Anybody who is considered self employed or receive additional income alongside their salary or pension is required to file a Self Assessment Tax Return (SATR) form SA302 to HMRC.
The October 31st deadline for paper assessments is now passed, but tax payers still have until the 31st January to file online. However, if you have not registered online with HMRC before you should register by 22nd of January as you need a tax code to file your return and HMRC send them by post.
Filing your tax return can be complicated and you if you miss the deadline or make an error whilst filling out the form you could incur a £100 fine in addition to the amount of payable income tax. You must file a SATR regardless of your income. Even if you make a loss you must file a nil return.
Your earnings are taxable if you do not pay PAYE through a specific income. Tax payers responsible for paying tax are:
- A director of a company
- Claim expenses above £2,500
- Rent property
- Taxable investments
- Compensation payments
It is advisable to set aside sufficient time to fill in your tax form and have all your accounting information to hand including bank accounts and invoices and sales receipts. Read the questions carefully. Tax forms are purposely designed to catch out people attempting to commit fraud and pay less tax.
You should therefore make sure you understand what the questions mean before answering them. If you are in any doubt seek professional help from a qualified chartered accountant otherwise you may be fined £100 or more.
Many business expenses are tax deductible so you can lower the amount of tax you have to pay by offsetting business expenditure. Expenses are defined as ordinary and necessary for the running of your business and include a list of items that is too long to publish here. However, you should refer to the HMRC website for details.
Business owners should be aware that they can get taxed on personal income as well as business income. It is therefore advisable to invest your personal cash in tax free funds like cash ISA´s and Premium bonds. You don´t even have to declare to HMRC that you have them. Alternatively pay more in pensions contributions and reclaim it as non-deductible tax.
Complications arise when you use equipment for both personal and business use, most commonly a vehicle. To claim mileage you must therefore keep a track of your business miles and claim it back from the tax man. You can also reclaim capital allowances on things equipment that you use in and outside work such as computers, printers and tools.
If you are new to registering Self Assessment Tax Return forms online and would like professional advice and assistance, contact one of the experts at Taxaccolega on 08000 235 234 or email firstname.lastname@example.org.