hMRC self employed tax return - why bother?
If you’re self-employed, and wondering what on earth is a HMRC self employed tax return then first you need to establish the basics. your business will have various running costs. You can deduct some of these costs to work out your taxable profit as long as they’re allowable expenses.
For example, if your turnover is £40,000 and you claim £10,000 in allowable expenses, you’ll only pay tax on the remaining £30,000 - known as your taxable profit.
A Self Assessment tax return can look daunting. But if you’re prepared, organised and understand what you’re being asked for, it’s a lot simpler than it looks. Make sure you understand the form so you can file it correctly and avoid paying any penalties.
Do I need to fill in a Self Assessment tax return?
Yes, if:
- your self-employment income was more than £1,000 (before taking off anything you can claim tax relief on)
- your income from renting out property was more than £2,500 (you’ll need to contact HMRC if it was between £1,000 and £2,500)
- you earned more than £2,500 in untaxed income, for example from tips or commission
- your income from savings or investments was £10,000 or more before tax
- you need to pay Capital Gains Tax on profits from selling things like shares or a second home
- you’re a director of a company (unless it was a non-profit organisation, such as a charity)
- you, or your partner’s, income was over £50,000 and you’re claiming Child Benefit
- you have income from abroad that you need to pay tax on, or you live abroad but have an income in the UK
- your taxable income was over £100,000
- if you earned over £50,270 in the 2023/24 tax year and make pension contributions you might have to complete an assessment to claim back the extra tax relief you’re owed
- you’re a trustee of a trust or registered pension scheme
- your State Pension was your only source of income and was more than your personal allowance
- you received a P800 from HMRC saying you didn’t pay enough tax last year.
You can also fill in a Self Assessment tax return if you want to make voluntary Class 2 National Insurance contributions. This will help you qualify for benefits such as the State Pension. Since April 2024, if you’re self-employed, you will no longer need to pay Class 2 National Insurance contributions when you complete your taxes, unless your profits are less than £6,725 and you wish to pay voluntarily.
How to register for a Self Assessment tax return
If you’ve never submitted a return before, you’ll first need to register for Self Assessment.
There are different ways to register if you’re self-employed, not self-employed but need to declare income, or if you’re in a partnership.
When you’ve registered, you’ll be sent your Unique Taxpayer Reference (UTR).
If you want to submit your Self Assessment form online, you’ll then need to set up a Government Gateway account. To do this, follow the instructions in the letter containing your UTR.
When you’ve set up the account, you’ll get an activation code in the post. You’ll then need to complete the set-up of your Gateway account.
If you’ve submitted Self Assessment tax returns before, you’ll need your old UTR to register and set up the account.
It’s best to make sure you can access your Gateway account before you try to submit your Self Assessment. This saves time if, for any reason, you can’t log in.
Still too difficult? No problem, we will help
Simply go to our home page and click the TAX REBATE/TAX RETURN button and we will take it from there.
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