Are you required to complete a self assessment tax return each year? Too often we are faced with helping people who don’t know the answer to this, what should be a very simple, question. In recent years HM Revenue & Customs (HMRC) have introduced new rules requiring more and more of us to register and file self assessment tax returns (SATR). The problem is that there are now so many rules that people can be forgiven for not understanding their own self assessment status. This article should help you shed some light on the main categories of people who are required to file an SATR each year.
Self Assessment : Some basic information
Before we head into finding out whether you are required to complete an SATR or not, we firstly need to be clear on what a self assessment tax return is and when you need to file one.
The UK tax year runs from 6th April to the 5th April each year, and the return for that period needs to be filed with HMRC, and the liabilities paid by the 31st January following the end of the year you are reporting on. Please see table below for clarification.
|Tax Year||Filing deadline|
|6th April 2017 – 5th April 2018||31st January 2019|
|6th April 2018 – 5th April 2019||31st January 2020|
|6th April 2019 – 5th April 2020||31st January 2021|
|6th April 2020 – 5th April 2021||31st January 2022|
The eagle-eyed of you will notice that this means you have 10 months in which to prepare and file your SATR and pay your tax to HMRC each year. With such a long window to get your information together and report it to them, you can understand why HMRC stand a very hard line on not overturning late filing penalties.
If you fail to file your tax return by the deadline date you will instantly be given a £100 late filing penalty which will increase over time to a maximum of £1,600 in each tax year that is outstanding.
Who needs to file an SATR?
If you fall into any of the categories below then you will need to register on the Government Gateway and file a self assessment tax return each year. Please note that the figures stated are per tax year.
- If you are running a sole trade business where your self employment profits are more than £1,000
- If you are renting out a property where the rental income exceeds £2,500
- If you receive more than £2,500 in untaxed income (i.e. cash tips or commission)
- If you receive more than £10,000 from savings or investments
- If you receive dividend income of £10,000 or more
- If you are a company director – regardless of whether you physically take any money out of your business, if you are a company director then you instantly become required to complete and file an SATR each year.
- If your salaried income exceeds £50,000 and you are in receipt of child benefit
- If your salaries income exceeds £100,000
Who can prepare an SATR?
The self assessment system was designed to allow individuals the opportunity to declare their own earnings to HMRC themselves each year (hence the word “self”). There is no requirement for any individual to employ the services of an accountant to help them with their return, but the option is there if they do require it.
Although there is no legal requirement to get an accountant, we would always recommend that you consult with one before you file your own return, especially if you are unsure what your self assessment status is, or how to complete the form.
HMRC have developed an excellent questionnaire that helps you to determine your SATR status, so if you are unsure then please do check it out https://www.gov.uk/check-if-you-need-a-tax-return. Alternatively you can e-mail us on [email protected] or call us on 01634 540340 where a member of our team will be ready to assist you.