Two-minute self-assessment guide
If you’re a sole trader, a partner in a business partnership, a limited Company Director or Shareholder or have other untaxed income, you may need to complete an online self-assessment tax return (and pay what you owe) by 31 January 2021.
CloudAccountant.co.uk practice manager Liam Glennon said: “Every Limited Company contractor or small business owner knows that failure to complete a self-assessment cannot not only lead to unnecessary stress but will also attract a steep penalty for non-filing.
“Business owners have enough to focus on running their own business, especially in the current climate. And if they don’t take self-assessment seriously and end up getting it wrong, they could be worrying about a phone call from the tax man for years to come.”
In this two-minute guide, we’ve tried to include all the most important information you’ll need to do your self-assessment this year.
Who needs to send a return?
You must complete a tax return if, in the last tax year, you were:
- Self-employed as a sole trader and earned more than £1,000
- A partner in a business partnership
- A Limited company Director / Shareholder
You may also need to submit a return if you had any untaxed income from renting out property, tips and commission, income from savings, investments or dividends or foreign income.
How do I send a return?
If you are new to self-assessment you’ll first need to register with HMRC. This can take some time to complete, so make sure you do it as soon as possible.
You can fill your return in online or use special HMRC-approved software like FreeAgent or Xero to submit your self-assessment.
What happens if I don’t submit my return or pay on time?
If you miss the January 31 deadline you will get a penalty. If your return is up to three months late you’ll receive an automatic penalty of £100.
If you are more than three months late you will have to pay more. You’ll also be charged interest on any late payments.
Has coronavirus changed anything this year?
While the self-assessment bill is usually due on 31 January 2021, you’ll usually pre-pay some of this amount on 31 January and 31 July in the year before. This advanced payment is called a ‘payment on account’.
However, because of the impact of coronavirus, the government announced that self-employed people could defer the July 31 2020 payment on account. And as long as this amount is paid before January, you won’t need to pay any penalty.
The Chancellor also announced that any outstanding tax for 2019/20 could be paid in monthly instalments of up to 12 months, easing the financial burden of Covid for anyone that needs it.
Self-assessment accountant support
Completing a self-assessment is time-consuming and it can be stressful. The best way to make self-assessment a breeze is to track your income and expenses throughout the year using cloud-based accountancy software such as Xero or FreeAgent.
You can also make self-assessment time less stressful by using a qualified accountant. They will be able to fill your self-assessment out for you, helping you concentrate on work (or just relaxing) over the next couple of months.
For more information about cloud accountancy software and accounting support, speak to a member of the CloudAccountant.co.uk team today. Call: 0808 281 0303.