For those in employment, tax is automatically collected via wages, pensions & savings so it’s not worth worrying about, which is nice.
But for those of us who have other income streams (like self-employment) then you need to let HMRC know how much you are earning so they know how much tax you owe them. This is done via the Self-Assessment (SA).
The SA covers your earnings from April 6th to April 5th the following year (this is known as the tax year). Awkward dates I know, but that dates back to 1900 and it’s too late to change it now. I can tell you all about it if you're interested … no? oh, ok then.
Now, the HMRC are quite nice in that they let you earn some money tax-free (currently £11,850 for years 2018-2019), but if you earn any more than £1,000 then you still need to tell them about it.
There are other circumstances when you need to submit an SA: (sorry, its a long list)
You have a rental property that earned you more than £2,500.
You have earned more than £2,500 in other income that hasn’t already been taxed (like tips or commission).
You have savings, investments, dividends or shares that have earned you more than £10,000 before tax.
You need to prove you’re self employed to claim tax free childcare
You want to make voluntary Class 2 NI payments – these help you to qualify for benefits (like the state pension)
You made a profit from selling an asset (like shares or a second home) – this means you may need to pay capital gains tax.
Your or your partner's income was over £50,000 and one of you claimed child benefit.
You have had income from abroad that you need to pay tax on, or you lived abroad and had UK income.
You have had more than £100,000 of taxable income.
You were a company director and didn’t’ get and pay or benefits (unless the company was a non-profit organisation).
You were the trustee of a trust or registered pension scheme, or your state pension was more than your personal allowance (only if you started getting your pension before April 6th 2016).
If the HMRC have told you to!! If you feel that you don’t need to fill one in, then you need to call them to talk about it … don’t ignore it!
If you are still not sure that you need to send a SA, then follow this link: https://www.gov.uk/check-if-you-need-a-tax-return
Please do get in touch if you have questions about this or any other financey bits and pieces. liz@money-bee.co.uk
Thanks for reading!