If you are filling the self-assessment tax return for the first time, the entire process may seem a little daunting to you. However, it is not that challenging and is in fact, easy if you know how to do it. Before you start paperwork, it is important to understand the process so that you can complete it in no time.
Before moving any further, it is important to understand that self-assessment is one of the ways of collecting income tax by HMRC. Some individuals may decide to pay their taxes automatically through their savings, pensions, and wages, others may require reporting it through the self-assessment form if they earn money through any other way. They can also seek the help of a tax return accountant who can help them in this endeavour.
These tax returns are normally filed by self-employed people or those who run their own businesses. They must have earned more than £1,000 in a given tax year or are a partner in business. Before you start the process of filling the self-assessment form, gather relevant information about earnings for that tax year. You also need to know your unique taxpayer reference or UTR number which can be found in HMRC letters.
The form will ask figures that concerns your expenses and earnings apart from what is owed to the National Insurance. Class 2 also need to be paid if the person is self-employed and the profits are more than £6,205. If the proceeds are more than £8,424, Class 4 needs to be paid. If you are filling the self-assessment form for the first time and the tax bill for the last year is more than £1,000, you will be prompted to estimate the tax for the next year so that payment can be done in lieu for the upcoming tax year. This payment on account would be anywhere close to 50 percent of the tax bill. Once all data has been entered, the calculations of self-assessment show the exact amount of tax that is due. If you find the process difficult to understand, you can use the assistance of a tax return accountant and fill the form.