Ainsworth & Co, Chartered Accountants and Business Advisors.

Self-Assessment for Self-Employed People


Self Assessment Service


We offer a Self Assessment filing service for our clients and will make your tax filing as simple as possible. We are based in Preston, Lancashire and provide our services to England and Wales.


This webpage is a guide to these questions:

• What is Self Assessment ?
• Who Needs to Register to File a Self Assessment ?
• How to Register for Self Assessment
• Sole Trader Accounts and Tax
• When do I need to file Self-Assessment Accounts?
• When do I need to pay my Income Tax under Self Assessment?
• How to pay your Self Assessment



What is Self Assessment ?


Self Assessment is the UK Tax Return for individuals. You can do the Self Assessment yourself or ask an accountant or other person to do it for you.

Self Employed people and Sole Traders file their Year End Accounts by Self Assessment.

Self Assessment is part of the Income Tax system in the UK.

Not everyone needs to complete a Self Assessment. People who are employed normally pay Income Tax through their payslip by PAYE.


Who Needs to Register to File a Self Assessment ?


These are the main categories when you will need to register to file a Self Assessment:

Business
• a self-employed Sole Trader (no matter how small the income)
• a partner in a business partnership
• a Company Director

Other Income
You will need to register for Self Assessment if you know you have additional taxable income, for example:
• Profits from Property (or Land) Rental Income:
• Taxable Investment Income (eg. Savings and Investment Income)

Here you can do your own Self Assessment Check


How to Register for Self Assessment


We can register you for Self Assessment, please call 01772 611432 for more information.

To register yourself, here is more information at GOV.UK.

Please note that if you are not registering a business then you would use Online Form SA1


Sole Trader Accounts and Tax


Self Employed people are taxed on the Profits of their business under the Income Tax system, ie. not on the money they take out of the business.

Year End Accounts are prepared first. Tax on the business, along with other personal income, is then calculated as part of the Self Assessment process.

Class 2 National Insurance and Class 4 National Insurance are also payable, if your Profits are greater than the thresholds.

To summarise, if you have not registered your business as a Limited Company, you are regarded as being Self-Employed by HMRC and you will be taxed under the Income Tax rules.

Sole Trader Accounts are normally less detailed than Limited Companies, because only a simple Profit and Loss Account is required, so an accountants fee would normally be cheaper.


When do I need to file Self-Assessment Accounts?


Income Tax is assessed in "Tax Years", which run from 6th April to 5th April the following year. For example the tax year 2015/16 runs from 6th April 2015 to 5th April 2016.

Your Year End Accounts must be filed, by Self Assessment, in paper form by 31st October, or online by the 31st January following the tax year just ended, ie. 5th April.

It is simplest to prepare accounts to 5th April each year. For example, if you started a business on 1st September 2015, you will need to prepare accounts from 1st September 2015 to 5th April 2016. These accounts should be filed online by 31st January 2017.

We recommend that you start the accounts and tax process in good time. We also believe that your Year End Accounts should be prepared for your own benefit, and we will help you understand them.

Tax is frequently the only reason why businesses prepare their Year End Accounts. As a result it can be quite stressful and gets low priority. However, delays can be costly.

Penalties are charged by HMRC if a Self Assessment is filed late.


When do I need to pay my Income Tax under Self Assessment?


Income Tax must be paid by 31st January for the previous tax year. Eg, for Tax Year 2015/16, ended 5th April 2016, Income Tax is payable by 31st January 2017.

Once a business is into its second year, and tax payable is greater than £1,000, payments on account are collected in the January of the tax year itself (6th April to following 5th April) and then the following July.

Payments on account are only estimates and are collected in the two equal instalments (31st January and 31st July). Any balance of tax still owing has to be paid by the following 31st January.

For example, for the 2015/16 tax year (6th April 2015 to 5th April 2016) the instalment dates for payments on account are 31st January 2016 and 31st July 2016. Any outstanding balance must be paid by 31 January 2017.

In this example, interest is payable on tax unpaid by 31st January 2017. A surcharge is payable on amounts unpaid by 28th February 2017, and further surcharge on amounts unpaid by 31st July 2017.


How to pay your Self Assessment


This UK.GOV link explains the options for paying Self Assessment:
Pay your Self Assessment tax bill, and includes HMRC bank account details if you are paying online, and the postal address if you are paying by post.

Please note that if your Self Assessment has been filed online, you will not receive a paper payment request by post.


Just Started ?


For new businesses, the HMRC use "Opening Year Rules" to calculate the tax due.

These can be quite complicated, depending on how long a period is covered by your first set of Accounts. If your first Accounts period is 12 months, then you have a nice and neat "basis period", which will make the calculations easier. If your first Accounts period is not 12 months, then it is a little more complicated!

To keep it simple, we recommend that your business accounts are made up to 5th April each year.

If you have just started up in business, the HMRC webpages Starting up in Business and How to Calculate your Taxable Profits may be useful for you.


Tax Services


Our Services can save you the time and the hassle. We will prepare your Income Tax calculations and Self Assessment and submit them to HMRC.

Our Tax Services also include:
VAT
Payroll / PAYE
P11D
CIS


Tax Investigations


Tax investigations can be very stressful. We recommend that you get expert advice and we will be able to recommend the necessary expertise.

Thanks for visiting.
If you need further help
please call us:
01772 611432
8:00am to 8:00pm


New Business?

New businesses must be registered with HMRC

We can register your business for you

To register your business yourself, this can be done online by setting up a Government Gateway account or by using HMRC form CWF1