Of the many questions you’ll have when you first start to consider going self-employed, one unlikely to top your list is, “do I need to complete a Self Assessment?” It’s probably one of the most important ones, though.
A Self Assessment is one of the most significant tax documents you’ll be dealing with when you’re self-employed, and if you’re not careful, it could be the one that causes you the most headaches. So let’s take a look at exactly what it is, whether you’ll need to file one, and why it’s important to stay on top of it.
Do I have to complete a tax return?
As a general rule, anyone who receives income that isn’t taxed at source needs to complete a Self Assessment.
In the case of a sole trader, the income you receive from your trade doesn’t have National Insurance Contributions or Income Tax deducted from it, so you need to tell HMRC about that income on a Self Assessment form so they can calculate what, if any, tax you owe.
If you’re a limited company director, you’ll usually need to file a Self Assessment. Other examples of income not taxed at source can include rental income from any property you own, income from abroad, or investment (dividend) income.
The complete list of who needs to complete a Self Assessment is available on the Gov.uk website – the website also has an online tool that will tell you if you need to file a return.
What if I have not received a tax return?
If you have not received a tax return but you think you should fill one in, call the HMRC Self Assessment Helpline on 0300 200 3310 and ask for a return to be sent to you.
It’s your responsibility to inform HMRC that you have received income on which tax is payable. You should do this at the latest by 6 October following the end of the tax year in which your income first arose.
Do not wait for HMRC to contact you. If you send in the tax return late, you may have to pay:
- interest on any tax paid late, and
- a penalty.
What if I don’t need to complete a tax return but I have received one from HMRC?
If you have been sent a tax return but you don’t think you should have to fill it in, do not just ignore the tax return. If HMRC does not receive the tax return by the date it has to be returned, they will issue an automatic penalty.
If you get a tax return that you think you shouldn’t have to fill in, contact HMRC. The correct phone number will be printed on the front of the form. If they agree that you shouldn’t have to fill in the form, they will confirm this in writing.
