Brits who have not yet registered for self-assessment are being urged to do so before the October 5 deadline, as failing to register could result in a £100 fine. Michele Tieghi, finance expert and founder of psyfi money, highlighted that more than 12 million people are expected to file self-assessment tax returns, but only around 4.5 million are actually registered as self-employed.
Who needs to register?
The remaining 7.5 million expected to file will mostly be those with a side hustle or other sources of income outside their day job. 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. It is most often used by those who earn the majority of their income from self-employed work, such as business owners or freelancers.
Mr Tieghi emphasised that it is also used by anyone who earns extra cash outside of their primary employment, via side hustles or day trading. He 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.”
Other income triggers
He added: “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 and deadlines
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.”
He added: “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.”
On deadlines, Mr Tieghi said: “If this is your first time registering for self-assessment, or you need to reregister 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.”
