Self Assessment Tax Sheffield
Autumn is here, and now is the time you should be thinking about your self assessment tax return.
If you’re a company director, or you have any other earnings from property or investments, then you’ll need to complete a return. You’re probably already aware of this.
But what about if you have a part-time self employed business alongside your employment that isn’t making a great deal of money yet?
Perhaps you’re involved in selling cosmetics or you’re an eBay seller, but you haven’t considered if you need to complete a self assessment tax return.
The HMRC have said that if your income from a self employed business is less than £1,000, then you don’t need to complete a return.
But what about if you’ve made a loss? Is it worth the extra work if you’ve not made a profit yet?
The short answer is YES!
If you’ve made a loss this year, and by this year we’re talking about the tax year that has just ended on 5th April 2018, you can use these against your employment income, and get a tax refund!
That’s money back in your pocket!
Take a look at this case study on a recent client of ours.
A business owner recently contacted us about their self assessment return. They were employed, but was also developing their own business as a sole trader.
They had assumed that because they hadn’t made profits yet, that it wasn’t necessary to do a tax return.
What they hadn’t realised is that because they’re self employed, they could use those losses, and get some of the tax they had paid as an employee back.
That tax refund amounted to nearly £2,000. What a lovely early Christmas present, and a very happy client!
Is it easy to do?
Filing your own taxes can be a simple process if you have one source of income. It can get more complicated when you have lots of income streams, and extra things to claim for, like marriage allowance.
Having an adviser file the return for you should ensure that all the extra information, and available tax breaks are applied. Having these in place can reduce the amount of tax you will pay.
How much will it cost?
When should I file my tax return?
- 1st February (1 Day late) = £100 fine
- 3 Months late (1st May) = £10 a day fine up to a maximum of £900 (90 days) for every day it is late, on top of the £100 fine.
- 6 months late (1st August) = £300 fine or 5% of the tax owing, which ever is greater. This is on top of the £100 filing penalty, and the £10 per day.
- 12 months late (1st February) = another £300 fine or 5% of the tax owing, which ever is greater, plus all previous fines.
Penalties for Late Payment of Tax Owing
- Payment is 30 days late (1st March) = 5% charge on the tax owing on that day
- 6 months late (1st August) = 5% charge on the tax owing on that day
- 12 months late (1st February) = 5% charge on the tax owing on that day.
Ask an accountant their opinion on your situation. In most cases, it is better to report those losses to the HMRC, as you can use them in future years if your business begins to make a profit.
You’ve got nothing to lose from telling the HMRC you’ve made a loss, and in the long run it will save you money on your tax bill.
If you’d like to know more, please get in touch on 0114 4000053 or head on over to our contact page.