Understand self-assessment tax calculation and Payment

 

Handling your own firm and being your own boss is a great way to go down. But one job you might require to handle is filling a Self Assessment tax return. Self Assessment is a procedure that HMRC utilises to collect data required to calculate how much revenue tax you should pay. And if you’re operating a small business instead of earning a traditional salary, you must work out how much you owe.

In this article, we describe best advices to assist you File your Self Assessment tax return. Filing a self-assessment tax return is less complex; in reality it is not bad at all.

Register With HMRC
If you are self-employed, you have to inform HMRC so HMRC will send you your Unique Taxpayer Reference (UTR) and you can set up your account online. Make sure you know your NI number also.

For the first year of your business setup, you can wait till the year ends in April and file your first tax return online or through your tax return accountant by midnight of 31 January the following year. It is advisable not to wait don’t wait until the last minute!

Understand tax Slabs
Most people are entitled to gain a specific portion of the money and not pay any tax on it. It is called a personal allowance and for 2020/21 it’s £12,500. After that, you pay 20% tax until you hit £37,500, and after that 40% tax on anything until you earn £150,000 These rates change every year and vary.

Get help:
Tax Accountants generally charge £100 to £300 for calculating and filing your self-assessment tax return, but you will still have to record your income and expenses and pay the actual HMRC bill yourself.