Know more about Self-Assessment Tax

The self-assessment tax return has to file by individuals who work as sole traders or have certain distinct sources of income, such as rented properties, COVID-19 funds, other relied funds and so on. The HMRC has strict auditing norms, and you can land into trouble if you don’t submit your tax reports promptly. You need to start preparing for the tax season and arrange all your documents beforehand. The HMRC may charge a penalty if you don’t clear the tax payments on time.

If you cannot pay your tax on time, you may be able to arrange to pay your self-assessment tax liability in instalments. You must connect with the HM Revenue & Customs on the Business Payment Support Service at 0300 200 3835 or ask them to set up instalments via your Government Gateway account. Let’s discuss more about Self-Assessment Tax.

Table of Contents

  • What is the need to pay a Self-Assessment Tax?
  • How to pay the Self-assessment tax online?
  • What is new in the MTD scheme?
  • Summing Up

What is the need to pay a Self-Assessment Tax?

The Self-Assessment Tax is paid by individuals who have multiple sources of income. The tax amount is charged because of the following possibilities:

  • If any individual fails to include any source of income while paying advance taxes.
  • The TDS amount deducted is lesser due to inaccuracy.
  • Additional sources of income, such as fixed deposits, mutual funds and so on, that go unnoticed by the employer.

Additionally, if you are a property owner, engaging in self-assessment can help you become more aware of your overall tax burden, including property taxes. If you believe that the assessed property value is unjustly high, you may consider protesting the property tax assessment with the help of a texas tax protest company, or a similar firm near you. These firms can help you review your tax assessment, and if necessary, appeal it. They can also provide guidance and advice on the best course of action.

How to pay the Self-assessment tax online?

Ensure you don’t miss out on any necessary steps or get stuck between your payments. Furthermore, the online tax payment platform accepts net banking only. Read the steps for applying for the Self-assessment tax online:

What is new in the MTD scheme?

Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) is a recently introduced initiative by the UK government with the sole purpose of digitalising the pre-existing tax system for convenience and easy accessibility. MTD for ITSA will come into practice in April 2024. It will apply to unincorporated businesses and landlords who have a total business or property income higher than 10,000 per annum. MTD for ITSA would substitute the pre-existing self-assessment tax return and will be equivalent to it.

Let’s see what new elements the MTD for ITSA will bring along:

  • Online records

It will become mandatory for businesses and landlords to store their business records online and submit a report of their business income and expenses to the HMRC with the help of MTD-approved software. In their latest guidelines, the HMRC has also declared spreadsheets a valid solution for maintaining and tracking digital records. For convenience, the HMRC allows you to use your present spreadsheet template and submit the data through verified Making Tax Digital bridging software.

  • Quarterly Submissions

It is advised by the HMRC that Taxpayers must submit a quarterly business income and expense report for both self-employment business income and property rent. The quarterly report must be synced with the original digital records. Post every quarterly submission, and taxpayers will get a chance to go through the updated information and get an estimation of their upcoming tax liabilities.

  • Annual Submissions

On top of the regular quarterly submissions, the HMRC also has a section for submitting the annual adjustments, reliefs and allowances reports. Once you wrap up a tax year, you need to conclude every business income source (self-employment and property businesses). You can do this by settling with a declaration commonly known as an End of Period Statement (EOPS). For every source of income, a distinct EOPS has to be issued.

  • Final Declaration (Crystallisation)

After submitting the mandatory quarterly and annual reports separately for each source of income, the EOPSs are generated, and the individual who files the self-assessment tax return is expected to finalise their overall tax position for the tax year by providing a Final Declaration.

Summing Up

Once you are so that you fall in the category of people who need to file the self-assessment tax return, you must start preparing for it quite before the last day. It is important to decide if you are going to make the application online or send the form offline. If you are picking the latter, you must be particular about the deadline as some days will be taken by the postal or courier service to send your application to the HMRC.

Make sure that you have all the supporting documents, as the HMRC may charge some penalty if your application gets rejected and you delay the procedure. If you get stuck anywhere, you can always use some expert advice. 123financials is there to resolve all your queries related to the self-assessment tax return.