There are benefits that come with being self-employed. You might be able to work from home, choose your jobs more carefully and have the flexibility to take time off whenever you want.
But there is one drawback – you have to fill out a Self Assessment tax return. The deadline for sending 2015/16 tax returns online is 31 January. With the deadline fast approaching, we're taking you through what you need to know about filling out a Self Assessment tax return.
Who needs to complete a tax return?
You might need to fill out a tax return if, in the 2015-2016 tax year:
• you were self-employed,
• you got £2,500 or more in untaxed income,
• your savings or investment income was £10,000 or more before tax,
• you or your partner earned more than £50,000 and one of you claimed Child Benefit, or
• you lived abroad and earned a UK income.
You can see a full list of who must send a tax return on the Gov.uk website.
Do I need to register to submit online?
You will need to register if you're submitting your tax return online for the first time. To do this, you will need your 10-digit unique taxpayer reference number (UTR) – you can find this on HMRC letters and other documents.
An activation code will arrive in the post within ten working days after you enrol. You will need to create a Government Gateway account and use this code to activate the service. The deadline for sending in paper tax returns passed on 31 October – so you can’t submit your returns this way.
Or if you're running out of time, you can submit your tax return through your online personal tax account. The HMRC says it takes a few minutes to sign up for an account and if you've used it before, you'll hopefully have all of your codes and passwords saved.
What if I miss the deadline?
You will usually pay a penalty if you're late handing in your Self Assessment tax return. The penalty is £100 if your tax return is up to three months late. Bear in mind that you'll have to pay more if it's later or if you pay your tax bill late. Over three months, you can start to pay penalties of up to £10 a day up to a 90 day limit of £900.
You can appeal against a penalty if you have a reasonable excuse. This can count as something unexpected or outside your control. For example, if your partner or close relative died, or you had a sudden stay in hospital before the tax deadline.
You cannot blame missing the deadline on someone not sending the tax return for you, or the HMRC online system being too difficult. There are videos about Self Assessment that can help you.
Sent your Self Assessment tax return? Find out how to get your finances in order if you're self-employed.