Permanent workers are usually paid via Pay As You Earn (PAYE). PAYE ensures that the employee’s income tax, national insurance, and student loan repayments have been deducted before the employee receiving their pay. However, self-employed individuals must pay to ensure that they have paid their taxes, national insurance contributions, and student loan repayments. If you are self-employed you must complete a self-assessment form to figure out what you owe and ensure that you have made payments before the deadline.
What Your Self-Assessment Covers
The tax year runs from April 6th through to April 5th – if you have earned over the tax threshold you’ll need to pay a percentage of tax on earnings over this percentage. For the 2018/19 tax year, everyone receives a personal allowance of £12,500, earnings of £12,501 to £50,000 are subject to 20% income tax and earnings above £50,000 are subject to 40% income tax. You may also be eligible for a further £1,000 tax-free allowance if you are self-employed.
On the completion of your self-assessment form, you’ll also be notified of any national insurance contributions that you need to pay for the tax year. In some cases, you may not owe class 1 national insurance contributions but may which to make voluntary contributions to ensure that you are eligible for state benefits such as the state pension.
If your student loan repayments to Student Loans Company (SLC) were due to begin on or before April 6th of the tax year you are submitting your self-assessment form for, your loan repayments for the tax year will also be calculated when you submit your form. The thresholds of student loan repayments are dependent on whether you have a plan 1, plan 2, postgraduate or a combination of loans with SLC.
Key Dates to Know:
For the 2018/19 tax year, you’ll need to have registered for self-assessment by October 5th 2019. If you are submitting a paper copy of your form, HMRC will need to have received this by midnight on October 31st. However, if you are submitting your form online, the deadline for submission is January 31st 2020. Regardless of whether you have chosen to submit your self-assessment form by paper or online, you must pay any owed tax, national insurance and student financial loan repayments by January 31st 2020.
Failure to comply with these deadlines results in a fine, further failure to comply without reasonable excuse can result in additional fines. If your tax return is up to 3 months late you’ll receive a £100 penalty, which increases if you have still not submitted your self-assessment form after 3 months. You can also be fined and be charged interest on late repayments.
How We Can Help
At Carrington Blake Accountancy we offer a range of accounting packages to suit your individual needs. We can help you complete your self-assessment form prior to the upcoming deadline of January 31st 2020.