Income Tax is an important contribution that eligible taxpayers must pay to HMRC. The money goes towards a large pot that funds public services such as the NHS, the education system, and housing.
There are different ways to register for Self Assessment, depending on your employment position. In this article, we have broken down the steps that you need to take in order to register for Self Assessment.
You can register for Self Assessment via the government's website. It is a legal requirement to register for the Self Assessment if you need to send a tax return but didn't send one in the previous year.
There are three different ways to register for Self Assessment based upon whether you are self-employed or not or a partner of a company. We have listed the ways that you can register in each scenario below.
Self-employed
If you are a sole trader or another type of self-employed individual, you have to register for Self Assessment. As well as paying Income Tax, self-employed individuals are also required to pay their National Insurance contribution. You must register for these by 5 October in your company's second financial year.
To register on the online service, you will need to use your business tax account and select the option for Self Assessment. You will need your Government Gateway user ID and password for this, but you can create a user ID for a new business tax account if you don't already have one.
After registering, you will be sent a unique taxpayer reference within ten days. You will need this reference code to file your Self Assessment tax return. After this, you will be sent an activation code for your Self Assessment account. You will be able to file a Self Assessment after you have activated your account.
Alternatively, you can fill out this form online, print it off and send it to HMRC before the Self Assessment deadline.
Not self-employed
You can register for Self Assessment using an SA1 form. Following your registration, you will be sent a unique taxpayer reference within ten days, although it can take up to 21 days if you are abroad. You can then set up your online account, which can then be used to sign up for Self Assessment online.
After setting up this account, you will be sent an activation code within seven days. Use this code to sign in to your new account and to send a tax return.
Don't worry if you lose your activation code - you can apply for a new one on the HMRC website.
If you have filed a Self Assessment form previously, you can log in to your online account on the government website.
Partner or partnership
You must register your partnership if you are the "nominated partner", which can be done via online or paper forms. Use your partner's ten-digit unique taxpayer reference to sign up for Self Assessment tax returns.
HMRC uses a system called Self Assessment to collect Income Tax. The tax is deducted from wages, pensions and savings, as well as other forms of income. HMRC will calculate the amount of tax that you owe based on the information you have compiled in your Self Assessment.
The amount of tax you pay will be based upon which Income Tax band you are in. The bands are as follows:
Personal Allowance
- Taxable income: Up to £12,570
- Tax rate: 0%
Basic Rate
- Taxable income: £12,571 to £50,270
- Tax rate: 20%
Higher Rate
- Taxable income: £50,271 to £150,000
- Tax rate: 40%
Additional Rate
- Taxable income: Over £150,000
- Tax rate: 45%
Capital Gains Tax has a different rate than Income Tax. You will need to pay Capital Gains Tax if sell you sell an asset, such as shares or a second home. The profit or "gain" that you make will be taxed, rather than the full sale price.
You must send HMRC your tax return online or in the post before the deadline. You will also need to send any money that you owe by the specified deadline too.
Here are the submission deadlines that you need to submit your Self Assessment to HMRC by:
- Registration deadline: 5 October 2021
- Paper submission: Midnight 31 October 2021
- Online submission: Midnight 31 January 2022
- Payment deadline: Midnight 31 January 2022
There is also a second deadline in July for people that have made advanced payments towards their tax bill.
You can be fined if you fail to submit or complete the registration process for a Self Assessment return before the deadline. HMRC will charge you £100 if you have failed to pay your tax return within three months. This amount will increase if you still don't submit and pay your tax return. You will also be charged interest on your late payments.