The Self Assessment Deadline is Fast Approaching
It’s that time of year again and if you haven’t done anything about your Self Assessment yet, it’s time to get moving so that you’re not caught out.
If you don’t file by the deadline of 31 January 2023, you could be served an avoidable fine and interest for late submission.
What is a Self Assessment?
Self Assessment, also known as a Tax Return, is the process by which you advise HM Revenue & Customs (HMRC) of your income, gains and relevant expenses for a given tax year.
For the tax year 6 April 2021 to 5 April 2022, your online submission must be completed and filed on the HMRC website by no later than midnight on 31 January 2023.
Timeliness is key, as you will be charged a late filing penalty of £100 if your tax return is up to 3 months late. There will be an increased amount to pay if it’s later than that, plus you will be charged interest on the tax you owe to HMRC.
The 31 January deadline is not only the last date for submission of your Self Assessment, but also the date your tax payment is due. Therefore, you should aim to complete it perhaps a few days before, particularly if you need to make sure you have the funds available to pay the tax you owe.
Who needs to file a Self Assessment?
The simple answer to this is anyone that needs to tell HMRC about untaxed income. You might be self-employed, freelance, or have multiple sources of income.
Even if you are employed and pay tax through PAYE, you may still be required to submit a summary to HMRC so that they know your tax affairs are in order.
The official stance
The official HMRC guidance confirms that Self Assessment relates to the self-employed person (acting as a sole trader), if you earn more than £1,000 in your tax year, or if you are a partner in a business partnership.
If you’re the director of a limited company, you may also need to complete a Self Assessment, but this will depend on how you receive your income, and whether you are already taxed through the PAYE system.
Most people will not ordinarily have to file a return if their only income is from their salary or pension.
Having said that, you may need to complete a Self Assessment if you have any other untaxed income such as from certain COVID-19 grants and/or support payments, money from renting out a property, tips and commission, income from savings, investments and dividends, or other foreign earnings.
Confused? There’s no need to be if you have a trusted accountant on hand to help.
You can also visit the HMRC website for further advice but do read guidance carefully so that you don’t misinterpret anything.
Are you sure about the submission date?
Yes, there is no escaping the 31 January 2023 deadline for Self Assessment!
If you normally submit your return in paper format, the date to complete this passed on 31 October 2022, so you’ll need to make alternative arrangements to complete this online as soon as possible.
Whilst HMRC decided to waive late filing and late payments in relation to the 2020/2021 tax year given complications arising from the COVID pandemic, it’s important that you understand this same arrangement will not apply in 2023.
Do I have to use an Accountant?
If you’re used to filing your own online Self Assessment that’s fine. For some however, it can prove to be time-consuming and tricky!
The questions raised aren’t always easy to understand. This might lead to you paying more tax than you need to, particularly if you’re not sure about all the expenses and allowances that you can claim.
Faced with a series of questions, it’s also very easy to make a simple mistake. Worst case scenario would be that you make an error, which ends up as a financial penalty.
For both reasons, we think it’s important to work with an experienced financial advisor that can use their knowledge and Self Assessment experience to guide you through the process from start to finish.
What you might not know is that using an accountant can also be a tax-deductible expense!
We aren’t just Accountants - we are expert Finance Advisors
Cobalt Accountants is a business-friendly Finance Expert based in Melton Mowbray, Leicestershire.
The approach we take is different. Each support service is tailored to meet the specific requirements of a customer. That’s because we recognise that businesses are unique.
Before we can best advise you, we get to know how you work and what your existing financial arrangements are. More than anything, we want to know how you see your future, so that we can provide the right financial services that will help you realise those ambitions.
Where every business counts!
All our financial services are designed to support your success.
From helping you become more tax-efficient, preparing and filing an accurate Self Assessment, to detailed VAT Returns, accurate book-keeping, forecasting and general financial guidance, Cobalts is a trusted advisor to many successful businesses.
It doesn’t matter if you’re a new start-up, small business, or a medium enterprise, we’re here for you, virtually and in person, to share our experience in an area of your business that you can’t afford to overlook.
‘Making Tax Digital for Income Tax Self Assessments’
Next year when you’re thinking of your 2022/23 Self Assessment, you will need to follow a new system. Making Tax Digital for Income Tax is a new way of reporting income to HMRC, and it starts from 6 April 2024.
Self-employed business owners and landlords with an annual income above £10,000 will need to follow the new rules for Making Tax Digital for Income Tax Self Assessments.
If you fall into that category, you’ll need to sign up for the new service, even if you’re already registered for Self Assessment.
You shouldn’t panic at this stage though, as there is plenty of time to prepare for the new requirements. If you don’t understand anything, drop us an email or give us a call.
You can read more about this new system here: Self Assessments are changing - are you ready?
Whatever stage you’re are with your Self Assessment, we’re here to help. Book a free consultation now.