The Office for National Statistics estimated that more than 160,000 people became self-employed last year.
Most of those will need to file a tax return for 2018/19 and the deadline to register for self-assessment is rapidly approaching – on 5 October 2019.
If you haven’t sent a return in the last year, and you need to complete one for the 2018/19 tax year, that means you have under a week to register on time.
Fortunately, if you’re filing online, there are a few more months left before you need to complete and send the return by the deadline at midnight on 31 January 2020.
Here’s what you need to know about registering for self-assessment and sending your return.
Do you need to complete a tax return?
You must register for self-assessment and file a tax return if you earnt more than £1,000 in 2018/19.
Any other untaxed income, perhaps from savings or investments, dividends, tips and commission, or renting out a property also needs to be reported.
You might also need to complete a return if you receive foreign income that hasn’t been taxed.
If you’re not sure whether you need to complete self-assessment, you can check on the HMRC website.
Registering or re-registering
If you sent a tax return in the last year, you don’t need to worry about registering again.
But if you’ve never sent one before, or if you didn’t send one last year, there are some steps you need to take.
People who haven’t sent a self-assessment return before must register online.
HMRC will then send you a letter with your unique taxpayer reference, and will help you set up your online account for self-assessment.
If you have sent one before, you need to re-register online, using the unique taxpayer reference you already have. You should be able to find it in your online account, or on documents from HMRC.
The deadline for paper filing isn’t far away either, on 31 October 2019.
With only around 6% of taxpayers using this method, however, most people will have until 31 January 2020 to submit their return and pay any tax due.
Even so, getting your return finished early is a good idea, to take the pressure off over the end of the year and January, and reduce the risk of mistakes.
Getting it done early also gives you plenty of time to find the funds to pay your tax bill before it’s due and hopefully avoid any penalties.
If you miss the filing deadline, you’ll incur an automatic £100 fine, which increases if you leave it longer than three months – all the more reason to send your return early.
Following the introduction of compulsory reporting for VAT under Making Tax Digital (MTD) this year, the HMRC scheme could be set to extend to income tax in the not-so-distant future.
Plans for this next stage of the Revenue’s digital revolution haven’t been confirmed in full yet, but under the live pilot version, taxpayers send digital updates to HMRC on a quarterly basis instead of filing a self-assessment tax return.
That means they see an estimate of the tax they owe throughout the year.
There’s no date set for MTD for income tax, but it could be mandated by April 2021 after the largely smooth rollout of MTD for VAT earlier this year.
For more information about self-assessment. Please contact us on 01792 410100. Alternatively, email firstname.lastname@example.org