It is said that there are two certainties in life, death and taxation. Our tax accountants at Go Accountants are specialists and work hard to ensure you pay the right amount of tax - and not a penny more. Whether it is your personal tax return, a partnership tax return or corporate tax return, our tax accountants can provide the tax payer with piece of mind knowing that all is dealt with in a correct and timely way.
Tax Accountants With our specialist knowledge as tax accountants we aim to ensure you only pay the right amount of tax and that you retain the maximum profit and capital at your disposal. We do this by using up to the minute diagnostic techniques and software to illustrate the benefits of our recommendations. We are constantly looking for new ways for our tax accountants to help you make the most of your money and bringing expert help to ensure that your affairs are fully and correctly compliant with HMRC regulations.
An Introduction to Personal Self-Assessment Tax in the UK The tax year runs from 6th April to 5th April in the following year and under self-assessment it is up to the individual taxpayer to calculate their own tax liability and pay the tax due by the due date.
Who has to fill in a Self-Assessment Return? The majority of people in the UK are taxed under PAYE and do not have to complete a Self Assessment tax return. However, where you have income that is not taxed at source or may be liable to higher rate tax on income that has only had basic rate tax stopped you will probably need to complete a self-assessment return. It is your responsibility to notify chargeability to tax to HMRC.
The following people usually have to complete one...
Anyone who is self-employed
A company director
Pensioners with an annual income of £100,000 or more
Employees or pensioners with an annual income from savings or investments of £10,000 or more
A landlord who rents out property or land.
If you are unsure whether you need to complete one, please contact us for advice.
Filing the Self-Assessment Return If you are required to complete a return, they are normally issued to you at the beginning of April each year. The basic return is 10 pages but many sources of income require supplementary pages to be completed as well. Some people receive a short tax return of only 4 pages.
As well as your income it deals with the allowances and reliefs that you can claim.
Paper returns have to be filed by 31 October following the end of the tax year and HMRC will calculate your liability for you. For online returns you have until 31 January following the end of the tax year to file the return. If you file the tax return online through the HMRC website the software will calculate your tax liability for you.
If the return isn't filed by the due date, there is an automatic fine of £100, which is reduced to the level of tax due if that is less. There is a further £100 fine if your return is still outstanding six months later.
Due Dates of Payment The method of payment usually involves two payments on account of your tax liability as follows...
One on 31 January during the tax year
and another on 31 July following the tax year. These are based on the net income tax and Class 4 NIC liability of the previous tax year .
A final payment (or repayment) is due on 31 January following the tax year.
Thereafter, there is a 5% surcharge on any taxes that remain unpaid after 28 February, and a further 5% on taxes not paid after 31 July.
The payments on account are not required if...
income tax and NIC liability for the previous year (net of tax deducted at source) is below £500 (doubled to £1000 from 2009/10 with first payment affected being 31 January 2010)
or more than 80% of the income tax and NIC liability for the previous year was tax deducted at source. You can also apply to have the payments on account reduced if you expect your liability for a tax year to be less than the previous year.
Amendments to Returns and Enquiries HMRC can correct a self assessment return within nine months of the return being filed in order to correct any obvious errors or mistakes in the return and an individual can amend their self assessment at any time within 12 months of the filing date.
For tax returns issued before 6th April 2008, HMRC have 12 months following the filing deadline to enquire into a Return. So for example, the 2006/07 return which usually has to be filed by 31 Jan 08, the enquiry deadline would be 31 Jan 09. If HMRC have not opened an enquiry by then, they cannot subsequently enquire into it unless they make a discovery of information relevant to the return or the taxpayer makes an error or mistake claim. Enquiries can be aspect enquiries into just one aspect of the return or they can cover a full enquiry into the whole return, in which case expert advice should be sought..
For tax returns issued from 6th April 2008 the enquiry window is altered to one year from the date the return is received by HMRC, which will therefore offer a real incentive to file your tax return early .
Keeping Records By law you must keep all records in support of the tax return for at least 22 months after the end of the tax year, but if you are self-employed or have rented property the records must be kept for five years and ten months after the end of the tax year.
You can be fined up to £3,000 if you fail to maintain or retain adequate records to back the return.
How We Can Help You We can assist you with completion of your self-assessment return, advise on payment of liabilities and deal with any enquiries into your return.
National Insurance - Your Way Around the Maze All rates in this article are for 2009/10.
NIC for Employees For employees Class1 National Insurance (NI) primary contributions are deducted from their salary each month as part of the PAYE system.
They are paid on earnings between £110 and £844 per week at 11% and then 1% on any earnings above this.
The rate of NIC paid by employees is affected by whether you are contracted out of SERPS or S2P as it is now called (the State Second Pension Scheme) in which case a reduced rate is payable. If the employee has contracted out of SERPS and into a salary-related scheme, then at the basic level the NIC rates are reduced by 1.6% for the employee and 3.7% for the employer. For money-purchase schemes, the employee's reduction is still 1.6%, but the employer's reduction is 1.4% and an additional age-related payment is made to the scheme by the NICO.
However, if an employee contracts out of SERPS into a personal pension, the full NI contribution has to be paid, but a rebate is then paid by the NICO to the pension provider.
NICs for Employers Class 1 secondary contributions are paid by the employer at the rate of 12.8% on all the employee's income above the threshold level. The contributions must be paid over to HMRC together with the primary contributions deducted from the employees' salaries, each by the 19th of each month or by 22nd if paying electronically. Employers with small payrolls can elect to pay quarterly.
Class 1A contributions are paid by the employer on most forms of benefits provided to the employee, at the rate of 12.8% on the value of the benefit provided. Class 1A contributions are paid once a year by 6 July after the tax year end.
Self Employment NIC When you become self-employed there are two types of national insurance that are payable...
Voluntary National Insurance
Class 3 National Insurance is a voluntary contribution at the flat-rate contributions of £12.05 per week and can be paid by people to keep up their national insurance record for the retirement pension and some other benefits, when they haven't paid enough of any of the other forms of contribution.
Class 2 contributions can also be paid voluntarily to protect entitlement to UK benefits while temporarily posted abroad.
Class 1 primary contributions are paid by employees;
Class 1 secondary contributions are paid by employers
Class 1A is paid by employers;
Class 2 is paid by the self-employed, and voluntarily by employees posted overseas;
Class 3 is a voluntary contribution to make up any deficits;
Class 4 is paid by the self-employed if they earn enough, but does not provide any entitlement to state benefits.
National Insurance can be a complex area and HM Revenue & Customs have wide powers. We can assist you with compliance and taking advantage of NIC planning opportunities.
Go Accounts, Business Accountants, Accounting Services, Bookkeeping, Year end Accounts, Self Assessment Tax, Management accounts,Payroll, PAYE year end, Tax returns, VAT registration and returns, Company Formations.The Full Accountancy Service,Online, or by Post,Fax or E-mail. Accounts to Go Our offices are at 83 Friar Gate, Derby, Derbyshire, East Midlands DE1 1FL