An annual self assessment is required from all non PAYE taxpayers including the self-employed, and company directors. The self assessments are payable either in October or January, and is used to evaluate the individuals taxable income during the previous tax year, along with their deductible costs. It may also be a possibility that they will need to give details of things like savings interest but this is largely dependent on each individual’s specific situation.
The document can be filed in two ways, Online or by paper. The deadline for it to be filed on paper is 31st October, and for online it is the 31st January. The consequences in failing to meet these deadlines will result in a fine of £100 which will be set to increase as time goes on until it is filed, whether you owe or not.
What is the cost to me?
There are a number of factors that will be taken into account when calculating your Self Assessment tax bill. The main factors include:
What if I can’t pay?
In an ideal world you will have been setting aside funds throughout the year in preparation for your Self Assessment tax bill. For late payments a penalty system has been put in place. Once you surpass the 30 days stage your bill will begin to amass interest at a rate of 5 per cent, after the 6 months stage you will receive a single penalty fee of 5 per cent of the amount due on top of the rolling 5 per cent. This same process will be implemented if your reach 12 months without paying.
Apart from the penalties if your tax bill continues to remain unpaid HMRC will take legal action against you. If you have any inclination that paying your bill may become an issue it is of paramount importance to inform the revenue of your situation as soon as possible preferably before your bill becomes overdue.
If this is the case your only option is to create a ‘payment proposal’, explaining how you plan to pay back the outdated funds and your time frame of doing so. HMRC must take the time out to consider any viable payment propositions, and it is more likely that they will agree to your proposition if you approach them before your bill is overdue.
Can I pay in installments?
Simply put, yes. How ever you must be up to date with all your payments before you are eligible for this, you will then have the option of being able to pay in installments. An option chosen by many for its flexibility, if you wish to apply for this you can do so via the HMRC website.