more, and bores or baffles everybody else?

It is mainly for the self-employed so whether on your own or in a partnership. It also

affects directors of limited companies, some pensioners, subcontractors, people who

have rental properties, and those people who are employed but fortunate enough to be

paying high rate tax.

How do I even begin to approach Self-Assessment?

If you are in business make sure you keep accurate and up-to-date business records,

an accountant can help you in this respect by telling you exactly what you need to keep

hold of. The receipt for the sandwich you ate with a bag of crisps and a can of Fanta will

need to be stored away safely just like the invoice for the new desktop you just bought.

See the section of Accounting and Bookkeeping for more details.

If you are employed, keep details of all tax statements (P60, P45, P11D), details of

interest, and all other income received, as well as details of any expense you incur

whilst employed. Don’t write it down on a number of sticky post-its because they will fall

off your desk, get stuck to your shoe and wind up down a supermarket aisle. A

notebook will suffice.

You have to complete your tax return, submit to HMRC, preferably on time, and pay the

correct amount of tax, again within the time limits.

Find a marker pen that will not wash off or get smudged over time. Walk over to your

wall calendar and put these dates in:

31st January: PAY TAX

31st July: PAY TAX

Self-Assessment in a little more detail

Self-Assessment basically means that you take into account all of your resources of

income, such as property income, savings, dividends, PAYE etc. You would then deduct

a personal allowance (for 2014-15 this is £10,000) and then your income tax and class 4

national insurance liability is calculated. If your liability is over £1000 then payments on

account are required.

To go into a little more detail, the lower limit for class 4 national insurance is £7,956

and the upper limit is £41,865. Subcontractors will need to take into account the

Construction Industry Scheme (CIS) tax suffered.

Limited Companies

An increasingly popular way of running your business because of the tax breaks it can

afford. If you are currently self-employed, we can quickly assess whether this would be

a viable option for you. Directors become an employee of the company which also has

shareholders that may or may not hold different classes of shares. So, one shareholder

might have 40% share of the company while the others each hold ten. Or, there could

be 5 shareholders that each possess 20% of the shares. Always remember that a 50%

shareholder will have half the say in a company and a 51% shareholder can take control of said company.

Limited companies pay corporation tax and profits up to 300k are taxed at 19%. Ouch!

Profits more than 300k are taxed at a marginal rate. So try not to make 301k profits! The

company must submit a CT600 12 months after the year end, although the tax must be

paid 9 months and a day after the year end.

Penalties and Interest

For late submission of tax returns and tax payments, penalties and interest will be

charged by HMRC.

If late submission is an issue because you are struggling with your accounts or

bookkeeping then consider outsourcing this work to an accountant.

Is there anything I can get back?

It all depends on your year-end figures. If you qualify then you could be eligible for

capital allowances and so could claim:

Annual Investment Allowance (AIA)

First Year Allowance (FYA)

Writing Down Allowance (WDA)

There is a special 10% tax pool for low emissions cars.

The post What is Self Assessment and when should you go Limited? appeared first on ABC Accounting Services.