Complete beginner tax return

lovetowinacar

Hello

Could someone clarify when my first tax return needs to be submitted please?

I started self employment 21st February 2010 so don't complete a full year until 20th February 2011. I have been told I should file an online tax return by 31st January 2011 but I will not have a full years figures then. I only do a very small amount of work as a self employed person and for the year the net profit is only a couple of hundred. I am also employed part time.

I understood that I didn't need to complete a tax return this year but I have now been told that I should, I confused!!

CLAPTON

if you started in feb 2010 then you need to cover the period Feb 2010 to 5th april 2010
the return need s filing and any tax paid by 31 Janurary 2011

it all works on the tax year 6th april to the following 5th april

no-oneknowsme

lovetowinacar wrote: »

Hello

Could someone clarify when my first tax return needs to be submitted please?

I started self employment 21st February 2010 so don't complete a full year until 20th February 2011. I have been told I should file an online tax return by 31st January 2011 but I will not have a full years figures then. I only do a very small amount of work as a self employed person and for the year the net profit is only a couple of hundred. I am also employed part time.

I understood that I didn't need to complete a tax return this year but I have now been told that I should, I confused!!

OP you have now missed the deadline for filing on paper which was 31st October 2010.

Your only option now is to file your return online. As Clapton says , this needs to be filed and the tax paid by 31st Jan 2011..this doesnt leave you much time so if you are not already registered for online services you really need to be getting on to it now as if you are not registered there is a 7 day wait for an activation code to reach you in the post.

So OP , are you registered with HMRC online ? If not are you familiar with what you need to do to get registered ?

John_Pierpoint

I'm sure nobody will mind if I bring forward these words of wisdom from a couple of years ago:

Elaine_Wilson wrote: »

The question of the best year end is a tricky one and you should really talk it through with someone who understands the current year basis of assessment. 30th April is often touted as a good idea but it has its drawbacks too.

First, March 2008 will have to be included in your 2008 tax return figures. This can either be the actual earnings for that month or an appropriate proportion of the first period's accounts. What happens next depends on the year end chosen.

Year end 28th February.

The 2009 return will include this year's figures, resulting in March 2008 being counted twice. This profit will be available for relief when you cease the business.

Year end 31st March

This is most straightforward as each year you are taxed on your earnings in that year.

Year end 30th April

The 2009 return will be based on 12/14ths of the period's profit, representing the amount earned in the tax year.

The 2010 return will be based on the year ending within the tax year 2009/10 which is again 12/14ths of that first accounting period.

Each following year is then based on the profits to the previous 30th April.

The advantage here is that where profits are increasing the increase in the tax bills are delayed by roughly a year. Of course the big problem arises if the profits drop for some reason. The tax, being based for the most part on the previous year, will still be rising.

Most of us align our year with the HMRC year of 6th April to the following 5th because we don't want the complexity of gaming the system.

How old are you?

Do you understand that the UK has two forms of income tax?

Here we are talking about an annual income tax.

There can also be a fixed weekly National Insurance tax, payable by direct debit (or probably still in cash if you must) unless you apply for it to be set aside; then at the end of the tax year the self assessment system will calculate how much extra NI you owe - if any. Currently you are well below the need to PAY the self employed tax called National Insurance.

http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073867963

John.

When I became "self employed", like you probably I just did some work because I was short of cash in the run up to Easter. I knew nothing about the complexities, so I reported my first few weeks as casual earnings and managed to register for the NI weekly charge etc. from the start of April. Which in some ways they were because I was not thinking that I had started a brand new business.
So here I am years later still stuck on Self Assessment because of my part time self employment.

Before we can comment further we need to know if your business will stay a small hobby or be something that will be on "Dragons Den" next year.

soolin

Indientally did you officially notify HMRC that you were self employed as there is also a time limit to do that which you have now exceeded.

lovetowinacar

soolin wrote: »

Indientally did you officially notify HMRC that you were self employed as there is also a time limit to do that which you have now exceeded.

Hi, yes I notified that I was self employed as soon as I started.

I have registered online but cannot login - it looks like I need to order a new activation code.

I will then work out February 2010 to April 5th 2010 and enter by January 2011.

Many thanks that is a great help.:A

lovetowinacar

John_Pierpoint wrote: »

I'm sure nobody will mind if I bring forward these words of wisdom from a couple of years ago:



Most of us align our year with the HMRC year of 6th April to the following 5th because we don't want the complexity of gaming the system.

How old are you?

Do you understand that the UK has two forms of income tax?

Here we are talking about an annual income tax.

There can also be a fixed weekly National Insurance tax, payable by direct debit (or probably still in cash if you must) unless you apply for it to be set aside; then at the end of the tax year the self assessment system will calculate how much extra NI you owe - if any. Currently you are well below the need to PAY the self employed tax called National Insurance.

http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1073867963

John.

When I became "self employed", like you probably I just did some work because I was short of cash in the run up to Easter. I knew nothing about the complexities, so I reported my first few weeks as casual earnings and managed to register for the NI weekly charge etc. from the start of April. Which in some ways they were because I was not thinking that I had started a brand new business.
So here I am years later still stuck on Self Assessment because of my part time self employment.

Before we can comment further we need to know if your business will stay a small hobby or be something that will be on "Dragons Den" next year.

The self employed earnings will stay small and supplement my part time employed earnings.

lovetowinacar

CLAPTON wrote: »

if you started in feb 2010 then you need to cover the period Feb 2010 to 5th april 2010
the return need s filing and any tax paid by 31 Janurary 2011

it all works on the tax year 6th april to the following 5th april

That's really helpful since I only need to get together the bank statements showing payments in and out for a short period this time Feb 2010 to April 2010. That is a relief and since only a few jobs each month should be easy to do.

With the online system if I order an activation code once it arrives do I then input, gross income, deductions and then net income or do I have to list each job? I have kept everything but not sure how much information I actually put on the self assessment online form.

Many thanks for all the helpful answers.:A

Mikeyorks

You put in the gross figures .... you don't list each job. But you also need to complete the 'employed' section and enter your P60 figure(s) for the year 09-10.

One thing to watch with the first year of SA - normally - is that in addition to the tax due 31/1 (for the year to Apr 10) you will be required to make payments on account (POAs) of the tax due for the following year. These are made 31/1/11 and 31/7/11 ..... at the rate of 50% of the tax due for 09/10.

There are 2 exceptions. And both may apply to you? The first is that POAs are not required if the tax due for the closing year is £1000 or less. The second is that POAs are not due if 80% or more of the tax due for the year is paid via PAYE.

But if you avoid POAs this first year .... they may apply in the 2nd or subsequent years. And finding the initial 50% in the first year you're required to make POAs .... catches a lot of people out. The POAs are subsequently deducted from the tax due the following 31/1

no-oneknowsme

Mikeyorks wrote: »

There are 2 exceptions. And both may apply to you? The first is that POAs are not required if the tax due for the closing year is £1000 or less. The second is that POAs are not due if 80% or more of the tax due for the year is paid via PAYE.

Hi Mike.

Just out of sheer curiousity (and it may well help the OP as well) , you say POA's are not required if the tax for the closing year is £1k or less.

Does this £1k include tax from all sources of income - ie from paye and self employment or just from the self employment ?

Thanks

Mikeyorks

It's the total due going forward onto the SA Record ..... so the £1k could include a portion from PAYE if that had been underpaid (and the 80% rule didn't apply). The HMRC website doesn't distinguish :

You'll have to make payments on account if your previous year's tax was over £1,000 - unless more than 80 per cent of the previous year's liability was covered by tax taken off at source