What you need for your 2021 self-assessment tax return
Posted on 17th November 2021
Although the deadline for your online tax return for the 2020/21 tax year is 31 January 2022, you should make the submission as soon as you can so that you know how much tax you will need to pay.
Sole traders and limited companies
If you’re a sole trader or in a general business partnership, you’ll declare your business earnings and allowable expenses on your SAT return because your business isn’t a separate legal entity.
If you have a limited company or a limited liability partnership your business will be taxed through your Company Tax Return. Usually, you must make a personal tax return as well, including your salary and dividends received through the company.
Who needs to submit a SAT return?
Her Majesty’s Revenue and Customs (HMRC) says that you need to complete a SAT return if, in the last tax year, you were:
• a self-employed sole trader earning more than £1,000
• in a business partnership.
You’re classed as self-employed if you run your business yourself and are responsible for its success or failure.
You might also have to complete a SAT return if you have untaxed income from:
• renting out a property
• tips and commission
• savings, investments, and dividends
• foreign income.
You can check if you need to make a SAT return using the HMRC’s online tool.
How to make your SAT return
You must register with HMRC for Self Assessment by 5 October in your business’s second tax year and you could be fined if you don’t register in time. There’s a slightly different process if you’re a business partner. HMRC will send you an activation code in the post, which can take up to 10 days, but it’s recommended that you allow 20 days to be sure.
Registering should also give you a Government Gateway user ID that you use to set up your personal tax account online. You will then be able to file your tax return online or on paper, although paper tax returns will eventually be phased out under Making Tax Digital.
Make sure you update your online account with any changes to your address or your name, for example. You can check and update your details during the Self Assessment process.
Your tax return information
You will need to provide information about your income and expenditure, so you will need your invoices and receipts. You can deduct certain allowable expenses from your turnover. These can include costs solely for your business such as your office, travel, marketing, and insurance.
You can make the job of preparing your SAT return much easier by keeping good records throughout the year. This is something your bookkeeper can help you with. It’s important because HMRC can ask to see your records, so you will need to keep them for five years after the 31 January deadline.
You're likely to need details of:
any additional income form employment
dividends you have received
interest on savings
pension contributions and income
capital gains during the year if you have sold a property for example.
You will also need your bank or building society statements, so if you don’t have an online bank account you will need to check in case any of your paper statements are missing so that you have time to ask for replacements.
Filling in your SAT return
As you complete the online form, sections that aren’t relevant to you will be removed. If you need to, you can save what you’ve entered and come back to make updates later.
You will enter your turnover before expenses and you might need to add other income, like property income, in a different section. Use your receipts when filling in the section about allowable expenses and make sure you check what you can include.
When you’re happy that all the information is accurate you can submit the form and you should receive a confirmation message and reference number. Your tax and National Insurance Contributions (NICs) will then be calculated.
If you file your tax return late there’s a £100 penalty. If your submission is more than three months late the penalty will increase. From 1 April 2022 new points based late submission penalties will apply.
You must pay the tax due by 31 January of the following year, along with any payments on account for the current tax year. Some payment systems like online banking are faster than BACS or Direct Debit, so make sure you leave enough time for the payment to clear before the deadline.
If you are struggling to pay your tax bill you can apply to the HMRC Time to Pay scheme, but you will pay interest on what you owe, so it’s best to pay in full if you can.
If you would like help and advice about organising your financial records, completing your SAT, or planning for your tax bill please get in touch.
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