Self Assessment
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"Income tax
would you believe is a temporary tax...only problem
is they keep introducing it every year."
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The majority of employees in the UK have their income tax deducted
at source when paid, so therefore do not need to prepare a tax return.
The only people who do have to go through with this are company
directors, employees/pensioners who pay a higher rate of tax (40%)
and employees/pensioners with complex tax affairs. More or less
everybody has to do the same with their self assessment forms, but
there are slight variations for those with different incomes and
gains.
Everyone who pays tax will eventually receive a
record of the total tax they have paid over the years. Laws brought
out in April 1996 warn that everyone who does pay tax must keep
such records, not to mention other paperwork received from their
employers/former employers. This includes P45s, P60s and P11Ds.
Completing Tax Returns
The Inland Revenue sends out tax returns to individuals, trusts
and companies when they are aware of tax being due. If a tax return
is not received by someone who has taxable profits or gains on which
tax has not been paid, and the Inland Revenue do not know about
it, the onus is on the individual to tell them. If they do
not, penalties will be charged when the Inland Revenue find out.
If details are submitted by 30th September, the Inland Revenue
will do all calculations for them; otherwise, details should be
submitted by 31st January (of the next year) and the individuals
must do their own calculations. The maximum penalty is £100
plus £60 p/day, and then a further £100 if the return
is more than six months late. If it's more than a year late, an
amount equal to the tax charged will also be added to the penalty.
Do not take that risk - call Academy Accounting Ltd today on 0141
891 5999 or e-mail us on enquiry@academyaccounting.co.uk.
Tax Payment
Most tax due is collected by those paying income to others,
i.e. employers under the PAYE system, and the payment dates for
remaining tax are as follows:
- Two payments on account (based on the previous years liability)
should be made on 31st January and 31st July; and
- The balance payable or repayable (taking into account capital
gains tax) on the following January.
You do not have to make payments on account if the income tax amount
due to pay directly to the Inland Revenue for the previous year
was less than £500, or if more than 80% of the previous year's
income tax was covered by PAYE and/or deduction at source. If a
balance payment for a year is over 28 days late, reasonable excuse
can be given to avoid any penalties, and that person will have to
pay a surcharge of 5% of any tax not paid by 28th February, plus
a further 5% of any tax still not paid by 31st July.
The Inland Revenue will normally have a year from the filing date
for the tax return to notify people that they intend to enquire
into it.
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