Yes, it is that time of the year when we are all dreaming of our Christmas Festivities and ignoring the fact that the 2018/19 tax return filing date of January 31st isn’t far away. Taking the ostrich head-in-the-sand panic stance is an option but will not ultimately file the return!
So, to avoid being one of the 735,000 people rushing on the last filing day or one of the 2,616 individuals using Christmas Day to file we have compiled some frequently asked questions which might help get that return off your To Do List:
What is an Income Tax Self Assessment?
Income Tax Self Assessment is the system HM Revenue and Customs (HMRC) uses to collect income tax from individuals. The process is referred to as Self Assessment as each individual is responsible for the completion and filing of their own return. The return covers a 12 month period from 06 April to 05 April the following year. The 2018/19 tax year ran from 06 April 2018 to 05 April 2019.
How do I know if I need to file an Income Tax Self-Assessment?
It is the individual’s responsibility to identify if they need to file a return.
You must file Income Tax Self Assessment returns if you are:
- Self Employed;
- A Company Director;
- A Partner in a business partnership;
- In receipt of more than one source of income.
If in doubt seek professional advice from an accountant or contact HMRC.
Why would I need to fill in a Self-Assessment?
You may have received income which has not been taxed at source on which you should pay tax. Alternatively you may have had too much tax deducted from income received and be due a refund.
When do I need to file my return by?
If you haven’t filed your 2018/19 return on paper which was by 31 October, you need to file on line by 31 January. You can file before these dates and it is advisable to do so.
Can I get a repayment if I have paid too much?
Yes. At the time of submission of your data for the tax year HMRC will complete a calculation and deduct any payments on account already made. Any overpayment should be refunded to you.
Can I deduct expenses when calculating my taxable income?
You can deduct any expenses that you have incurred unless they have been already reimbursed by an employer. The expenses must have been incurred “wholly, exclusively and necessarily” in the course of a business. The actual expenses allowable are dependent on the work you do and how you do it and may vary from person to person.
When do I have to pay any tax that is due?
All tax due must calculated and paid by 31 January.
What happens if I file my return or pay my tax after the deadlines?
If you file your tax return after the deadline you will be charged a penalty. The initial penalty for filing the 2018/19 return late will be £100 and will increase after 3 months. Late payment incurs a daily interest charge.
I have been asked to make a Payment on Account for my Self Assessment Income Tax. What is this?
A payment on account is an amount of tax you will be asked to pay in advance of your next income tax calculation.
For example: You may be asked to make a payment on account for 2019/20 if you have more than £1,000 tax liability for 2018/19. The payments are due on:
- 31 January 2020 and
- 31 July 2020.
These amounts will then be deducted from your next income tax due when it is calculated.
How long do I need to keep any records?
HMRC requires you to keep your records for at least 6 years from the end of the relevant tax year. In certain circumstances you may need to keep records longer.
So, to avoid being forced to use one of the exceptional excuses heard by HMRC in 2019 including:
- I’m too short to reach the post box
- I was just too busy – my first maid left, my second maid stole from me, and my third maid was very slow to learn
and our office favourite:
- My boiler had broken and my fingers were too cold to type
Foremans LLP will be presenting “Tax Tips and Trading Options” at Professional Dentistry's Northern Dental Summit & Exhibition and will be available on stand C51 to discuss any queries you may have.
01978 364 000