When HMRC brought in on-line filing of income tax and corporation tax returns they also expected individuals and companies to self-assess the tax that was due to HMRC. Therefore there are two acronyms, CTSA (corporation tax self-assessment) and ITSA (income tax self-assessment).
If you are required to complete an income tax return you have three dates to think about:
- 31 October after the end of the tax year is the deadline to submit your income tax return on paper;
- 31 December after the end of the tax year if you want any underpayment collected through your notice of coding; and
- 31 January after the tax year for on-line submission of income tax returns.
Companies only have one filing deadline – 12 months after the accounting period end.
Standard rated supplies
This term refers to sales made by a business registered for VAT. There are three rates of VAT and a fourth category.
The standard rate is currently 20% and this will apply to most sales
The reduced rate is 5% and applies to an eclectic mix of sales, for example, domestic fuel and power, childrens car seats, contraceptives and caravans!
The 0% rate applies to most human and animal food, books/newspapers, drugs and medicine and transport.
The final category is for exempt supplies (see letter E). This includes health, finance, sport and insurance.
If you are not registered for VAT you do not have to worry which category your sales fall into.
Also known as being a sole trader. If you are self employed you are trading as yourself, ie not through a company. You will be entitled to deduct business expenses from your business income and only the profits of your business will be subject to income tax. If you want to know more about setting up in business then download our e-book or you can check this blog for information on deductible expenses.
Once you have registered with HMRC as self employed you will need to complete a tax return and pay your tax in three installments: 31 January in the tax year, 31 July after the tax year has ended and a final payment with your self-assessment tax return on 31 January after the end of the tax year.
There are a number of blogs in the freelancer and self employment categories you can check-out for more information.