Knowledge

Do I need to complete a Self Assessment tax return if I run a startup?

Self-Assessment – what exactly is it?

Self-assessment was designed by HMRC as a way for people outside of PAYE to declare their annual income and pay the correct amount of tax.

Whilst on PAYE your tax liability is automatically taken from your wages each month and paid to HMRC. However, if you are self-employed a company director or receive investment income then HMRC needs to be informed and self-assessment is the way to do it.

Do I need to file self-assessment if I haven’t made any money?

A question new clients often ask us is; “I haven’t made any money yet, we’re a startup, do I still need to register for self-assessment?”

The answer is yes.

By law as a company director, you have to register for self-assessment even if you haven’t made or taken any money from the business.

The dates and deadlines around self-assessment

The dates are relatively simple:

The tax year runs from 6th April until the 5th April the following year.

Your self-assessment tax return is then due by the 31st January the following year.

Eg: The current tax year runs from 6th April 2019 – 5th April 2020 and the filing deadline is 31st January 2021

What needs to go on my self-assessment?

Any income you take out of the business needs to go on your self-assessment.
That could be a salary and/or dividends.
You are allowed to put expenses through to reduce your liability, but of course, you can’t claim for expenses you’re already claimed for through your company!

You’ll also need to declare any investment income from any shares that you own.
Interest from any savings needs to be added here too, although you are entitled to a personal savings allowance depending on your tax bracket. That simply means if you’re only earning a small amount of savings income you won’t pay any tax on it.

The penalties

The bad bit!
You need to file your self-assessment by 31st January, if you miss this deadline you will be charged a £100 late filing fee. For every month you are late thereafter you’ll get another £100 fine… So make sure you meet that deadline!!

How to register

The easiest way to handle all of this is to let RJF do it for you. We’ll take the headache out of reminding you and filing the return on time. Plus, if we’re engaged to act on behalf of your company as well, we’ll have all the information needed regarding any salary and dividends (as we’ll process that for you each month).

It’s nice and easy, we’ll just ask you if you have any other income outside of the business and do all the necessary form filing to make sure your return is submitted accurately and on time.

But…. if you really really want to do it yourself. Go to gov.uk to register for self-assessment. Follow all the steps on there, and HMRC will put you into the pool of people now required to file a self-assessment.

As always, do give us a call if you need any help with your tax affairs.