HMRC Self Assessment Overview
What is a self-assessment?
HMRC (Her Majesty's Revenue and Customs) Self Assessment is a system in the United Kingdom that requires individuals and certain entities to report their income, gains, and other financial information to calculate their tax liability.
It is a way for HMRC to collect income tax, capital gains tax, and other taxes from those who are not taxed through the Pay As You Earn (PAYE) system, such as self-employed individuals, company directors, landlords, and those with complex financial affairs.
What are the main features of a self-assessment?
Under the Self Assessment system, taxpayers are responsible for calculating their own tax liability, completing a tax return, and submitting it to HMRC by the relevant deadlines.
The tax return includes details of the taxpayer's income from various sources, such as employment, self-employment, investments, and property, as well as any capital gains they may have realized.
The tax return also allows taxpayers to claim deductions and reliefs they are entitled to, such as business expenses, personal allowances, and tax reliefs for pensions and charitable donations. It is important to maintain accurate records and supporting documentation to ensure the tax return is completed correctly.
Once the tax return is submitted, HMRC reviews the information provided and calculates the tax liability based on the applicable tax rates and allowances. HMRC will issue a tax calculation or a Statement of Account to the taxpayer, indicating the amount of tax due or any refund owed.
What are the deadlines?
Taxpayers are required to pay any tax owed by the payment deadlines set by HMRC. These deadlines are usually January 31st following the end of the tax year for online submissions and payments, with additional payment deadlines for the first payment on account in July.
In addition to income tax and capital gains tax, Self Assessment also covers other taxes, such as National Insurance contributions, student loan repayments, and the High-Income Child Benefit Charge. It is important to include all relevant information in the tax return to ensure accurate assessment and compliance with the tax laws.
HMRC provides guidance and online tools to assist taxpayers in completing their Self Assessment tax returns. However, it is advisable to seek professional advice or consult HMRC directly if there are complexities or uncertainties in the tax affairs to ensure compliance and minimise errors.