Self Assessment tax return - Guide for Sole trader or Limited Company

The 2023/24 tax year deadline is looming. If you are submitting an online tax return, you must submit it by midnight 31 January 2025.

If you are a sole trader, limited company director running your own business, partner in a partnership business or have income from other sources and not just your salary, you will need to file a Self Assessment tax return to HMRC by 31st January each year.

This blog covers all you need to know about Self Assessment tax returns and is a step by step guide to Self Assessment tax returns.

What is a Self Assessment tax return?

Self Assessment is used by HM Revenue and Customs (HMRC) in the UK to deduct income tax from individuals who are self-employed, directors who run their own business or you generate income that isn’t taxed through PAYE. If you earn income that isn’t taxed automatically by your employer, you’ll need to declare that income to HMRC and pay the appropriate amount of tax using a Self Assessment tax return.

Put simply, a Self Assessment tax return is a form that declares your income that is sent to HMRC. From this HMRC can calculate your tax liability for the year. It should include details of income from all sources.

Who needs to file a Self Assessment tax return?

People who need to complete a Self Assessment tax return are:

• you were self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on)
• you were a partner in a business partnership
• you had a total taxable income of more than £150,000
• you had to pay Capital Gains Tax when you sold or ‘disposed of’ something that increased in value
• you had to pay the High Income Child Benefit Charge

You may also need to send a tax return if you have any untaxed additional income, such as:

• property income from renting out a property
• tips and commission
• other income from savings, investments and dividends
• foreign income

If you receive untaxed income from other sources, such as a side hustle or selling assets then you will need to file a tax return.

How to register for self assessment

If you think you must contact HMRC for self assessment registration and maintain accurate accounting / bookkeeping records, but they don’t have to register the company with Companies House.

As a sole trader you will have to pay income tax and file a self-assessment tax return with HMRC every tax year.

How do you register for self assessment?

There are different ways to register for HMRC self assessment depending on if you are self-employed, a company director, not self-employed or registering a partner or partnership.

How you register for sole trader Self Assessment will depend on if you have sent tax returns previously to HMRC.

If you have not filed a tax return before

You must register for Self Assessment by 5 October 2024 if you have to send a tax return and you have not sent one before.

1. Register for Self Assessment and Class 2 National Insurance through your business tax account. You’ll need a Government Gateway user ID and password to sign in. If you do not have a user ID for a business tax account, you’ll be able to create one.
2. You’ll receive a letter with your Unique Taxpayer Reference (UTR) number within 10 days (21 if you’re abroad). You’ll need your UTR to file a return.
3. You’ll receive a reminder letter or email telling you to complete a Self Assessment tax return before it’s due.

You can file your tax return any time before the deadline.

If you’ve filed a tax return online before

If you’ve registered for Self Assessment before but did not send a tax return last year, you must register again to reactivate your account.

1. Re-register online (Self Assessment form CWF1) for Self Assessment and Class 2 National Insurance if you’ve filed a return before but did not file one last year.
2. You’ll need your 10-digit Unique Taxpayer Reference (UTR) from when you registered before. You can find your UTR if you do not know it.
3. You’ll receive a reminder letter or email telling you to complete a Self Assessment tax return before it’s due.

You can file your tax return any time before the deadline.

Self Assessment deadlines

It is important that you file your tax return on time, as you will incur a penalty for missing the filing deadline.

You must tell HMRC by 5 October if you need to complete a tax return and have not sent one before.

You will need to register for Self Assessment online at the HMRC website.

Deadline for submitting a paper return

If you’re doing a paper tax return, you must submit it by midnight 31 October 2024.

Deadline for submitting an online return

If you’re doing an online tax return, you must submit it by midnight 31 January 2025.

Submitting your Self Assessment tax return

Once you register, you must send your Self Assessment tax return to HMRC by the deadline.

Send a return online

You can file your Self Assessment tax return online.

The deadline for sending a return online is 31 January.

Sending paper tax returns

If you need a paper copy of the main Self Assessment tax return you can:

• download the SA100 tax return form
• call HMRC and ask for the SA100 tax return form

If you need to send a tax return for trustees of a registered pension, you must download form SA970.

You can download all other forms and supplementary pages.

The deadline for sending a return using a paper form is 31 October (or 31 January if you’re a trustee of a registered pension scheme or a non-resident company).

Tip: File your tax return early!

Many people leave filing their tax return until the last minute. However, completing your tax return early offers several advantages, which can help give you peace of mind about your income tax and be able to focus on running your business. Here are just some of the benefits of filing your Self Assessment tax return early:

• Filing early allows you to know what you owe. This can help you to plan your budgets for the year, and give you the option to pay your tax bill in instalments if you need to.
• You can discover if you’re owed a refund sooner, allowing you to reinvest your money.
• Early filing gives you time to discuss tax planning ideas with your accountant and tax advisors, allowing you to make informed decisions about how you optimise your tax situation and get on top of any challenges.

Self Assessment – what happens if I miss the deadline?

If you don’t file your tax return online by midnight on 31st January then you will face fines and potentially additional penalties.

How much is the penalty for missing the Self Assessment filing deadline?

Late filing penalties

You’ll pay a late filing penalty of £100 if your tax return is up to 3 months late. You’ll have to pay more if it’s later, or if you pay your tax bill late.

Interest

You’ll be charged interest on late payments. You’ll also pay interest on any unpaid tax you owe, so the money you owe HMRC can mount up very easily if you miss the deadline and continue not to file your tax return.

Daily fines

This will be added to your online account if you have one. This fine is given whether you owe tax or not. HMRC will impose an additional £10 daily fine if you fail to file within three months of the deadline (i.e. by the end of April). This £10 per day fine will be charged for the next 90 days.

If you haven’t paid the tax you already owe from the previous years by 31st January, then HMRC will impose more fines on you. So don’t forget to not only submit your tax return but pay any tax you owe to HMRC by specified deadlines.

What do I do if I miss the Self Assessment deadline?

If you miss the deadline, then get your information together and get your Self Assessment tax returned filed as soon after the deadline as possible, otherwise you’ll begin to incur and build up fines and penalties from HMRC.

Planning for tax payments on account

Payments on account are the advance payments you have to make to HMRC towards your Self Assessment tax bill.

There are two instalments each tax year and the amount of these payments will depend on how much tax you owe. Each payment represents half of the previous year’s tax bill. HMRC payments on account are designed to help people to better manage their cash flow. The due dates for payments on account are midnight on 31 January and 31 July each year.

Many people don't plan or save in advance for payments on account.

You don't have to payments on account if your last Self Assessment bill was under £1,000, or you’ve already paid over 80% of all tax you owe.

We encourage people to put away money each month towards their personal tax bills. If you think that you won’t be able to afford your payment on account, you can arrange to make regular monthly or weekly payments by setting up a budget payment plan to help you spread the payments.

If you miss the payment deadline, you’ll be charged interest and may have to pay a penalty.

Remember, if you are earning significantly more this year compared to the previous tax year, then you must put more money away as you will be required to pay the balance of any tax owed.

Can I file my own tax return?

Some people do file their own Self Assessment tax return themselves. How complicated it is depends on your circumstances and sources of income. Getting an accountant to file your Self Assessment will give you the peace of mind that a professional is completing it correctly on your behalf.

This year some people face additional complexity of reporting due to Covid related support payments and claiming deductions for extra costs of working from home. So it’s even more reason to get a professional to do your tax return for you.

How to complete your own Self Assessment tax return

Once you have registered for self-assessment, you can begin filling in your tax return online.

We would not advise that individuals complete their own Self Assessment as many people make mistakes and pay pay more tax than they really owe or don't pay enough and incur fines.

However, if you are considering filing your own tax return, there here is a step-by-step guide to help you to complete a self assessment tax return accurately and on time.

Gather your information

Before filling in your tax return, you must gather all the necessary information. This includes:

• Your National Insurance number
• Details of your income, including any employment income, self-employment income, pensions, savings, and investments
• Details of any expenses you can claim tax relief on, such as business expenses or charitable donations
• Details of any benefits you have received, such as Child Benefits or Tax Credits
• Any other relevant information, such as capital gains or losses

Choose your filing method

There are two ways to file your self-assessment tax return: online or by paper. Filing online is the most common method and is also the easiest and quickest way to complete your return. To file your Self Assessment tax return online, log in to your HMRC account and follow the prompts.

Complete your personal information

The first section of the self-assessment tax return asks for your personal information, including your name, address, and National Insurance number. Ensure you enter this information accurately, as it will be used to identify you and your tax return.

Declare your income

The next section of the tax return asks for details of your income. This includes income from employment, self-employment, pensions, savings, and investments. You will need to enter the total amount you earned for each source of income.

Claim your allowances and deductions

In this section, you can claim any tax allowances and deductions you are eligible for. This includes your personal allowance, which is the income you can earn before you start paying tax, as well as any other allowances such as marriage allowance, blind person’s allowance, or trading allowance.

You can also claim tax relief on specific expenses, such as business expenses, charitable donations, or pension contributions. Ensure you have all the documentation to support your claims and enter the amounts accurately.

Declare your taxable benefits

If you have received any taxable benefits, such as company cars or medical insurance, you must declare them in this tax return section.

Declare your capital gains or losses

You may need to declare any capital gains or losses if you have sold any assets, such as property or shares, during the tax year, you may need to declare any capital gains or losses. You must provide details of the assets sold, the purchase and sale price, and associated costs.

Check your tax calculation

Once you have entered all the relevant information, the tax return will automatically calculate your tax liability or refund. Make sure you check this calculation carefully to ensure it is accurate.

Submit your tax return

After you have reviewed your tax return and are satisfied that all the information is accurate, you can submit it to HMRC. If you are filing online, the system will ask you to confirm that you have reviewed and agreed to the information provided before submitting.

Most common Self Assessment tax return mistakes

• Incorrect figures or incomplete information
• No Unique Taxpayer Reference (UTR)
• No Government Gateway user ID
• Not taking advantage of tax-free allowances
• Not declaring income from all sources
• Not claiming all allowable expenses or claiming disallowed expenses

Find out more about sole trader allowable expenses here.

Find out more about limited company allowable expenses here.

• Not planning for payments on account
• Missing the self assessment filing and payment deadline
• Not claiming tax relief on private pension contributions
• Not claiming relief on charitable donations
• Other common Self Assessment mistakes
• Not being aware of the High Income Child Benefit Tax Charge
• Incorrect National Insurance number
• Using the wrong tax code
• Ticking the wrong boxes

What to do if you make a mistake with your tax return

You have 12 months from submission of your tax return to correct any mistakes made.

If HMRC finds problems with your return, this could result in paying too much tax, not paying enough or receiving a penalty notice.

HMRC may decide to open a tax investigate into your tax affairs if there are inconsistencies on your different returns over the years.

Specialist accountants for self assessment tax returns

Income tax is a big revenue generated for HMRC and it's imperative that you submit your tax return on time, understand your tax bill and pay payments on account when they are due. How much tax you pay will depend on your income level and employment status.

If you are unsure about how to file your Self Assessment tax return then contact us today. Don’t let the complexities of the UK tax system confuse you! At dns accountants, we offer expert services to ensure your tax return is accurate, compliant, and submitted on time. Whether you’re self-employed, a landlord, or someone with multiple incomes, we simplify the process of filing Self Assessment Tax Return for you, avoiding costly penalties and ensuring you only pay what’s required.

How dns accountants can help with your tax return

Are you unsure about how to file your Self Assessment tax return? Don’t let the complexities of the UK tax system confuse you! At dns accountants, we offer expert services to ensure your tax return is accurate, compliant, a nd submitted on time. Whether you’re self-employed, a landlord, or someone with multiple incomes, we simplify the process of filing Self Assessment Tax Return for you, avoiding costly penalties and ensuring you only pay what’s required.

Contact us today 0330 088 6686

can also e-mail us at enquiry@dnsaccountants.co.uk

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