Self-assessment

Q: What is self-assessment?

A: A fee system uses to collect income tax. Tax is automatically deducted from savings, pensions and wages. Tax buyers are responsible for paying the tax amount before the due date to the competent authority responsible for collecting the tax.

Q: Who does it apply to?

A: A responsible citizen of a state is required to fill in a tax return. The people who submit income tax includes wage earners, businessmen, property owners etc. The government finances its activities through income tax therefore, it is important to pay taxes.

Q: When did self-assessment start?

A: It was started about 20 years ago and initiate on April 6, 1996.

Q: When do I pay my tax?

A: According to the government rules, taxes are normally paid by the end of July month each year, while in some states it is paid in two installments first is by the end of January month and the second one by the end of July month every year.

Q: What happens if I pay my tax late?

A: If the income tax return is not filed before the required date interest will apply. A total 5% interest will surcharge if the tax is not paid before the due date and if it is still unpaid five months after the due date another 5% interest will also apply (total 10%).

Q: Does self-assessment mean that I have to prepare my own tax return?

A: Normally an officer at the tax department is assigned the duty to prepare tax returns.

Q: How much time do I have to send in my tax return?

A: Normally there are two types of process to submit the return, one is in the form of paper and the second one is electronically submitted return. For the paper return, it is submitted by the end of October by the end of the tax year and for electronically submission the due date is by the end of January month each year. If you are comfortable filing your own taxes electronically so well and good otherwise hire a professional to file your income tax return electronically.

Q: What happens if my tax return is sent in late?

A: A fine of £100 plus is applied and if it is late six months more than a further £100 fine is applied with the condition that the fine cannot be more than the tax due.

Q: Does self-assessment mean that the Revenue do not assess my tax?

A: It happens only in rare cases. Through example, it will be easy to understand if there is an unnecessary slowdown in accepting your tax return. They will carry on with to lift up assessments where suitable for resolving your tax affairs for any years prior to self-assessment, but generally tax assessments are a thing of the past. However, you will get obtain a declaration of account from the Revenue.

Q: How do the Revenue check that my tax return is right?

A: If something is wrong the revenue may ask questions. Just for checking they select some returns at random even when everything appears to be in order. They normally have twelve months from filing date to notify you if they intend to make inquiries. The department can assure you against the professional fees rising from a tax inquiry.

Q:How do I prove that I have reported the correct figures if the Revenue queries my return?

A: It is mandatory under self-assessment rules to keep written affirmation holding up all the particulars making up your tax return.

Q: How long do I need to keep my tax records?

A: Records relating to property income should be kept at least 6 years  and records related to any self-employed income must be kept for at least 5 years after the filing date of the tax return. Income relating to employments and investment income must be kept for at least one year after the normal filing date. In order to be at the safe point, we would advise consumer to kept all their tax and business papers for at least six years after the filing date.

Q: What happens if I don’t keep my tax records?

A: The records are useful to kept because sometimes they are needed by the tax department, and if the records are not available the revenue may charge a fine for every tax year agitated.

Q: If I am employed, how can I be sure of getting the necessary details from my employer to complete my tax return?

A: The employer has a legal responsibility to provide the employee with the necessary requirements. There are also deadlines for the employer to provide the employee necessary information so that he can complete his tax return in time.

Q: If I am self-employed, do I have to make up my accounts to 5th April every year, to coincide with the rest of the tax return information?

A: Usually it’s not mandatory, but the new system makes it tax efficient in most cases to prepare accounts on 5th April each year. This may depend on the individual situation and we will be delighted to debate on this with you.

Q: If I am an employer, do I have any particular responsibilities under self-assessment?

A: Yes, the employer plays a significant role, they must provide their employees with form P60 by the end of May month and where relevant they also are provided with a copy of form P11D (where relevant) by the end of July month.

Q: Are there any special rules for partnerships?

A: Yes there are specific rules for partnership and each partner in a partnership is assessed independently on his or her part of the interest. These partners need to complete a combined tax return and each partner is independently responsible for the tax on their part of the interest.

Q: What should I do if my tax affairs are not currently up to date?

A: We are always here to help you, we will arrange a meeting in order to discuss the information we need to bring everything up to date on your behalf.

Q: Who should I contact if I have any other questions about self-assessment?

A: Our Tax Partner Haroon Rafique will always be there to for any kind of help and will give you expertise advice.