Self assessment tax returns and you

With RIFT's self assessment tax return service, we do all the paperwork for your annual returns. There are no deadline worries, no costly mistakes or misunderstandings and no missed opportunities.

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Self Assessment

What is self assessment?

Self assessment is a system HMRC uses to collect income tax in the UK. Tax is usually deducted automatically from wages, pensions and savings. People and businesses with other income must report it in a self assessment tax return.

Self-employed tax returns require a number of things such as keeping business records if you are self-employed so be sure to keep your business transactions in an order that will be easy to work through when the time comes. You will also need to consider things like payments on account each year which involve paying 6 months worth of tax in advance on the 31st January and the 31st of July each year. It's also worth understanding what you can claim on your expenses when you do your tax return. If you think you could be due a tax refund, our simple tax refund calculator will tell you.

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Self Assessment

Who needs to do a self assessment tax return?

It's not just the self-employed who need to worry about self assessment tax returns. You’ll need to submit one if:

  • you got £2,500 or more in untaxed income e.g. money from renting out a property or savings and investments. You can find out more about paying tax on rental income here.
  • your savings or investment income was £10,000 or more before tax
  • you made profits from selling things like shares, a second home or other chargeable assets and need to pay Capital Gains Tax
  • you were a company director - unless it was for a non-profit organisation (eg a charity) and you didn’t get any pay or benefits, like a company car
  • you're a nominated business partner - when you set up a Partnership and get it registered with HMRC, one of you becomes the "nominated partner". If that's you, it's your responsibility to manage the business partnership's tax returns
  • your income (or your partner’s) was over £50,000 and one of you claimed Child Benefit as there is the High Income Child Benefit Tax Charges to consider.
  • you had income from abroad that you needed to pay tax on foreign income for
  • you lived abroad and had a UK income
  • you got dividends from shares and you’re a higher or additional rate taxpayer
  • your income was over £100,000
  • you were a trustee of a trust or registered pension scheme
  • you had a P800 from HMRC saying you didn’t pay enough tax last year - and you didn’t pay what you owe through your tax code or with a voluntary payment
  • you make a substantial amount of money from selling things online. Find out more about self assessment and online selling

Certain other people may need to send a return (eg religious ministers or Lloyd’s underwriters) – call us to check. 

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Self assessment for the self employed

When you're setting up a small business, you've got some important decisions to make. One of the first is between being a Sole Trader or forming a Limited Company. There are pros and cons to each route. You'll be weighing up simplicity against security, and inexpensiveness against tax efficiency. Either way, though, you're going to have to be comfortable with HMRC's Self-Assessment tax system.

When you're self-employed, you really have to understand what Self Assessment means for you and your business. The system has specific deadlines and requirements to meet - and painful penalties for failing to meet them. RIFT can take care of all your Self Assessment and self-employment questions or problems. We can even file your tax returns for you, and fight your corner with HMRC if you want.

Find out more about accounting options for the self employed here.

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Self Assessment Help

What is filing a tax return?

Tax returns are just a way of telling HMRC what you've been up to and what money you've got going in and out. They're what the taxman uses to work out the Income Tax and National Insurance you owe. Not everyone needs to file their own tax returns, but those who do use a system called Self Assessment.

Self Assessment tax returns are designed to be as simple as possible. Even so, it's easy to get tangled up if you aren't used to the system and the kind of language it uses. There are hard-and-fast deadlines for filing your returns, and for paying the tax you owe. These can vary depending on how you choose to submit your return, but it's always bad news to miss one.

There are lots of common, painful mistakes made when people file Self Assessment tax returns. If you're not sure of your footing, or whether you even have to file at all, talk to RIFT. We'll quickly put you on the right track, and can even take care of the whole thing for you.

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Self Assessment Tax Returns

What documents do I need to file a self assessment return?

Filing a Self Assessment tax return means showing HMRC a full picture of your finances. Here are a few of the most important documents to hold onto:

  • Form P45, if you stopped working for an employer during the tax year.
  • Form P60, showing what tax you've paid.
  • Form P11D, if you get any "benefits in kind" like a company car.
  • Records of any Taxed Award Schemes or redundancy payments.
  • Other things to keep track of include extra income such as untaxed tips, incentive payments or benefits like meal vouchers.

Remember, it's not just the self-employed who file a Self Assessment tax return online. If you're claiming a tax refund for expenses of over £2,500, you'll need to use the system too.

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Self Assessment Tax Returns

What happens if I don’t get my self assessment tax return in?

There’s basically no acceptable excuse for missing self assessment tax return deadlines, even if you don't owe HMRC anything. If you miss the deadline there are a number of self assessment tax return penalties that you could be hit with:

  • £100 automatic fine for filing even a single day late,
  • £900 in penalties can stack up over the next three months
  • £3,000 for each year you can’t provide the necessary records

We’re here to take care of everything - from completing your tax return, through calculating any refunds due, to speaking to HMRC on your behalf. You can also get more self assessment tax return tips and advice here with some clear do's and don'ts

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Employment Status

What does employment status mean? Can I choose whether I'm employed or self-employed?

Knowing your employment status is incredibly important. Self-employed people are treated very differently from employed ones by HMRC. It makes a difference to your National Insurance contributions, your Income Tax and the ways you pay both. It also has a big effect on the way you qualify for and claim your tax refunds.

The key thing to realise is that you can't just choose your employment status to suit you. The taxman is very keen on stamping out what he calls 'false self-employment'. This is where people are treated as if they were employees, but are declared as self-employed.  Workers trapped like this can easily find themselves missing out on key employee perks like sick pay or maternity leave. Whether you're employed depends entirely on your circumstances, and there's a surprising amount of fuzziness in the definitions.

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Self Assessment Tax Returns

How do I know if I'm employed or self-employed?

If you've got a contract to work for a company you don't own, there's a good chance you're employed by them. Employed people tend to work set hours, usually for one company at a time. They get regular pay either weekly or monthly, which has already been taxed. They also have paid holidays or other benefits.

Self employed people probably work for several clients or customers at the same time. They may own their own business and can choose how, where and when they work. They tend to invoice for each job they take on and pay their own taxes through Self-Assessment. In some cases, they may not even have to do the work themselves. Many self-employed people can actually assign other people to do it instead. Things can get tricky when a self-employed person gets work through an agency or other employment intermediary. Also, if you've got more than one job, it's possible you might be bother employed and self-employed at the same time. If you've got any doubts about your employment status, talk to RIFT and we'll get it sorted out.

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Allowable Expenses

I'm self-employed, what are my allowable expenses?

Expenses for self-employed people are the inescapable costs of doing your work or running your business. When you're filling in your Self Assessment tax return each year, they reduce the amount of profit you end up paying tax on. The specific rules for this depend on whether you're a Sole Trader or a Limited Company, and how you do your accounting. The main point, though, is that there are certain necessary expenses that count against your taxable income. Examples of common allowable expenses include:

  • Travel costs, whether in your own vehicle or by public transport.
  • Specialised clothing, tools or equipment you need for your work.
  • Any stock you buy to sell on.
  • Anything you're spending on advertising or marketing.

Sometimes, you may pay for something that has both a business and a personal use, like a phone bill. In general, you can only claim for the proportion of business use you get out of it. If you work from home, you might also be able to claim a percentage of your household bills as expenses.

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Allowable Expenses

Is there a simpler way to work out my allowable expenses?

There are a couple of things you can do to keep your expenses calculations simple. One is to use the "cash basis" of accounting. Traditional accounting has a few complicated rules about when costs become allowable expenses. For instance, if you buy some stock to sell on, HMRC says you've bought an "asset", and can't claim its cost as an expense. When you sell the stock, what you paid for it becomes an expense of the sale, and can be claimed for. Under the cash basis, you simply record everything you spend when you spend it. This means you can claim the stock as an expense straight away.

Another option is to use HMRC's "simplified expenses" rules. Under this system, you can claim fixed amounts as expenses for things like working from home or running a vehicle. Simplified expenses can't be used by Limited Companies, though. Only Sole Traders and partnerships (with no companies as partners) can choose them.

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Our Guarantee

Our guarantee means you'll never lose a penny

When you claim your tax refund with RIFT, our unique RIFT Guarantee means that you don't have to worry about the taxman reclaiming any of your money. So long as you give us full and accurate information, if HMRC disagrees with the amount that we’ve claimed and ask for the money back, we’ll pay it. It won’t cost you a penny.

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