Let’s start with the basics: 

The key to submitting your Self-Assessment on time is ensuring your books are kept up to date throughout the year.

It’s possible to do this manually, with a pen and paper or an excel sheet. However, as we move forward with Making Tax Digital (the Government’s plan to have tax assessments all submitted through software) the reality is that you are going to have to use Cloud Accounting to manage your records and submit your self-assessment one day in the future. 

We use Xero – One of the most user-friendly and sleek cloud accounting tools

However, now is not the time to worry about submitting your Self-Assessment in a new way.  

For the moment, if you have to send a tax return and did not send one last year, you need to register for Self-Assessment and Class 2 National Insurance. 

Register by 5 October in your business’s second tax year. You could be fined if you don’t. 

For example: 

If you start your business on 1st Jan 2020, you have until 5th Oct 2020 to register.

The main date in the tax year is – 6th April – The start of the new tax year.

The one that is of most interest is the 31 January – The final deadline for submitting and paying your tax return.

So, by the 31st January you must have registered, logged onto your online self-assessment portal, completed your books, submitted your self-assessment online and paid the bill.

If you are sitting mid-January and not registered then the reality is that you will be facing a fine this year, as you do not have the time to register for Self-Assessment, get your Unique Taxpayer reference back from HMRC (which can take up to 20 working days) and the activate your account and submit. 

When you complete your self-assessment, you are calculating the tax owed, three main taxes are charged.

Income Tax – In Scotland this is.

Starter rate                            19%       £         1 –  £    2,085

Basic rate                               20%       £  2,086 – £   12,658

Intermediate rate                   21%     £12,659 – £  30,930

Higher rate                             41%       £30,931 – £150,000

For 2020 / 21 you will also pay class 2 and 4 NI as follows:

Class 2 Self-employed – Flat rate £3.05 pw (if earnings exceed £6,475). 

Class 4 Self-employed – 9% on annual profits between £9,501 and £50,000 2% on annual profits above £50,000.

The last sting in the tail HMRC have for you is Payment on Account.

You have to make two payments on account every year unless:

Your last Self-Assessment tax bill was less than £1,000.

Each payment is half your previous year’s tax bill. 

Payments are due by midnight on 31 January and 31 July.

The taxes owed are all calculated in your Self-Assessment Calculation, and all need to be paid by 31st January.

If you need support to complete your Self-Assessment or wish to discuss the benefits of Cloud Accounting, do not hesitate to contact us.