Everyone has to pay taxes if they earn over a certain threshold. However, many people never have to worry about filling in a tax returns as their employer pays their tax and National Insrance directly to HMRC. However, if you're self-employed, you're going to need to do this yourself. Whilst it can be daunting at first, if you follow a few simple steps it can become a breeze.
Read on for tips on how to file your tax returns if you're self-employed.
How do I report my self-employed income?
After you've calculated your taxable profits from self employment, you'll have to report it to HM Revenue & Customs (HMRC) and pay the correct amount of tax.
After registering as self-employed with the HMRC, you'll receive a notice after the end of the tax year asking you to complete a tax return for the previous tax year. However you have been paid by your customers, even if it's a paystub direct deposit, you have to ensure you complete your return on time to avoid a penalty.
Make sure you're registered for tax and National Insurance beforehand to avoid any unnecessary delays.
Do I need to include Coronavirus Support Grants on my tax return?
You may have received support for your business during the pandemic. If this applies to you, you may be wondering whether you have to include it in your tax return. Depending on where the money came from, it may be taxable. Make sure you check before completing your tax return.
You should be able to see the conditions of each grant you've received and it's taxable status. You'll also need to make sure, if the income is taxable, what tax year it falls into so you know when to include the income in your return.
When do I have to submit my tax return to HMRC?
This depends on when the notice to file is sent to you by HMRC, and whether you complete a paper or online return. Be aware that there are penalties for missing filing and payment deadlines.
Missing the submission date will result in a £100 charge for late filing whether you have already paid what you owe or don't owe anything. View the penalties page for more information.
What happens if I encounter problems with my return?
If you receive a tax return and aren't sure how to complete it, you can contact HMRC for help.
To sum up
If you have self-employed income, it's likely to will need to complete a tax return unless your profits are under the trading allowance, regardless of whether they have any income to declare or not. Declaring your income can be daunting but by keeping your records up to date and organised can ensure you don't incur any unwanted financial penalties.
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