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It feels as if the tax year has hardly begun, but the self assessment paper deadline is already looming – words that strike fear into the heart of many a self-employed person!

Fortunately, IBISS & Co are here to help: in this blog, we’ll debunk some of the most prevalent tax myths surrounding self assessment returns, helping you to avoid fines, save money, and complete your tax return with care and confidence.

The first thing to discuss is deadlines. Here are the key dates:

  • 5th October 2018. This is the date by which all eligible UK tax residents must register for self assessment.
  • 31st October 2018 (midnight). This is the deadline by which all paper self assessment tax returns must be submitted to HMRC.
  • 31st January 2019 (midnight). This is the deadline by which all online self assessment tax returns must be submitted to HMRC. You must also pay any tax that you owe by this point.

Tax Myths #1: I Haven’t Earned Any Self-Employed Income – So I Don’t Need to Complete a Return

Even if you did not work as a self-employed individual during the last tax year – or if your earned income was below the thresholds for NICs and tax – you may still need to complete a self assessment return. It’s worth getting in touch with HMRC to double check. Even if your circumstances have recently changed and you believe you do not need to complete a return, failure to do so could result in financial penalties being levied against you (as HMRC will likely be expecting your submission and will fine you for missing the deadline).

Tax Myths #2: Self Assessment Tax Returns Only Apply If You’re Self Employed

Self assessment tax returns are not just for self-employed individuals. There are a number of things to consider – for example:

  • Do you have untaxed income – rental income, for instance, or interest that is not taxed before it is paid to you?
  • Do you receive income from savings or investments?
  • Do you receive income from a trust?
  • Do you owe tax that cannot be collected via your PAYE tax code?
  • Is your expenses claim £2,500 or more?

These are just a few of the questions that need to be answered when evaluating whether you need to file a self assessment return. If you’re unsure, don’t hesitate to seek advice from an certified accountant; IBISS & Co’s friendly team will review all the options with you and offer professional, personal guidance on how best to proceed.

Tax Myths #3: If You Are Fined, You Have to Pay Up

Whilst it’s true that there’s an automatic penalty for missing the filing deadline – and further fines if you don’t pay the tax due on time, or continue to miss payments – there is the option to appeal if you have a legitimate excuse for falling behimd.

In HMRC’s eyes, ‘reasonable excuses’ are quite specific; they include, but are not limited to:

  • The death of a loved one (a close relative or your partner).
  • A serious illness.
  • An weather event that has affected your business (such as a flood).
  • If you have been the victim of a crime that has affected your business (such as arson or theft).
  • There was a fault with HMRC’s online services or postal delays that prevented your submission reaching them in time.

Moreover, if you miss the paper tax return deadline, you can avoid the automatic £100 penalty fairly easily – simply register to submit your return online (thus giving you an extension of three months, as online returns don’t need to be filed until 31st January).

Another prevalent myth is that you need an accountant to fill in your return for you, which often isn’t the case if your tax affairs are simple and you keep good records. That said, it’s always worth consulting an accountant to ensure that you are saving as much money as you possibly can. The IBISS & Co team can advise on whether you’re deducting all the expenses that you’re eligible to claim for, as well as investigating potential tax refunds and allowance options. Contact ustoday for a no-obligation self-assessment quote.

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