Filing Self-Assessment Tax Returns


This article will help you understand Self-Assessment basics and inform you of the deadlines for paying self-assessment tax in 2022. The rules don’t tend to change much year by year, so you should be able to benefit from this article in future filling as well. This article will also help clarify the confusion between self-employed and self-assessment tax.  

What is Self-Assessment (SA)?

Simply put, self-assessment is a method of paying taxes, not a tax. The concept behind self-assessment is that you are responsible for filing a tax return each year, if necessary, and paying any taxes that are owed for that tax year. If you believe you need to file a tax return, you must notify HM Revenue & Customs (HMRC). 

All of your taxable income, as well as capital gains tax, are included in a self-assessment tax return. Here, you also list any tax breaks or exemptions to which you are entitled. 

You send the documents to HMRC either a hard copy or online. The data on the government form is utilised to compute your tax liability. This process is called Self-Assessment. 

Is Self-Assessment the Same as Self-Employed?

Self-Assessment is the tax return process for self-employed people. When you are self-employed, the money you earn is not subject to tax; you must report this on your self-assessment tax return. Contrary to when employed, your employers are responsible for utilising your tax code to deduct tax from your pay and remit it to HMRC on your behalf. 

Employers pay their income tax directly to HMRC through the PAYE system, but self-employed people must calculate their income and expenses and pay their bills in January. The only reason you would not have to pay income tax as a self-employed person is if your company is dormant and not making any income at all. However, you cannot make company dormant just to avoid paying income tax, as to be fully dormant your company must also have no investments. Even if your company only made £1, you still need to declare it.

Do I Have the Choice to Be Registered Either as An Employee or Self-Employed?

Understanding your job status is crucial. HMRC treats self-employed people significantly differently from employed people. It makes a difference to your income tax and dramatically impacts your ability to qualify for and obtain tax refunds. 

Realise that you cannot simply select your employment status based on your preferences. The taxman is determined to eradicate what he refers to as “fake self-employment.”  

Employees in a situation like this may miss out on essential benefits like sick pay or maternity leave. There is a surprising degree of ambiguity in the definitions, and whether you are employed solely relies on your circumstances. 

Filing Self-Assessment Tax Returns Early

Submitting Self-Assessment tax returns in advance can avoid any last-minute hassles or potential late fees. It will prepare you to organise your finances over a longer time horizon, which is more significant. 

It is vital to take note that documenting your return early doesn’t influence the date your tax is payable. The payment date is 31 January. It does not give HMRC more time to enquire, a common misconception. 

Do I need To Fill in A Self-Assessment Tax Return?

You are obligated to file a self-Assessment tax return under the following conditions. 

  • Your income from self-employment exceeded £1,000.  
  • You received more than £2,500 in rental revenue (if it was between £1,000 and £2,500, you must contact HMRC). 
  • You received untaxed income of more than £2,500, such as tips or commissions. 
  • You earned £10,000 or more in savings or investments before taxes. 
  • You must pay capital gains tax if you make money from selling assets like shares or property. 
  • You manage a corporation as a director (unless it is a non-profit organization, such as a charity. 
  • You or your partner earned more than £50,000 and are claiming Child benefits.  
  • You also have income from a foreign source subject to tax or live abroad but earn money in the UK. 
  • You earned more than £100,000 in taxable income. 
  • If you make pension contributions and earn more than £50,000 in the tax year 2021–2022, you may need to be done with an assessment to be eligible for the additional tax relief you are due. 
  • You oversee a trust or registered pension plan as a trustee. 
  • Your only source of income, which was higher than your allowance, was your state pension. 
  • HMRC sent you a P800 stating that you didn’t pay enough tax the previous year. 

When Can I File My Self-Assessment Tax Return?

Even though the 31 January deadline might seem far off, filing your Self-Assessment tax return significantly impact your financial plan. A self-assessment tax return can be submitted as early as the first day of a new tax year (6 April each year). For instance, the tax year 2021/22 ends on April 5, 2022. As a result, beginning on April 6, 2022, tax returns for the 2021/22 tax can be filed. 

For the 31 January 2022 deadline, according to HMRC, 630,000 people submitted their forms online on that day, with nearly 21,000 doing so in the final hour. 

Aside from the risk of error associated with a hasty last-minute submission, submitting your return so close to the due date leaves little time to set up the necessary tax payment to be made on schedule. 

What Do I Do If I No Longer Need to Complete a Tax Return?

Let HMRC know as soon as possible if your circumstances have changed and you believe you no longer need to file a tax return because you pay all of your taxes through PAYE. You can contact HMRC through the information on GOV.UK. 

In case you have previously received a tax return for a year, HMRC could consent to drop it, assuming you clear up your conditions for them via phone call. If HMRC agrees to cancel the return, you will never have to submit it again, and HMRC will drop any punishments for missing the filing deadline. 

HMRC may request that you complete the return and inform them of the change in your circumstances in the Additional Information boxes if they disagree. If they believe you have not paid enough tax, they might also agree to offset the tax return by a Simple Assessment instead. 

If you typically file a tax return, calculating your due refund happens automatically. However, you might need to file a tax repayment claim each year if you are no longer in Self-Assessment but still believe you are entitled to a refund.  

Our skilled team can assist anyone needing guidance with Self-Assessment tax returns. Legend Financial offers a comprehensive range of personal and corporate tax services. We regularly assess our client’s unique situations to ensure they only pay the appropriate amount of tax due.