Taxpayer is regarded as a self-employed person when rendering services to a client or selling goods to make a profit. It is a legal requirement to register yourself as soon as you started working for yourself, however you can always do it up to three months’ time. Registration required possession of NI (National Insurance Number). After registration HMRC assigns taxpayer UTR (Unique Tax Reference) number, which is send to the taxpayer’s address by post within 2 -6 weeks after registration.
People registered as self-employed are required to file annual Self Assessment Tax Return.
The UK tax year begins on April 6 and ends April 5 next year.
Currently we have a tax year 06/04 / 2018-06 / 04/2019.
The tax return for the 2018-19 will be available after 5th April 2019.
Self Assessment must normally be filed on or before following dates:
for paper returns, 31 October 2019
for returns filed electronically, 31 January 2020
For failure to send Self Assessment Tax Returns on time is automatically assigned a penalty of £ 100, the interest is still accrue until Taxpayer completes and deliver Self Assessment to HMRC.
To prepare a self assessment, the taxpayer is required to fairly present all sourced income from April 6 to April 5, which may be income from: self employment, employment (employee P60, P45) dividends, partnership, property income, foreign income, income from trust, capital gains, some benefits etc.
Costs that can be deducted from the tax are “necessary costs” incurred solely for the purpose of performing work as self employed.
Persons working as self employed are obliged to issue invoices and declare income received by bank transfer as well as cash.
For people registered in the CIS scheme (Construction Industry Scheme). The Contractor is obliged to issue a Statement of Payments and Deductions for each subcontractor, which presents the income and tax deducted for the work done by Taxpayer. However, it is under the subcontractor’s obligation to make sure that all documents have been received as this is a necessary document for preparing the tax return.
When the taxpayer terminates work as a self employed person, he must inform the Tax office as well as the National Insurance office, otherwise he or she is still required to send a tax return each year.
Changes such as leaving the UK or changing the type of employment from self employed to employed does not cancel the Self employed registration automatically, the taxpayer is obliged to close self-employment in person.
If you need our help to register, prepare and submit your Self-Assessment or appeal against penalty, please contact with us today!
Self Employed advantages:
Tax payer decide where and when they do their work
Profit from self-employment increases the personal income of the self-employed.
Self employed people normally have several clients at the same time
Tax Return completed once a year
They can sell goods and services to make a profit
Self employed disadvantages
Self-employed people are responsible for success and failure of business. They are legally responsible for liabilities to creditors with all their personal assets.
They are paid only for the service performed or the goods sold and therefore no pay at the time of holiday or illness.
Self employed provide their own equipment.
Prife for Self-employed tax service in Blue Diamond Accountancy Ltd