Time is running out for self-employed entrepreneurs and limited companies to declare what they earnt in the 2015/16 financial year, with self-assessment tax returns due for submission online by 31st January 2017.

More than half of those eligible to submit self-assessment tax returns for 2015/16 are yet to submit it to HM Revenue and Customs (HMRC). Failure to submit your tax return online before 31st January 2017 will see you hit with an immediate £100 late filing penalty from the tax authority, with additional fines lurking if your forms are submitted more than three months late.

It’s therefore very important that you get your finances in good shape sooner rather than later. New figures from HMRC revealed more than 14,000 taxpayers filed their online tax returns between Christmas Eve and Boxing Day and while you may not have felt the need to calculate your tax liability around the Christmas turkey, now that we have entered the New Year it’s vitally important that you get your house in order.

Who is eligible to submit a self-assessment tax return?

You will be required to submit an online tax return to HMRC if any of the following was applicable to you in the 2015/16 financial year:

  • You were self-employed at any point
  • You received £2,500+ in untaxed income e.g. property rental income
  • Your income (or your partner’s) exceeded £50,000 and one of you claimed child benefit
  • Your investment or savings income was £10,000+ before tax
  • You profited from selling shares or a second home and therefore need to pay capital gains tax
  • You received shares dividends and you’re a higher or additional rate taxpayer
  • Your income was over £100,000
  • You were a trustee of a trust or registered pension scheme

Submitting a self-assessment return for the first time?

If you meet at least one of the parameters above you’ll be required to register with HMRC. It’s essential that you enrol for HMRC’s Self Assessment online services as soon as possible ahead of the 31st January deadline as it can take up to 10 working days to receive your account activation code and 10-digit Unique Taxpayer Reference (UTR) to enable you to log in and file your 2015/16 tax return.

What information do I need to file a self-assessment tax return?

As a self-employed entrepreneur, you’ll be required to declare your personal income within your tax return, including:

  • The total revenue paid to you between April 6th 2015 and 5th April 2016
  • Any taxable benefits e.g. company car or private health insurance
  • Any dividends declared to you in the 2015-16 financial year from any companies of which you have shares in

What if I have a day job and freelance on the side?

As you would be technically self-employed as well as employed you would be required to submit a self-assessment tax return. In terms of preparing your tax return, you would be required to complete the set of self-assessment pages which outlines the earnings from your freelance income.

In addition, given that you have a full-time job too, you’ll need to fill in a set of employment pages which demonstrate how much you earned from your employer and how much tax you paid on your salary. You will require the relevant P60 form which covers the 2015/16 financial year and if you receive any taxable benefits from your employer you will need to declare these using the relevant P11D form.

What to do if you've made a mistake on your tax return

If you believe that you have paid too much tax because of an error on your tax return e.g. failing to claim an allowance you were entitled to, you can correct this within 12 months of the original deadline – in this instance, 31st January 2018.

You subsequently have two options at this stage:

  • Update your tax return online within 12 months of the initial deadline
  • Write directly to HMRC for any changes after the 12-month window (including the tax year you wish to correct, why you believe you’d over or underpaid tax and how much you’ve over or underpaid).

Note: You can claim a tax refund for overpaid tax up to four years after the end of the tax year it relates to.

A complete list of HMRC's self-assessment late filing penalties

Failure to submit your 2015/16 self-assessment tax return ahead of the 31st January deadline could lead to one or more of the following late filing penalties:

  • Up to 3 months late
    An immediate £100 penalty, applicable even in the event you have no tax to pay or have already paid the tax you owe.
  • More than 3 months late
    You’ll receive a fine of £10 for each following day it is late up to a maximum of 90 days (£900). This is dished out in addition to the initial £100 fixed penalty.
  • More than 6 months late
    An immediate fine of £300 or 5% of the tax due – whichever is greatest. This is payable on top of the previous penalties.
  • More than 12 months late
    A further £300 fine or 5% of the tax due – whichever is greatest. This is payable on top of the previous penalties.




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