Do I Need to Complete a Tax Return?

Do I Need to Complete a Tax Return

If you are a freelancer or self-employed person, you have to submit your tax returns yourself to the HMRC. On the contrary, if you are employed in a company, your employer is responsible to manage your tax deductions from your wages and NICs. Do I need to complete a tax return as a self-employed person or an employee in any organisation?

So, you need to be aware of the process of filing your tax returns, if you are a sole trader, freelancer or a partner in a limited company. So, it’s essential for every taxpayer to apprehend the self-assessment tax returns systems.

In this blog, we will walk you through what is a self-assessment tax returns procedure and how to apply for it. Moreover, we will discuss the criteria to be eligible for this type of tax return with more light on the penalties for failing to complete tax returns timely. So, let’s start our discussion!


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What are Self-Assessment Tax Returns?

PAYE is a process of filing tax returns by the employer and they deduct the tax before they pay you your wages. So, you should not stress about your tax returns. On the other hand, if you are a sole trader, self-employed person, freelancer or a shareholder in a company having multiple sources of income like interest payment on your savings and dividends received on your shares, you’re responsible for taking care of your tax returns yourself.

The self-assessment tax returns process can be challenging for many people, especially for those who are going to submit their tax returns for the first time to the HMRC. So, it is essential to go for checking the eligibility and deadlines for making tax returns. So, let’s start with the eligibility of making tax returns on your own!


Do I Need to Complete a Tax Return?

Not every self-employed person is liable to make their tax returns to the HMRC. Instead, they have to check out certain income levels and types of work for making their self-assessment tax returns. Following are the conditions for this:

  1. You received an income of £10,000 or more as interest paid on savings or investment income like dividends.
  2. You received an income of £2,500 or more from tips or commissions from your untaxed services.
  3. You have received a Covid-19 grant or support payment system.
  4. You have not paid your complete tax returns last year and you receive a notification from HMRC with a P800 form. So,  you are obliged to make tax returns.
  5. The earned income of you or your partner is more than £50,000 and you may be charged with High-Income Child Benefit Charge.
  6. You are obliged to pay capital gains tax as a result of selling a property or asset, or you have earned a profit in dividends as a shareholder in a company.
  7. Your taxable income is coming from abroad, or you are residing abroad but getting all your income in the UK.
  8. You want to claim tax-free child benefit or Maternity as a self-employed person.
  9. Being a higher rate or additional rate taxpayer, you wish to seek income tax relief from your pension contributions.
  10. You’re a trustee of a registered pension scheme or any other trust.
  11. You’re a trustee or representative of someone who has died.


How Can I Do A Tax Return?

If you have not registered yourself or your business in the previous tax year, you need to register your self-employment business with the HMRC. As a self-employed person, you need to:

  1. Register for NICs and Self-Assessment
  2. With the help of your business tax account, you can register yourself. If you have not created one, you can create it and use it to sign into your business tax account.
  3. After a gap of 10 business days, you will receive a UTR.
  4. Before the due date, you’ll receive a reminder from the HMRC for the submission of tax returns.

You can submit your tax returns via post or online. Before October 5, an individual company or in a partnership needs to complete their tax returns registration process. As a self-employed person, if you are in the second tax year, you also need to get registered by the 5th of October.


How Much Tax Do I Owe to HMRC?

Your income is affected by certain factors. And, you will pay different levels of income depending on the following factors:

  1. The tax thresholds are different and you need to determine in which band your income falls.
  2. Capital Gain you have made.
  3. After the calculation of certain tax reliefs.


Deadlines and Penalties

The deadline for the UK tax year 2021/2022 which runs from 6th April to the 5th April is midnight 31st October 2021 if you are submitting tax returns on your papers. In case, you are submitting your tax returns online, the submission deadline is by the end of  January 2022.

If you fail to pay the tax returns by the deadlines, you have to pay a penalty to the HMRC. The penalty is equal to £100 if your tax returns are later than 3 months. It can increase in amount if you have not paid tax returns for later than this.


The Bottom Line

Wrapping up, we can conclude that tax returns are essential for those who are self-employed or he is partners in a limited company. As an employee, the tax filing is managed by the employer. As a first-time tax filer, the self-employed person needs to get registered for the NICs and the Self-Assessment with the HMRC.

If you fail to pay tax returns on time, you will be charged £100. Moreover, you will be charged interest for each late payment.


Tax returns can be tricky and stressful at times. Don’t worry! AccountingFirms is here to help you by providing you with an opportunity to get help from professional accountants in the UK.


Disclaimer: All the information provided in this article on do I need to complete a tax return, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.