Tag Archives: Self Assessment

When do you need to submit a self-assessment?

Despite ongoing consultations and efforts to simplify the system, many taxpayers are still left unsure of what it is they’re meant to do.

Since filing a self-assessment late carries a hefty penalty fee, knowing when you’re required to complete a tax return is very important.

The chances are that, if you completed a self-assessment for the last tax year, you’ll need to do it again this year. HMRC tend to issue letters informing people when completing Self Assessment forms are no longer necessary, and they actively urge taxpayers to tell them as soon as their situation changes.

A spokesperson for HM Revenue and Customs stated “people with slightly more complex affairs may have to fill in a tax return but it all depends on their personal circumstances.

“We don’t want anyone to fill in a tax return unless it’s absolutely necessary.”

So, how do you know if it is necessary for you? HMRC will judge whether or not they need you to complete a Self Assessment based on a few different factors. Here are some of the more important points to consider –

Your income

As a rule, anyone with a taxable income of more that £100,000 will automatically be required to fill out a self-assessment form.

If you make any income over £10,000 from savings, investments or shares, you’ll also need to report it to HMRC.

Say you sold your holiday home or some shares to your business in the last year. You would need to disclose that income on a self-assessment in order to pay the Capital Gains Tax that you owe.

In most cases, though, if your only income comes from your wages as a non-shareholding employee/director or pension, you won’t need to submit a return.

Your role

If you’re self-employed, or were self-employed at any point over the past tax year, you will need to submit a Self Assessment. You will be allowed to deduct some allowable business expenses from your income before working out how much you owe in tax.

Company directors also need to complete a Self Assessment unless they work for a non-profit organisation and do not receive any pay or benefits. Trust and registered pension scheme trustees must complete tax returns.

As a landlord, you may not think of yourself as self-employed or as a business owner. But, in HMRC’s eyes, you are. You must report all income you receive in rent but you will be able to deduct revenue expenditure from your profits to reduce your tax liability.

Depending on your individual circumstances, you may need to send a return even if you do not fall into any of these categories. For example, religious ministers and Lloyd’s underwriters are also liable for self-assessment.

Other types of income

Even if your usual income does not meet the HMRC criteria for requiring a Self Assessment, other factors may mean you still need to fill out a tax return.

This could include your partner’s income too. If one of you makes more than £50,000 a year, and either you or your partner are claiming child benefit at the same time, you will need to report it on a self-assessment form.

Income from overseas is also taken into consideration. Any tax owed on income in other countries must be put on your tax return. Even if you were living abroad yourself, you’ll need to pay the tax on any UK income you made during that time.

If you have received a P800 from HMRC saying you didn’t pay enough in the last tax year, and you have not already payed what you owe through your tax code or voluntary payment, it will be added onto your total tax bill.

Work with us

In any case, if you receive a letter or HMRC telling you to send in a tax return, you must submit the form. Even if you don’t have any tax to pay, going against HMRC could result in fines or even trigger an official investigation.

The Self Assessment process can seem daunting, especially with new tax changes being announced every year. If you need any advice or guidance through submitting your tax return, speak to us today on 01872 271655, or email us on enquiries@kelsallsteele.co.uk

Making Tax Digital: New Timetable

HMRC have announced significant changes to the timetable for the implementation of Making Tax Digital. We have previously written about HMRC‘s original plans for the implementation of Making Tax Digital, which would have come into effect from April 2018 for a number of businesses and landlords with gross income exceeding the VAT threshold (currently £85,000), and April 2019 for those below the threshold – however these timescales have now been relaxed.

Following HMRC’s newly reformed timetable, only VAT Registered businesses will be required to keep digital records from April 2019 – and only for VAT reporting purposes. The previous requirements for the reporting of other taxes quarterly to HMRC will not come into effect until at least 2020. This means businesses and landlords with turnovers below the VAT threshold will have at least 2 years before having to adopt a new digital system.

While the Government and HMRC are wholly supportive of MTD and the need to move to a more modern and streamlined system for the reporting of businesses tax affairs this is a significant slackening in the more imminent timescales that were previously expected. These changes have been well received by businesses and software providers alike who both recognise that more time is required to be able to make a comfortable transition to a new digital system of working.



Tax Return Excuses

Whilst the majority of us manage to submit our tax returns in a timely manner, there are always a number of late filers, and with late filing normally comes an excuse!

HMRC have again released their list all time most bizarre excuses offered by taxpayers who left it a little late in filing their self assessment returns.

This year’s deadline for the completion and submission of your self-assessment tax return is 31st January 2017. Time is fast running out, so if you’ve been putting it off, now is the time to get your accounts in order and submit your tax return to the revenue. Failure to meet this deadline will result in an automatic £100 fine.

HMRC are always open to accept reasonable, legitimate excuses for the late filing of returns, however if you’re thinking of using any of the classic lines on this list, I would think again!

1. My tax return was on my yacht, which caught fire.

2. A wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed.

3. My wife helps me with my tax return, but she had a headache for ten days.

4. My dog ate my tax return…and all of the reminders.

5. I couldn’t complete my tax return, because my husband left me and took our accountant with him. I am currently trying to find a new accountant.

6. My child scribbled all over the tax return, so I wasn’t able to send it back.

7. I work for myself, but a colleague borrowed my tax return to photocopy it and lost it.

8. My husband told me the deadline was the 31 March.

9. My internet connection failed.

10. The postman doesn’t deliver to my house.

*Source: http://economia.icaew.com/en/news/december-2016/the-top-ten-worst-late-tax-return-excuses


Self-employment Business start-ups – FAQ

Self Employment FAQ

Starting-up in business, becoming self-employed, can be a bit of a daunting process, especially if you are not sure of some of the steps you need to go through. There are a few ‘hoops’ you need to jump through so we have put together a few basic pointers for those who are thinking of making that move in self-employment.

We can help you at every step of the way, so please feel free to contact us if there is anything you would like further information on or help with.

  1. Do I need to tell HMRC?
    • You will need to register as self-employed with HMRC and the easiest way to do this is online at gov.uk. Tell them as soon as possible after your self-employment begins.
  2. What will they ask me?
    • Your National Insurance number, address, date of birth and details of the business including nature of the business, date it began trading and your business address. If you have previously registered as self-employed you would have had a 10 digit unique taxpayer reference number. They will ask for this if you have it.
  3. Do I need to register for VAT?
    • You only need to register for VAT when your sales exceed £83,000 in a rolling 12 month period. However, you may wish to voluntarily register to enable you to claim back the input VAT on your expenses. This does mean you have to charge output VAT on your sales so it’s only advisable to voluntarily register if this will not affect your competitiveness e.g. if your customers are VAT registered and can reclaim the VAT you charge them.

Don’t forget that if you become VAT Registered you will need to file VAT Returns online with H M Revenue & Customs. You will need to create a Government Gateway account and register to file VAT Returns online. Make sure you allow enough time for this process before your first VAT Return becomes due!

  1. Do I pay myself a salary?
    • No, the money you draw from your business is not classed as a salary and is not a business expense. You do not pay tax on the money you draw from the business, only on the business profits. You can of course employ other people and pay them a salary which is a business expense.
  2. When do I pay tax?
    • Your first tax return will run from the day you start self-employment up to the following 5 April. Any tax will be due on the 31 January following that e.g. if you start self-employment on 1 June 2016, your first tax return will run to 5 April 2017 and if you have made a taxable profit, you will pay tax on 31 January 2018.
  3. Do I need to register for national insurance?
    • When you register as self-employed you will automatically be registered to pay national insurance. If your income is high enough, you will pay national insurance at the same time as any income tax.
  4. What records should I keep?
    • You need to keep records of your business income and expenditure. This will include bank statements, sales invoices and purchase invoices, details of the entries on your VAT Return and payroll records if you employ people. Keep records for at least 5 years from the 31 January following the tax year e.g. you must keep your records for the year ended 5 April 2016 at least until 31 January 2022.
  5. What happens once I’ve registered as self-employed?
    • HMRC will issue you with a unique taxpayer reference number and send you a notice to complete a tax return. You will need to enter on this tax return all your business income and expenditure to calculate your taxable profit and any tax that may be due. The tax return needs to be filed by the 31 January following the tax year end date (e.g. tax returns for the year ended 5 April 2016 are due to be filed by 31 January 2017).
  6. Aren’t things changing soon?
    • Yes! Over the next few years the Government’s plans to ‘make tax digital’ (MTD) will be rolled out and, depending on the size of your business, you may have simpler rules to follow for reporting your income and expenditure. You will also have to report more regularly, probably 4 times a year. More details will follow as they come through!

Budget 2016


  • Income tax personal allowance to rise to £11,500 for 2017/18
  • Introduction of a Lifetime ISA for under 40’s
  • Abolition of Class 2 NI
  • Reforms to corporate tax losses
  • Reduction in the Corporation Tax rate
  • Changes to Entrepreneurs’ relief

Budget 2016 Summary

The Chancellor’s 2016 Budget contained some important announcements and confirmed a number of changes planned for the new tax year. Following this, we have put together a Budget Summary PDF which contains the latest tax and financial information, which we trust you will find useful.

There is also a handy Tax Data Card for 2016/17, giving details of all the allowances and limits you’ll need to know. You can download both the PDFs for free via the links below:

Our summary goes into more detail on all of the points raised in the budget, aimed to give you a clearer picture of the announcements and how the changes will affect you and your business. however, as always, if there is anything you would like to discuss, please do not hesitate to contact us on 01872 271655 or via email at enquiries@kelsallsteele.co.uk

Class 2 NI – Making it Easier to Pay

National Insurance for the Self-Employed – making it easier to pay

At the moment, if you are self-employed, you will pay income tax and Class 4 National Insurance (NI) on your profits. These amounts are calculated when you prepare your Self-Assessment Tax Return and are payable on 31 January following the end of the tax year. If your tax liability is over £1,000, then you will make payments on account for the income tax and Class 4 NI for the following tax year in 2 instalments, one on 31 January and the second on 31 July.

You will also pay Class 2 NI contributions, which are currently a flat rate of £2.75 per week. Most people will pay these by Direct Debit or cheque, separately to the payment of the other taxes.

The amount of state pension and other benefits that you can claim is based on the National Insurance contributions you have paid. For those who will reach state pension age after 6 April 2016, 35 qualifying years of National Insurance contributions are needed to enable receipt of the full basic state pension.

From 6 April 2015 HM Revenue & Customs (HMRC) want to simplify the system by collecting Class 2 NI contributions at the same time as collecting the income tax and Class 4 NI contributions due. When calculating your tax liability based on your Self-Assessment Tax Return, your Class 2 NI contributions will be added on as well.

This comes with the added bonus that if the profits reported on your Self-Assessment Tax Return are below the Class 2 NI threshold (currently £5,885 per annum), then you will not have to apply separately for a Class 2 NI exemption, but will automatically be given the option not to make Class 2 NI contributions for that year. Anyone who currently has a Small Earnings Exception certificate in place will be notified that their certificate will cease to be valid from 2015/16 onwards.

Please note that currently Class 2 NI is collected four months in arrears, so if you have a quarterly Direct Debit in place your final payment for 2014/15 will be taken in July 2015. This Direct Debit should then cease.

If you have any concerns about your NI contributions, please do not hesitate to contact us on 01872 271655 or email lydia.williams@kelsallsteele.co.uk

Excuses, excuses….

HMRC have recently released their list of the all time worst excuses offered by taxpayers who were late in filing their self assessment returns.

With this year’s deadline of 31st January fast approaching, now is the time to get your accounts in order and submit your return to the revenue.

Although HMRC will accept reasonable, legitimate excuses for late filing, any of the following excuses are not likely to be enough to swerve that £100 fine!

  • My pet dog ate my tax return…and all the reminders.
  • I was up a mountain in Wales, and couldn’t find a postbox or get an Internet signal.
  • I fell in with the wrong crowd.
  • I’ve been travelling the world, trying to escape from a foreign intelligence agency.
  • Barack Obama is in charge of my finances.
  • I’ve been busy looking after a flock of escaped parrots and some fox cubs.
  • A work colleague borrowed my tax return, to photocopy it, and didn’t give it back.
  • I live in a campervan in a supermarket car park.
  • My girlfriend’s pregnant.
  • I was in Australia.

The deadline for filing by paper return passed at the end of October 2014, so any outstanding returns for the 2013/14 tax year must now be filed online before the deadline of 31 January.

While HMRC have highlighted a number of excuses given by taxpayers, it’s nice to know that us taxpayers are not the only ones with the excuses. Here are a number of excuses that HMRC gave in regards to inquiries on the state of client’s tax affairs:

  • Please can you call back in about an hour, Mr X (the Inspector) has just gone for a lie-down (that one was used by HMRC a few years ago).
  • We can’t issue your tax repayment, as shown in your Corporate Tax Self-Assessment, because it’s on a work list.
  • It’s in a pile and because it hasn’t been two weeks since we received it we don’t have to look at it yet.
  • Automated HMRC message: ‘If it’s less than 4 weeks since you submitted the return to us, please call later’.
  • Automated HMRC message: ‘We are very busy at this time’ and the call cuts out.

* Source http://economia.icaew.com/


Self Assessment 2014 – don’t miss the deadline!

Self Assessment 2014

Welcome to January – a time for new beginnings, resolutions, dieting and for thousands of people, it is also time for that last minute panic to complete and file their tax return by the deadline of 31 January. And as accountants, don’t we know it!

If you still haven’t gathered together your income and expenditure records for the year ended 5 April 2014 then this does need to be done sooner rather than later. Remember, if H M Revenue & Customs have issued you with a Tax Return, you do need to submit one, regardless of whether you have anything to report on it.

A penalty of £100 per late Return will be charged whether you have any tax to pay or not, and for partnerships, this can prove quite expensive as it is £100 per partner for a late partnership Tax Return plus £100 for each personal Tax Return.

The information that needs to go on your Tax Return would be the following (where applicable):


  • Self employment income, expenses and details of purchases of any capital items relating to the accounts year ending in the 2013-14 tax year;
  • Employment income, tax deducted and any benefits in kind;
  • Pension income and tax deducted;
  • Rental income and associated expenses;
  • Savings income and dividend income and tax deducted;
  • Capital gains from the sale of assets;
  • Total amount of Child Benefit received by you and your partner (including details of the number of children you received the Benefit for)


  • Personal pension and annuity contributions;
  • Interest paid on loans used for a qualifying purpose;
  • Charitable donations made under the Gift Aid scheme.

If you are not sure if you have been issued with a Tax Return or if you need any help at all in completing the Return, please do not hesitate to contact us.

Self-Assessment – filing your tax return on time

Filing on time

With the filing deadline of 31 January fast approaching for self-assessment, there has recently been published the 10 oddest excuses for sending in a late return.  The highlights of these run from ‘my goldfish died’, ‘my wife won’t give me my mail’, ‘I’ve been cruising round the world in my yacht’ and from an accountant ‘I’ve been too busy submitting my clients’ tax returns’.


HM Revenue & Customs accept reasonable excuses for late filing with some examples such as a failure in the HMRC computer system, problems with the preparer’s computer, a serious illness or not receiving the activation code in time.  However these are just examples and each case will be considered individually. HMRC would still need to see a reasonable effort has been made to meet a deadline.


In normal circumstances, the penalty for late filing of the tax return is an initial fine of £100, even if there is no tax to pay or the tax due is paid on time.  After three months, an additional daily penalty of £10, up to a maximum of £900, applies.  After 6 months a further charge of £300 is imposed ,or 5% of any outstanding tax, whichever is greater.  There are also additional penalties for paying late of 5% of the tax unpaid after 30 days, 6 months and a year.

If you have any queries or concerns, please contact our tax experts

Child Benefit and Self Assessment

If you earn over £50,000 and you or your partner receive child benefit you may need to register for Self Assessment in order to declare this, but you only have until 5th October 2013 to do so.

As announced in last year’s Budget, the Government intends to claw back child benefit from higher earning households, specifically those in which at least one parent earns more than £50,000. In cases where a parent’s earnings are above £60,000 the benefit will be clawed back entirely.

The new tax charge, high income child benefit charge (HICBC), was introduced on 7th January 2013, being 1% of the child benefit received for every £100 of income in excess of £50,000. It is the responsibility of the individual who is liable to ensure they declare the child benefit payments by registering for Self Assessment and filling in a tax return. If both parents in the family earn over £50,000, it is the highest earner who will need to register.

HMRC have written to families who may be affected by HICBC to inform them of what steps they now need to take. Those who need to can register for Self Assessment on the HMRC website.

It’s worth remembering that although the deadline to register for Self assessment is 5th October, you will not have to pay anything until 31st January 2014.

Opting Out of Child Benefit

It is possible for parents to ‘opt out’ of receiving child benefit altogether, more than 400,000 high earning families already have, however if you had not already done this prior to 7th January and have already received the benefit for some or all of the period to 5th April 2013 you will still need to complete a tax return. Opting out now may allow you to come out of Self Assessment for future tax years.

Reducing your income

While the limit over which the child benefit charge takes effect is £50,000, it may be worth considering options to reduce your income to below that threshold, hence removing your liability to the charge.

  • Salary sacrifice schemes reduce your earnings in return for a non-taxable benefit, such as childcare vouchers. If your employer offers such schemes it may be something to look into.
  • Similarly, some Pension schemes work in the same way, reducing your earnings by the amount you save. In most cases this is also topped up by your employer and is another tax efficient way to save for the future

If you have any questions on this topic, or are unsure whether it applies to you then please contact Accounts Manager Lydia Williams on 01872 271655 or e-mail lydia.williams@kelsallsteele.co.uk