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Self-Assessment

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Tax - Personal

 

Self Assessment Tax Returns

 

Download our 2010 Self-Assessment Tax return checklist for a simple guide on what information you’ll need to fill in your return.  In order to make sure that you comply with the current legislation and legitimately claim all you are entitled to we advise you to speak with a trained tax adviser.  Feel free to give us a call, or send an e-mail by clicking on the Tax Help link on the right claim and we’ll get right back to you.

The SA (Self Assessment) Tax Return can be daunting.  To keep you on your toes our friends at HMRC have changed the layout for 2007/2008.  Don’t worry!  We are here to help.   Tax Help is at hand - simply click on the link and send us an e-mail or give us a call.

Self Assessment involves completing an online or paper tax return in order to tell HMRC about your income and capital gains (profits on the sale of certain assets), or to claim tax allowances or reliefs against your tax bill.

There are different types of tax return and different 'supplementary pages' you may need to complete depending on your circumstances. There are also deadlines for sending your tax return in - and penalties and interest charges if it arrives late.

 

Self Assessment payment deadlines
The deadline for making Self Assessment tax payments depends on how and when you receive your Self Assessment tax return.

If you were sent a tax return (or ‘Notice to File’ if you file online) by the previous 31 October, then you must pay HMRC any balance of any tax you owe by 31 January. This is also the date by which you may be asked to make any first 'payment on account' for the current tax year. If you are due to make payments on account, the deadline for making a second payment on account is 31 July for tax owing for the preceding tax year.

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Record keeping for the Self-Employed
By law, you must keep business records for at least five years and ten months after the end of the tax year the records relate to. You can be charged up to 3,000 for failure to maintain or retain the records you need to make a tax return.
You'll need to keep your business records and personal records separate. Most businesses find that it helps to have a separate business bank account.

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Other records you must keep
All businesses are different and there are many specific types of detailed record that may need to be kept. Some examples of records you should keep include:

  • cash book
  • petty cash book
  • order notes and invoices
  • copy sales invoices
  • details of any other business income received
  • details of any private money brought into the business
  • till rolls or other form of electronic record of sales
  • details of any other income
  • any cash taken out of the till to pay small business expenses
  • bills and invoices for purchases and expenses
  • a record of stock on hand at the end of the year
  • all bank and building society statements, pass books, cheque stubs and paying-in slips which include details of business transactions

All this information will be useful in completing your Self Assessment return. You'll need to keep certain records and hold on to them for several years so that you can back up the information you put on your return.

 

 

Tax Returns for Partners and Partnerships
If your business is run as a partnership you'll have to file an individual Self Assessment tax return. You'll also have to fill in the partnership supplementary pages - SA104.
The nominated partner must also file a Partnership Return - SA800 - showing each partner's share of the profits or losses. This might include supplementary pages too, depending on what types of income the partnership has.
The nominated partner is responsible for filing the partnership return but you'll be jointly liable with your other partners for any penalties, surcharges and interest if the return is late or inaccurate.
Each partner is personally responsible for paying the tax and Class 4 National Insurance contributions due on their share of the partnership profits

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Basic records you must keep
Your basic partnership records should include:

  • a record of all the partnership's sales, with copies of any invoices you've issued
  • a record of all your purchases and expenses
  • invoices for all the partnership's purchases and expenses - unless they're for very small amounts
  • details of any amounts partners personally pay into or take from the business
  • copies of the partnership's bank statements

The nominated partner uses these records to work out:

  • the partnership's business profit
  • each partner's share of the profits - this goes on the supplementary partnership pages that you and your partners fill in with your individual tax returns

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An introduction to self assessment

It is a fundamental part of the self assessment system that  responsibility lies with you, the taxpayer, to file Tax Returns and pay  the right amount of tax, at the right time - you must not wait for the HM Revenue & Customs to ask.

Tax returns

Tax returns covering income for the year ending 5 April 2010 were  issued on or after 6 April 2010, and will consist of a main tax form and backing schedules. Your tax office will send out what they think are  the relevant schedules. If you need other schedules you will have to ask for them. The completed full return has to be submitted to HM Revenue & Customs by 31 October 2010 for the paper return or by 31 January 2011 for the online return.

If you don't want to work out your own tax bill, you must send the  tax return in by 30 September 2010. However, you should note that your  return must be completed as far as the total income on which tax has to  be paid. Figures must be given for every item, even if only estimates.  It is not possible to enter question marks or leave the tax inspector to decide whether an item is taxable or not. The only section that can be  left for the tax office to complete is the actual calculation of the tax due on your total income.

If you have taxable income or capital gains for 2010/11 and have not  received a tax return, you must advise your tax office by 5 October 2010 at the latest.

There are automatic penalties for late filing of tax returns. Failure to submit the tax return by 31 January incurs a £100 penalty. If it has still not been returned six months later, a further £100 will be  charged. However, the penalties charged cannot exceed the total amount  of tax due. In the most serious cases, there are provisions for  penalties of up to £60 a day.

Amendments, investigations, and record keeping

You have one year from the filing date to make any amendments to the  return. HM Revenue &  Customs may correct obvious errors or mistakes within nine months of  receipt of the return.

Within a period of one year from the date the tax return was due to  be submitted (or when it actually was submitted, if later), HM Revenue & Customs will have a  right to make enquiries to check that the tax return has been correctly  completed. No reason for the enquiry need be given.

All records relating to the return should be kept during this  one-year period. If trading or rental income is involved, all records  should be kept for a further four years.

Determinations

If a return is not submitted by the due date, HM Revenue & Customs can, within five years of  the filing date, make an estimate to the best of its information and  belief of the amount of tax due. This amount of tax will be payable  without appeal, but will automatically be superseded when the return and self assessment are sent in.

Payment of tax

Payments on account of income tax (and Class 4 national insurance  contributions) for a particular tax year will be due on 31 January in  the tax year and 31 July following the end of the tax year. These  payments will be based on one half of the total income tax liability  (less any tax deducted at source) for the previous tax year. You have  the right to reduce payments on account if you believe the income tax  for the current year will be lower than that for the previous year.  However, you may be charged interest if the reduction is more than it  should be. Payments on account will not be required where each payment  works out at less than 250.

 

Example:

Tax year

Final liability

Payments on account

Balance due

2009/10

6,400

5,500

900

2010/11

7,200

6,400

800

2011/12

7,800

7,200

600

Amount due

Payment date

On account

Balance

Total

31 January 2011

3,200

900

4,100

31 July 2011

3,200

-

3,200

31 January 2012

3,600

800

4,400

31 July 2012

3,600

-

3,600

31 January 2013

3,900

600

4,500

Surcharges and interest

An automatic surcharge of 5% will be levied on any 2009/10 tax  outstanding at 28 February 2011 and any 2010/11 tax outstanding at 28  February 2012, and a further surcharge of 5% will apply to any tax still outstanding at 31 July 2011 and 31 July 2012 respectively. There is a  right of appeal against the surcharge on the grounds of reasonable  excuse.

In addition, interest will run on tax (and surcharges and penalties)  paid late, from the due date of payment to the actual date of payment. HM Revenue & Customs will pay  interest on amounts overpaid, from the date of payment (or the due date  if later) to the date of repayment.

Self assessment for employees

For employees, self assessment is not too drastic. The PAYE system means most employees  should pay the correct amount of tax at source. An employee with  relatively straightforward tax affairs is unlikely to be asked to  complete a tax return.

Tax codes

The main cause of under or over payments of PAYE is actual benefits in kind being different from the estimates included in the tax code. If there are under-payments of  tax, they may be collected by direct demand or, if modest, carried  forward as an adjustment to their tax code for the next tax year, but  one. Self assessment allows up to 2,000 to be carried forward in this  way, provided HM Revenue  & Customs is given all the relevant details by 30 December following the end of the tax year if the return is filed online.

Information deadlines

So that employees can complete their tax returns properly,  information deadlines are imposed on employers:

  • Forms P60 must be provided to employees by 31 May following the end of the tax year
  • Copies of forms P11D and P9D must be provided to relevant employees by 6 July following the end of  the tax year
  • Form P45 has a part for the employee to retain

Online filing

There is now an established procedure for filing tax returns online.  For details visit www.hmrc.gov.uk

Please contact us if you would like help with your self assessment returns.

Vector Accountants in St Ives, Huntingdon are professionally trained business advisers and management accountants specialised in helping SME companies be successful; as well as bookkeeping and VAT returns we offer executive coaching and mentoring for new business, start ups and established companies looking to improve performance, increase profits and pay less tax. 

Located between Huntingdon, Cambridge and Peterborough we typically serve clients in the East of England (Cambridgeshire, Suffolk, Norfolk, Essex, Lincs) and the East Midlands (Bucks, Beds, Herts, Leics), but with a global network of  professionally accredited  advisers and accountants in 28 countries across the globe location is not a limitation.

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