People who are included in the self-assessment system will report their income, taxable gains and allowable expenses to HM Revenue & Customs (HMRC) each year by completing a tax return. Once the tax return has been completed with all the information, it’s sent to HMRC, either by mail or submitted online.
This means that there are a number of important dates to adhere to if you are in the self-assessment system, as failure to comply will result in a penalty and possible interest charges.
Payments on Account
Payments on Account are based on the previous year’s tax bill. Two payments are required, one on 31st January and the other 31st July. The two payments should cover the amount of tax that you owe, and which is due the following January.
Any balance will be paid by 31st January. For instance, you pay £2,000 on 31st January 2016 and £2,000 on 31st July 2016, which is based on the tax bill for 2014-15. As the tax bill for 2014-15 is due to be paid by 31st January 2016, you will pay the tax bill, plus a Payment on Account. The second Payment on Account is due on 31st July 2016.
The total you have paid should be sufficient to cover your tax bill for 2015-16. If you owe more, the balance has to be paid by 31st January 2017.
The tax year
The tax year runs from 6th April one year to 5th April the next. If you are due to complete a tax return and have registered for self-assessment with HMRC, you will receive a paper tax return just after April. If you have previously completed a tax return online, you will receive a notice reminding you that a tax return will be due for completion.
Due dates for tax returns
A paper tax return has to be completed and received by HMRC by 31st October after the end of the relevant tax year. For instance, a tax return for the year 2014-15 has to be submitted by 31st October 2015. If you elect to submit your tax return online, you have until 31st January the following year, which for 2014-15 would be 31st January 2016.
Collection of tax through tax code
You can opt for your tax to be collected through the next year’s tax code, although there are restrictions on the amount. For this to be possible, HMRC must receive your tax return before 30th December following the tax year end.
There are other important dates to remember, which is why so many opt to outsource accounting to reputable accountants. If you would like to discuss your self-assessment tax return, please contact us to arrange a suitable date for a chat.