The deadline for registering for self-assessment tax returns is Monday, October 5. Those who are required to register and have not yet done so should act quickly to avoid risking a fine, according to a finance expert.
Michele Tieghi, founder of financial research and comparison site Psyfi Money, pointed out that more than 12 million people are expected to file self-assessment tax returns, yet only around 4.5 million are actually registered as self-employed. The others could be at risk of a £100 fine if they fail to register and then miss the tax payment deadline.
Who needs to register
Self-assessment is the system used by HMRC to collect Income Tax from those who do not have their full tax bill deducted from their normal wages. This mostly applies to the self-employed, such as business owners or freelancers.
Of the outstanding 7.5 million due to file a return, the majority could be those who earn extra cash through a 'side hustle' or day trading, or have other sources of income outside their main job.
Mr Tieghi said: “The most common reason someone would have to register for self-assessment is if they’ve earned more than £1,000 from self-employment or a side hustle during the previous tax period. You can earn up to £1,000 tax-free but, past this point, you need to notify HMRC as you’ll need to start paying tax on your earnings. You’ll also have to register if you’ve earned money from selling stocks and shares outside of an ISA. In this instance, you can earn up to £3,000 tax-free each year but, go over this value, and you’ll be subject to capital gains tax and therefore subject to self-assessment. If your shares pay out dividends, you only get a tax-free limit of £500 before you have to register for self-assessment.”
How to register
Mr Tieghi said: “Thankfully, registering for self-assessment is an incredibly easy process. It’s all done through the Government website, answering some basic questions about why you think you need to register. Just be sure to have your Government Gateway ID handy along with your National Insurance number to make the process as smooth as possible, as you won’t be able to make much progress without them. You won’t need any detailed financial information at this stage as you’re simply telling HMRC that you intend to pay tax, so don’t worry if you don’t have all your accounts ready at this stage.”
Deadlines to meet
Mr Tieghi said: “If this is your first time registering for self-assessment, or you need to re-register after previously telling HMRC you no longer need to file a tax return, then you’ve got until October 5 to do so. Past this point, and you’ll often incur late fees, though these can sometimes be waived if you pay all of your owed tax on time.”
“Speaking of paying tax, there are two separate deadlines for this. If filing paper tax returns, the deadline is much shorter, having to submit them by October 31. However, if filing them digitally, you have much more time to get everything sorted, with the deadline instead being January 31. Miss these deadlines and the penalties become much harsher, with an immediate £100 penalty that only continues to rise if left unpaid.”
