If you are self-employed, you pay income tax through Self Assessment (SA). After the tax year ends on 5 April, you will need to complete and file a Self Assessment Tax Return, which you can either do online or by filing in a paper form.
Completing your Tax Return if you are a self-employed individual
To complete your Tax Return you will need information from your business records, receipts or bank statements. If you get stuck, there is advice available. You can visit www.hmrc.gov.uk/sa or call the Self Assessment Helpline on 0845 9000 444.
Self Assessment Tax Return deadlines
If you choose to do your Tax Return on paper you need to make sure HM Revenue & Customs (HMRC) have received it by 31 October. A paper return received after that date may be charged a penalty. But if you do it online you will have until 31 January. This gives you an extra three months. Remember, if you send it in late you may be charged a penalty.
You are responsible for working out how much Income Tax and National Insurance Contributions you need to pay. However, if you do your Tax Return online, your calculation is automatically done for you. If you choose to send HMRC a paper return, HMRC can still calculate your tax for you but only if you make sure your return is received by the 31 October deadline.
HMRC recommend doing your return online because:
- it is secure and convenient
- you can stop, save and come back to it at any point
- calculations are done for you automatically
- it shows you immediately if you owe any tax
- it calculates any repayment due and processes it quickly
- you get automatic acknowledgement of safe receipt
For help with completing and filing your Tax Return online:
- see the step by step guide at www.hmrc.gov.uk/sa/step-by-step-guide.htm or you can order a booklet, call 0845 9000 404
- see the demonstration of the online SA return at www.hmrc.gov.uk/demo/ (this includes four case studies)
Alternatively you can get an accountant or tax adviser to do all this for you. Please remember, if you do this, it is
your responsibility to make sure the information on the return is accurate, complete and received by HMRC in time.
Completing your tax return if your business is run as a partnership
Each partner will have to fill out a partnership supplementary page as part of their own, individual Self Assessment Tax Return. The nominated partner will also have to complete a Partnership Return, showing each partner’s share of the profits or losses. This might also include completing other supplementary pages, depending on what type of income the partnership has.
The nominated partner is responsible for filing the Partnership Return but each partner could be charged a late filing penalty if the return is received late, i.e. this is after 31 October deadline (if a paper return) or after 31 January deadline, (if completed online).
Everyone who completes a Self Assessment Tax Return gets a Self Assessment Statement. This shows you how much you owe and how to pay any tax due. It also shows you how much you have paid or how much we have repaid to you since your last statement. If you have registered for HMRC’s Self Assessment Online service, you can also view your statement online and set up a direct debit as a single payment or as part of a monthly or weekly Budget Payment Plan.
Paying your SA Tax at the right time
From your second year of trading, HMRC will ask you to make payments on account. These are part payments (or commonly referred to as payments on account) towards your next tax bill. These payments on account are based on the amount of tax that was due in the previous year. Certain conditions apply as to whether you need to make payments on account.
You will usually make two separate payments, one on 31 January and one on the following 31 July, as well as any balancing payment on 31 January.