Posted: 12. November 2019 by: Rupert Tennant

How to write a Self-Assessment Return

The most common way to pay taxes in the UK is via PAYE since most people are paid a monthly salary. The second most common is self-assessment.  That’s how those who pay income tax pay their taxes, starting with reporting their income to HMRC.

The tax return may be a bit complicated and difficult to grasp at first, but it’s important for the business owner to try to understand it even if they don’t pay the taxes and file the return on their own.

Who needs to fill in the return?

The return needs to be filed on time and by a business that falls under the criteria set by HMRC. These are:

  • The person who is self-employed and earns over £1.000 a year.
  • The person renting a property and earning more than £2.500.
  • Those who earn more than £2.500 from tips or sale commissions
  • To report income from savings that’s more than £10.000 a year
  • Those who have a combined income of £50.000 and are using Child Benefit.
  • Those that have a taxable income of over £100.000.
  • Those that have underpaid their taxes the previous year

The deadlines

There are clearly set deadlines as to when you need to send the return, and if you miss this deadline, you’ll get a fine from HMRC. There’s also another deadline for actually paying the taxes, and there’s a fee for missing this one as well.  However, HMRC is willing to accept a few valid excuses for missing the mark if you let them know and prove your case.

  • Those who are registering for the first time need to do so before October the 5th.
  • Those that have paid before need to file by 31st of October
  • The taxes need to be paid by 31st of January

The information

Self-assessment return needs to contain a few key information that you provide for HMRC in order to identify both your business and your obligations towards the government. These are:

  • Your 10-digit Unique Taxpayer Reference (UTR)
  • your National Insurance number
  • The details of the untaxed income that you’ve made in the previous year.
  • Records about the expenses made to run your business
  • Contributions towards pensions that can be excluded from your tax obligations
  • P60s and other documents that prove that you’ve already paid some income on your salaries.

How to fill it?

There are two main parts of the return, and one is more important than the other since it deals with the income itself, and that’s where you add your income and how much you need to pay based on it. This section is called SA100, and it deals with the following income:

  • Taxed and untaxed income in the form of dividends and interest
  • pension contributions
  • charitable donations
  • benefits, including State Pension, Child Benefit and Blind Person’s Allowance.

This is also where you add foreign income regardless of the way that money has been made since all foreign income is taxed this way.

Supplementary pages

The supplementary pages of the documents are known aren’t the same for all the taxpayers. They depend on what kind of income you make and therefore, what they have a variety of different names. For instance:

-Self-employed you need to complete SA103
-reporting property income, fill in SA105
-declaring capital gains, complete SA108.

The income coming from these sources is reported and logged in, in the same way as the income that’s reported in the main income. This is also where the allowable expenses that are deducted from your taxes are reported.

Self-employed

Besides being a worker in someone else’s company, this is the most common way to earn money in the UK, and that’s why it gets a separate portion in here. This part of the return is known as SA103.  Those who have a small company meaning that they earn less than £85.000 a year have it pretty simple when it comes to this return. They don’t have to itemize business expenses.

These expenses could be a lot of different things, and they include:

  • cost of stock bought for resale
  • cost of equipment used at work
  • wages, salaries and other staff costs
  • payments to subcontractors (if you work in the construction industry)
  • vehicle and travel expenses
  • work building costs (including rent, power and insurance)
  • repairs and maintenance for work buildings and vehicles
  • office costs (including internet access, phones and stationery)
  • advertising and business entertainment costs
  • interest on loans
  • bank, credit card and other financial charges
  • accountancy, legal and other professional costs

Conclusion

A self-assessment tax return is the most common way to pay taxes if we don’t count the PAYE system, which is how the income made from salaries is taxed. The return needs to be filled in once a year, and there’s a clear deadline that you need to stick to.