Self-Assessment and Personal Tax filing can be an overwhelming process for those that are unfamiliar with the tax system. Even if you are familiar with the basics, there is a lot of information to consider when filing taxes.
What is Self-Assessment?
Self-Assessment is a method of taxation where individuals must assess themselves for any tax liabilities they may owe through their income or capital gains. This includes any income from employment, pensions, investments, rental properties or business profits. Self-Assessment requires that taxpayers submit an annual tax return for the period 6th April to 5th April by the 31st of January of the following year. Showing all their sources of income for the year in question and all applicable deductions. It also requires taxpayers to pay any taxes due on time. Payment needs to be received by HMRC on or before 31st January. You need to allow a minimum of three/four working days for the payment to show on your account. Failure to do this could result in fines or penalties from HMRC (His Majesty’s Revenue & Customs).
What is Personal Tax Filing?
Personal Tax Filing involves completing your own paperwork to file your yearly taxes for self-assessed individuals. This means that you will need to fill out forms such as Self Assessment Tax Returns (SA100), submit them on time and calculate how much tax you owe based on your taxable income for the year in question. In order to complete a successful personal tax filing, you will need to have a government gateway account, a good understanding of the relevant laws and regulations associated with taxation as well as being familiar with any deductions which may be available. Furthermore, it is important to keep accurate records throughout the year so you can accurately report your income when it comes time to file your taxes. Some choose to keep paper copies e.g. receipts, invoices, and bank statements plus all relevant documentation, others may choose to scan these documents and store them digitally. These records need to be kept for six years.
Filing taxes can seem like a daunting task but it doesn’t have to be! With a bit of research into self assessment and personal tax filing, taxpayers can ensure that they understand the process before starting their return forms so they can minimize potential mistakes or errors. Additionally, keeping accurate records throughout the year will help make sure that everything goes smoothly when it comes time for filing returns at the end of each fiscal period (6TH April to 5th April). So don’t wait – start gathering information now so you’re prepared when it comes time for personal tax filing.
This article is intended as a guide only, and should not be taken as financial advice. Please contact us for advice tailored to your individual circumstances.