We’re into December, which means there’s less than 2 months left until all self-assessment tax returns must be safely with HMRC, warns Emily Coltman ACA, Chief Accountant at FreeAgent.
Who needs to worry about this?
If you have your own business then you’ll almost certainly have to file a self-assessment tax return (usually called a “tax return” for short). It’s only if you started your business after 6th April 2011 that you don’t have to file a tax return by 31st January 2012.
You may well have already done your tax return, so if you have then go and grab a glass of mulled wine and a mince pie and put your feet up. But if you haven’t then please read on!
What do you mean, “If you have your own business”?
By “have your own business”, I mean if you’re:
– A sole trader, or
– A partner in a partnership or LLP, or
– A director of a limited company.
Sole traders and partners
If you have a new business that you started between 6th April 2010 and 5th April 2011, this is the first year you’ll have to file a tax return.
You should by now have notified HMRC that you’re in business if you started up before 5th April, and telling them you’re in business as a sole trader or partner lets them know that they can expect a tax return from you.
If you haven’t notified them yet, then you need to do so double quick and unfortunately they may well fine you £100 for late notification.
Directors of limited companies
If you’re a director of a new limited company which incorporated between 6th April 2010 and 5th April 2011, you’ll have to file a tax return even if the company didn’t pay you a salary or dividends in this tax year.
The only exception is for directors of non-profit organisations who don’t receive any payments or benefits, and for directors of dormant companies.
Incorporating a company and notifying HMRC that you’ve done so lets them know to expect returns from the company, but they need to know you, as an individual, will be filing returns too. If you’re not already registered with HMRC to file tax returns, you can find the relevant form here.
Making sure that HMRC know they can expect a tax return from you is only the first step.
HMRC will then issue you with your 10-digit “Unique Tax Reference”, or “UTR” for short. This is an identification number that you need to quote on your tax return, and without it you won’t be able to file your tax return online.
Because it’s now after 31st October 2011, if you haven’t yet filed your tax return covering the tax year to 5th April 2011, you’ll have to do so online. You can do that either by using commercial tax software or by completing HMRC’s own free form.
HMRC now know they can expect a tax return from you – but the important bit is that you have to go through another process to register to file it online.
And this is important, because to complete the registration process, HMRC have to send you an “activation PIN” through the post.
And we all know how busy the post gets at this time of the year.
So in essence, if you need to file a tax return this year and this is either the first time you’ve ever had to file a tax return, or you filed a paper form last year but are too late to do so again – register now.
31st January may sound like a long way off but it’ll be here before you know it.
So get your skates on and register now!
This article was written by Emily Coltman ACA, Chief Accountant at FreeAgent, who provide an online accounting system specifically designed to meet the needs of freelancers and small businesses.