Guide to Self-Assessment - Thomas Cope Ltd

A brief guide to self-assessment

Does self-assessment apply to me?

Anyone who works for themselves needs to submit a self-assessment tax return, this applies even if you are also employed elsewhere. This can include income from property rental. Also, if any badges of trade can be confirmed, any items you may sell regularly, keep only for a short period of time and sell or work performed on goods to make them more marketable could indicate towards trading and would class as being self-employed.

You would also be required to fill in a self-assessment if you or your partner earn more than £50,000 and one of you claimed child benefit.

When should I be registered for Self-assessment by and how!?

You need to register by 5th October, then you would need to create a government gateway account. You would be enrolled for the self-assessment online service and await a letter with your Unique tax payer reference number (UTR). You’ll also get a letter within 10 days with your activation code allowing you to log in to your account.

Penalties and Fines

There is a £100 fine if you miss the deadline which increases after 3 months, plus there’s also penalties for missing payments too.

Landlords

As a landlord you may not see yourself as self-employed or a business owner, but HMRC takes a view that if you are renting out properties then and making a profit then you are and subsequently will have to fill in a self-assessment tax return. Taxes landlords need to keep in mind regarding renting is income tax and National insurance. If a property is rented out and you have earned between £2500 and £9,999 after allowable expenses or £10,000 or more before allowable expenses the this would need to be included through self-assessment.

Capital Allowances

Capital purchases (not rented) such as Plant & Machinery, Fixtures & Fittings, Equipment and Vehicles are provided with tax relief through capital allowances. Items not deemed to be Capital include land, buildings and structures.

Allowable & Disallowable expenses

Below are a few examples…

Allowable expenses – Trade Purchases, Office stationary, Phone, Motor expenses, Travel & Subsistence, Computer and software, Accountancy fees, Repairs and maintenance, Bank charges, Insurance, Advertising, use of home as Office.

Disallowable expenses – Drawings or salaries taken by the sole trader, interest paid to sole trader on capital invested in the business, Excessive salaries paid to sole traders family, capital expenditure (covered in Capital allowances), Car leasing where Co2 emissions exceed 130 g/km, 15% of the rental/lease charges are disallowed, Non charitable gifts, Entertainment expenditure (unless relating to employees!), Business owner/director fines, journeys to and from your place of work.

Need help with your Self-Assessment

tom@thomaswcope.co.uk | 07903 051197