Self-employed people are normally required to file a Self-Assessment tax return each year. This is true whether you are a sole trader, if you are in a business partnership or if you run a limited company. HMRC’s Self-Assessment process can be complex at first, especially as the government often likes to make changes to self-employed tax. So now we will talk about self assessment tax return cost UK.
Do I have to file and pay tax through Self-Assessment?
Most self-employed people who run a business must file a HMRC tax return each year and pay tax on their personal income. This includes both sole traders and those in business partnership. For limited company directors, you may have to pay tax on wages and dividends received through your company – but you may not have to file Self-Assessment if your income is only paid on PAYE. You are classified as self-employed if you run your own business and are responsible for its success or failure.
HMRC says you need to send a tax return and pay your tax bill through Self-Assessment if you were in the last tax year:
a self-employed sole trader earning more than £ 1,000
partner in business partnership
Register for Self-Assessment if you are new self-employed
You must register with HMRC for Self-Assessment by 5 October in the second tax year of your business. HMRC may fine you if you don’t register by this deadline, so don’t delay. To register for Self-Assessment, you must visit the gov.uk registration page and enter your details. If you are a business partner, the process is slightly different and you will need to register here. Registration for Self-Assessment should give you a Government Gateway user identity, which you can then use to set up your personal tax account and manage different aspects of your tax affairs online.
When you are registered for Self-Assessment you are then able to file your tax return. You do this by completing the Self-Assessment tax return form online or on paper. However, HMRC would like to abolish paper tax returns under the Making Tax Digital initiative. We will keep you up to date as these plans develop.
How to make my Self-Assessment
When it comes to filling in your tax return, you will need to have all your information about your earnings for the tax year, together with details of any expenses you wish to deduct from your tax return. It is important that you keep a record of all your income and costs. In this way, you will be on hand when the time comes to fill your tax return. There are a number of other accounting and bookkeeping software for small businesses, if you prefer to keep digital records, many of them are integrating with HMRC website to fill tax fill a little easier.
To file your tax return you will also need your unique (UTR) number. This is a reference number assigned to you when you register for Self-Assessment. It is usually printed on letters from HMRC regarding your tax return, but keep a note of it somewhere safe so that you can find it easily when the time comes.
What are allowable costs for small businesses?
When you are self-employed, there are a number of costs that you can claim back against your Self-Assessment tax bill, provided they are allowable. These are the largest ones small businesses can claim:
office expenses such as stationery or telephone bills
travel expenses such as fuel, parking, and some train or bus fares
cost clothing as a uniform
staff costs such as salaries or subcontractor costs
things you buy for sale such as stock or raw materials
finance costs such as insurance or bank charges
costs for business premises such as heating, lighting, and business rates
Before you go, I hope this article summing up the self assessment tax return cost UK is helpful for you. To get a free quote for your self assessment tax return contact us today and speak to the best tax expert for you.
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