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Whether you run the business as a sole trader or have a large business structure, you are required to fill your Self-Assessment tax return every year. This is the strategy adopted by HM Revenue and Customs (HMRC) to determine the amount of Income Tax and National Insurance (NI) that is to be paid. There is no such demand on the part of employees because the tax payable is deducted using an automatic process but this does not come easily for individual owners of a business. For example, a sole proprietorship makes an income that has no National Insurance Contributions and Income Tax automatic deduction. It is therefore expected that the HMRC would be informed about the amount involved through a Self-Assessment form. It is on this note that the amount of tax payable would be determined. In the same vein, a limited liability company is required to file a Self-Assessment form. Other types of income that are taxed include rental income and dividend.
For many businesses, the Self-Assessment process can be found to be complex. No thanks to the changes which the government usually makes in respect to it. Yet, the seeming complexity does not grant anyone the liberty to ignore it. It remains one of the most important tax documents that you have to fill as a business owner.
Having determined that you need to complete a Self-Assessment, you are advised to register as early as possible. It is necessary to do this early because of the usual prolong process. Besides, many self-employed leave it up until the day of the deadline and this is usually more stressful. Also, you are able to enjoy adequate time to address any likely problem and even save up for the tax payable. It should also be noted that the late filing of Self-Assessment form comes with varying penalties.
Similarly, you must endeavour to keep appropriate record about your employment income, invoices and business expenses, return on investments, capital gains, income from abroad, interests and rental income, among others.
However, you don’t have to be afraid. The burden is less 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.
We will help you with completing your Self-Assessment tax return. Being fully aware that the process could be tedious, we have made available unparalleled support to different clients in Essex and about. Our friendly and compassionate team of expert accountants will help your business to carry out Self-Assessment easily every year.
Among other things, we will help you calculate how much income tax you are likely to pay with our useful resource tools. This will help you to prepare ahead for the billing. While our support system is always available to attend to your needs, we deem it fit to provide answers to some questions we receive frequently.
How do I pay tax and National Insurance (NI) due?
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 eventually you are overcharged, a refund can be requested and vice versa. This method is described as Pay As You Earn (PAYE). Similarly, the National Insurance due is taken from your earnings based on how often you get paid. It could be distributed using weekly or monthly payment. You are required to fill forms in this respect with HMRC.
What happens if I miss the deadline?
It is highly recommended that do you do not cultivate the habit of postponing filing your Self-Assessment form. Inherently, the process could be tedious; the earlier you do, the better. There are penalties while there are acceptable excuses for delay. However, if you do not enjoy the benefits of excuses, the penalty involved depends on the longer you delay. The penalties are automatic £100 penalty for late return filing, a £10 daily fee which may add up to £900 and further charges at half or full year. This is costly when compared to your tax bills. You are advised to pay on or before the deadline.
What if I am no longer self-employed?
Being an employer or being self-employed attracts different tax bills methods and National Insurance contributions. Circumstances like the liquidation of the business or need to engage in full-time employment may bring about the end of self-employment. When you are no longer self-employed, the 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). You have nothing to worry about, the process is direct. However, you should make sure HMRC is informed at a date not less than 7 days before you quit the self-employment.
What tax relief can I claim?
Tax relief is meant to reduce the amount of tax payable by an individual or a corporate entity. The amount you can claim depends however on the industry of your business. The instances in which you can claim tax relief is if you spend personal money on things that are required for your job and you strictly use them for your job only. For example, 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 proofs in order to make the claim.
What expenses can I 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 are then filing your tax return, they can be claimed. Some of them are:
• Office expenses like phone, stationery, printing and postage.
• Business space expenses like rent, maintenance and repair bills, heating and lighting.
• Travel expenses like fuel, washing and cleaning vehicles, parking and transport fare.
• financial costs that include insurance or bank fees.
• Clothing expenses like gloves, socks and helmet, 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 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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