Whether you run the business as a sole trader or have a large business structure, you are required to fill out a Self-Assessment tax return, which is used to determine the amount of Income Tax and National Insurance (NI) that is to be paid. This does not come easily for the individual owners of a business. For example, a sole proprietorship makes an income that has no NI contributions and Income Tax automatic deduction. Therefore HMRC expect to be informed about the amount involved through a Self-Assessment form to then determine the amount of tax payable. Other types of income that are taxed include rental income and dividends.
The seeming complexity of the Self-Assessment process does not grant anyone the liberty to ignore it, as it remains one of the most important tax documents you have to fill out as a business owner. Many self-employed people choose to leave it up until the day of the deadline, which is incredibly stressful and doesn’t allow time to address any problems. It should also be noted that the late filing of Self-Assessment form comes with varying penalties. We recommend that you register for Self-Assessment early and keep the appropriate records of your employment income, invoices and business expenses, return on investments, capital gains, income from abroad, interests and rental income.
The burden is lessened when you are able to address your Self-Assessment designs with an expert and also seek quality advice. At Nordens, we are well grounded to provide you with the right strategic services that will sort out your Self-Assessment. Our reputable years of serving our clients through the effort of our highly-skilled chartered accountants cannot be compared with any other. We are available to help take care of every process that needs to be carried out. Among other things, we will help you calculate how much Income Tax you are likely to pay with our Useful Resource Tools, which will help you to prepare for the billing. While our support system is always available to attend to your needs, we deem it fit to provide answers to the questions we receive frequently.
Nordens premium service is designed to support you in your self assessment calculations and formulations.
Our highly qualified ACCA accounting team can handle even the most complex self assessment situations.
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Here at Nordens, we understand that you want to know more about our Self-Assessment tax returns. To keep you well-informed, here’s a list of our most frequently asked questions:
As long as you are receiving income that is above your personal allowance, you are required to pay tax. Usually, the allowance you receive personally is distributed through your pay list for the year so that your employer can deduct it before paying you. If you are overcharged, a refund can be requested (and vice versa). This method is known as Pay As You Earn (PAYE). Similarly, the National Insurance that is due is taken from your earnings based on how often you get paid. It could be distributed using weekly or monthly payments. You are required to fill forms in this respect with HMRC. However if you are self employed you will need to pay your income tax and national insurance on a yearly basis once your tax return has been filed.
It is highly recommended that you do not cultivate the habit of postponing filing your Self-Assessment form. Inherently, the process can be tedious; the earlier you do it, the better. You won’t be penalised if you have an acceptablebexcuse for the delay. However, if you do not enjoy the benefits of excuses, the penalty is based on the length of the delay. The penalties include: an automatic £100 penalty for late return filing; a £10 daily fee which may add up to £900; and further charges at every half or full year. This can be costly when compared to your tax bills. You are advised to pay on or before the deadline.
Being an employer or self-employed attracts different tax bills, methods, and National Insurance contributions. Circumstances like the liquidation of the business or the need to engage in full-time employment may bring about the end of self-employment. And when you are no longer self-employed, HMRC has to be duly informed. This is possible by filing a form to de-register, or put a call through. You will be required to provide your National Insurance (NI) number and Unique Tax Reference (UTR). HMRC should be informed at a date no less than 7 days before you quit the self-employment.
Tax relief is meant to reduce the amount of tax payable by an individual or a corporate entity. The amount you can claim depends on your industry. The instances in which you can claim tax relief is if you spend personal money on things that are required for your job, and that you only use for this purpose. For example, if you have to repair the company’s vehicle with your own money while on a journey under the company’s directive, you can claim tax relief on it. Don’t forget that you have to keep evidence of this in order to make the claim.
As a sole trader, you will incur many administrative costs. They are otherwise called allowable expenses. These allowable expenses that you claim can be deducted from your taxable profits. Thus, you are advised to keep records of what you spend on. When you file your tax return, they can be claimed. Expenses include:
• Office expenses such as phones, stationery, printing and postage
• Business space expenses like rent, maintenance and repair bills, heating and lighting
• Travel expenses including fuel, washing and cleaning vehicles, parking and transport fares
• Financial costs that include insurance or bank fees
• Clothing expenses like gloves, socks and helmets, among others
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In November 2002, having sold our other business interests off earlier in the year, I decided to set up Nordens Chartered Accountants. The easy part was knowing how to do it, as I had established and built a smaller practice a few years earlier. The difficult part, for me, was not following the traditional accountancy path. Having run businesses, both successfully and unsuccessfully, I wanted to help business owners resolve their short term problems and work with them to achieve their longer term goals. Business has always been my interest and I love that I can help business owners achieve what seems like the impossible every single working day.
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