quick self assessment question

dllive

I registered as being self employed back in May. Ive just received a letter from HMRC (the first correspondence Ive had from them since registering) saying 'from our records it seems you need to fill in a self assessment form'. I pressume I dont have to fill a self assessement form until *next* october, is that right? My understanding is they give you 6 months from the end of the tax year to fill in the self assessment form (or 9 months if doing it online).

Rolo_Tomasi

Assuming that your tax affairs were straight forward prior to becoming self employed then your first Tax Return should be for the 2009-10 tax year which will have to be submitted by October 2010 (if you do a paper Return) or 31 January 2011 if you file online.

However, it is not uncommon for the Revenue to process information you give them incorrectly and therefore the signal may have been set to issue a Return for last tax year. You could just wait to see if a Return is sent to you but to be on the safe side I would contact the Revenue tomorrow and ask if a 2008-09 Tax Return needs to be completed.

maxmor

they are just warning you that in future you will need to complete a tax return so you pay the correct amount of tax so make sure you keep proper records. When you are employed tax is automatically deducted from what you earn and now you are responsible for letting hmrc know what your turnover has been in the previous tax year, and they calculate what tax you are due them. Anybody can be sent one at any time, but if you are sent a tax return you MUST complete it or you pay a penalty.

dllive

Thankyou. Im sure I do just have to just sit tight until next October, but Ill phone them this week just in case!

PlutoinCapricorn

I got one of these letters shortly after registering. It was not personalised, it is just a routine letter. It gives possible reasons on the back, and self employment was the only applicable one.

It says "when we send you a tax return...." so it is just an advance warning, no action is needed.

PlutoinCapricorn

I see that you say that this was the first communication received since registration. Didn't you get a pack with a book and forms for the Class 2 NI?

You should get your first return around the end of April 2010, it will cover April 6th 2009 to April 5th 2010. If you file online, the deadline will be 31st January 2011.

Like just about everyone on MSE, I recommend filing online. The first time can be a bit tricky, but if you are keeping proper records it is just a matter of ticking boxes and transferring figures. It is best to get it over with as soon as possible.

dllive

Thanks Pluto, you've confirmed my thoughts. I got another letter from them yesterday saying that theyre going to take all the money I owe them so far for NIC (class 2), but I paid all of that 2 weeks ago!? Im going to phone them today to sort that one out!

PlutoinCapricorn

I seem to remember getting a demand for Class 2 NIC owed from start of trading to date, and a Direct Debit form for paying them each month in future. There was also information on how to claim a certificate of exemption on the grounds of low earnings. This is fine if you are paying Class 1 under PAYE, but may limit your entitlement to benefits and the state pension if not.

To complicate the issue, if you do have gaps in your NI contributions record, you can make it up with voluntary Class 3 payments later.

I believe that you stop paying Class1/2/3/4 when you reach retirement age.