or 5% of the tax due (as well as above)
12 Months whichever is the higher of £300 or 5% of the tax due (as well as above)
In some cases 100% of the tax due may replace the above.
Self Assessment tax returns can be a nasty area of tax for individuals if they are not careful and aware of their statutory obligations but we are extremely experienced in this area and have been keeping clients and their tax positions up to date for many years.