Last reviewed 6 December 2019
Self-assessment is the method used for accounting for income tax to HMRC. Tax is automatically deducted from wages, pensions and savings. Persons and businesses with other income (such as rental income, investment income, commissions) must submit a self-assessment return.
Returns need to be submitted on time. Failure to do so will result in penalties. The deadline for submitting a paper return for the tax year 6 April 2018 to 5 April 2019 has already passed (31 October 2019). The deadline for an online return and for payment of any tax due is midnight on 31 January 2020. If an online return is submitted before 30 December, HMRC will calculate the tax due.
Who needs to submit a return
Where tax has not been deducted from wages, pensions of savings income, or when people or businesses have earned additional untaxed income, a self-assessment tax return needs to be submitted.
For example, a tax return needs to be completed where:
More than £2,500 from renting out property is earned;
The taxpayer or their partner received Child Benefit and either had an annual income of more than £50,000;
More than £2,500 in other untaxed income is earned, for example from tips or commissions;
The taxpayer is a self-employed sole traders;
Where the taxpayer is an employee claiming expenses in excess of £2,500;
Where the taxpayer has an annual income over £100,000; or
Earned income from abroad is received that they need to pay tax on.
Registering for self-assessment
Where tax returns have not been previously submitted it is necessary to register for self-assessment in order to receive a Unique Taxpayer Reference (UTR). This should be applied for at least 20 working days before the submission date to ensure registration is complete.
A link to explain the various ways to register and submit your return on line is at:
A return can also be submitted using commercial software or using a paper form. These must be used for partnerships, trusts and estates, where income is received from a trust, where you have lived overseas as a non-resident, Lloyds underwriters, religious ministers and where profits are being reported for the disposal of more than one asset.
A list of commercial return suppliers is shown at https://tinyurl.com/pwnz5wv
Paper forms must be submitted by 31 October. Paper returns can be found at https://tinyurl.com/PaperRtn. A paper return can be submitted by 31 January if you are a trustee of a registered pension scheme or a non-resident company.
A penalty is due if the deadline is missed. The penalty is £100 if the return is up to three months late. Larger penalties are payable (plus interest) if the return is later or tax is paid late.
Changes to the return
If it is necessary to alter the return to correct an error, the change needs to be made by:
31 January 2020 for the 2017 to 2018 tax year; and
31 January 2021 for the 2018 to 2019 tax year
Where the deadline is missed it is necessary to write to HMRC.
Where an online return has been submitted it is necessary to correct the return by going through the Government Gateway. It is necessary to find the return to be corrected and make the amendments and resubmit the return. Where a paper return has been submitted a new return needs to be downloaded. The pages to be corrected should be resubmitted and marked ‘AMENDMENT’. The software provider needs to be contacted if commercial software has been used.
At this time of year there are many attempts by fraudsters to access tax details of businesses. Last year HMRC reported 900,000 suspicious contacts of taxpayers by telephone, text or e-mail. The most common method of fraud is for the business to be contacted by a fraudster offering a fake tax refund and pretending to be HMRC. Where contact is made electronically, there is often a link to take the business to a fraudulent page where attempts will be made to obtain bank details and steal money. Tax scams are frequently accompanied by threats of imprisonment or arrest if a bill is not paid immediately. HMRC will rarely make such threats, especially where this is an initial contact. HMRC will also not ask for PIN numbers, passwords or bank details. It is recommended that no-one should give out private information, or reply to texts, download attachments or click on links where these are unexpected communications.
Where a suspicious call, text or e-mail is received HMRC should be contacted (and they can confirm if this is a genuine contact or not). HMRC can be contacted on this matter at firstname.lastname@example.org and texts to 60599. Where there has been financial loss HMRC should be contacted on 0300 123 2040.