Busy Mum’s Guide to….Basics of Self-Assessment

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Like a lot of parents, I’m super busy and don’t have time to trawl the Internet researching a topic, let alone understanding it in my sleep deprived brain fug. So I’ve done the work for you, condensing topics down to the essentials you need to know plus more detail if you need it.

Filling in your self-assessment tax return, especially for the first time, can be a daunting prospect. However once you understand a few principles, it should make the process less scary!

  • You can submit figures for employment and self-employment, and any combination of the two. This includes being employed by more than one company or having more than one source of self-employment income.
  • Your return may show figures for your employment income but you should still check these against your P60.
  • If your total income from all sources of self-employment is less than £1,000 for the tax year, you do not need to declare it. This is income (sales / turnover) rather than profit.
  • If you are submitting figures for self-employment you will need your total sales figure, plus a total for expenses such as stock or office costs.
  • Any large purchases such as a laptop or printer are dealt with separately under Annual Investment Allowance. This is generally items that will last longer than a year.
  • Your employment and self-employment income is added together to make one total. The first £12,500 is not taxed, you will then pay tax at 20% on any income above £12,500. For example if you earn £30,000 you will pay tax on £17,500.
  • If you have been employed through a PAYE scheme, your income will already have been taxed, so you should not have anything additional to pay on this income (I’m not guaranteeing that though!)
  • Any dividends or interest you have received in the year will be taxed under their own separate rules.
  • National Insurance contributions will also be calculated, and this is payable on top of your tax liability. You may be due to pay Class 2 and Class 4, or just Class 4 on your self-employment income.
  • Once you have submitted your return, you will be provided with a figure that needs to be paid by the 31st January. This will include any amount due for 19-20, plus a contribution towards what you will need to pay for 20-21. This is calculated as 50% of your tax due for 19-20.
  • Your 31st Jan payment may be higher this year than previous, as many people were allowed to defer their ‘payment on account’ on 31st July last year.
  • If you not able to pay your tax liability by 31st January, get in contact with HMRC straight away (do not wait until 31st Jan). You will be able to agree a payment plan.

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