The main elements of self-assessment in the UK include:
Registration: Individuals who are required to complete a self-assessment tax return must first register with HMRC by obtaining a Unique Taxpayer Reference (UTR) number.
Completing the tax return: The self-assessment tax return is used to report income, expenses, and other financial information for the tax year. This includes details such as employment income, self-employment income, rental income, capital gains, and other relevant transactions.
Paying the tax liability: Based on the information provided in the self-assessment tax return, HMRC calculates the individual's tax liability, which includes income tax, National Insurance contributions, and other applicable taxes. The individual is responsible for paying the calculated tax liability to HMRC by the payment deadline, which is usually 31 January following the end of the tax year.
Keeping records: It's important for individuals to keep accurate and detailed records of their income, expenses, and other financial transactions, as these may be required for completing the self-assessment tax return and for potential audits or inquiries by HMRC.
Deadlines: Deadlines are important in the self-assessment process. The deadline for submitting the tax return is usually 31 January following the end of the tax year for online submissions (or 31 October for paper submissions), while the deadline for paying any tax owed is also 31 January following the end of the tax year.
Penalties: Failure to meet the self-assessment deadlines or provide accurate information may result in penalties and interest charges from HMRC.