Income Tax

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Self assessment is carried in order to acertain how much tax you should pay. You will need to complete a tax return every year. They are issued in April of every year and they cover a 365 day period.

You must complete a tax return every year if you:

• are self-employed, either as a sole trader or in a partnership
• are a company director
• are earning enough to pay higher-rate tax
• have complicated tax affairs (for example, if you earn income abroad)
• have made significant capital gains (for example, from selling shares)
• are asked to by the Inland Revenue

The Inland Revenue once given all the information they require will be able to inform you how much tax you will have to pay.
Try to make sure you receive all the forms you need to complete, it is your responsibility to ensure you have made available all the information the inland revenue require.

The tax return

A SA100 form is a tax return form which HM Revenue and customs will send you to complete. You will have to provide details of income, savings, pensions and investments.

Additional pages

There are other pages that may have to be completed in addition to the main form for example:

• Employment (SA101) - if you are an employee or company director
• Self-employment (SA103) - if you are a sole trader
• Partnership (SA104) - if you are self-employed in a partnership

There are other circumstances where you will have to complete other forms for a full account of these forms please see HMRC.gov.uk

You can also complete and file your return online.

When to send the forms back

The dead line for paper returns where the Inland Revenue is to do the calculations for you is 30th September. If you do your own calculations, you should return it by 31st January, which is also the closing date for online completions. There are financial penalties to pay for late returns.

Keeping records

If you keep precise and correct records then when it comes to tax return time things will run smoothly with less stress. Good records will make your tax returns easier to complete. The records of your income must legally be kept for 22 months after the end of the tax year.

If you are a partner or self employed you must keep records for 5 years and 10 months after the end of the tax year. You will need to be able to prove the information you supplied on your tax return form, so you need to keep any statements, receits,expenditure details etc, in case you are ask for them in the future.

Employees

Tax for employees or directors is usually paid under PAYE which is deducted from pay by the employer each pay period.

Self-employed

If you are self-employed or a partner in a partnership, you will normally pay your tax in three stages:

• A first payment on account by 31 January during the tax year. This is normally half your previous year's tax bill.
• A second payment on account - which is the same amount as the first installment - by 31 July after the end of the tax year.
• A final balancing payment (or you get a repayment) by the next 31 January - this is the bill calculated on the actual income returned for the tax year less the payments you have made on account.

There are automatic penalties for late payment. You will also be charged interest on any overdue tax.