If you’re self-employed, you’re responsible for paying tax and National Insurance on your income. In order to work out how much you need you pay, you need to have kept good records throughout the tax year.
You can use the employment status indicator on the HMRC website to work out your employment status if you are unsure.
As soon as you become self-employed you have to inform HMRC. If you register too late you might be liable to pay penalties.
It is very important to keep good records in order to work out your tax correctly. If you keep good records throughout the year rather than trying to find receipts and invoices at the end of the year, it will make completing your tax return a lot easier. You can be fined for failing to keep records. Your records must include all your purchases, expenses and sales. To work these out you should keep all paperwork relevant to your business. This includes; Bank statements, invoices, cashbooks, receipts for any purchases, mileage records and p60’s if you are also employed. Read our previous blog on accounting tips for small businesses to find out more about how to manage and keep good records.
You can pay your tax bill in a variety of different ways;
Same or next day
- online or telephone banking(Faster Payments)
- By debit or credit card online. There’s a fee if you pay by credit card.
- At your bank or building society
- At the Post Office. You need a paying-in slip from HMRC to pay at a bank, building society or Post Office. (You won’t be able to pay at the Post Office from 15 December 2017.)
3 working days
5 working days
- Direct Debit (if you haven’t set one up with HMRC before)
You may be charged interest and may have to pay a penalty if the payment is late.
You can also set up a ‘budget payment plan’ which allows you to make regular payments in advance. You must be up to date on your previous Self Assessment payments in order to do this. You can decide how much to pay a week or month and can stop paying for up to 6 months. Go to your HM Revenue and Customs (HMRC) Online account if you decide that you want to set up a budget payment plan.
Tax return deadlines are as followed:
Online tax return: 31 January after the end of the tax year.
Paper tax return: 31 October after the end of the tax year.
Deadlines for paying your self-assessment tax are:
- 31 January is the payment deadline for the balance of what you owe for the previous tax year. Normally you will already have made two payments on account for that year. This is also the deadline for making your first payment on account for the current tax year.
- 31 July is the deadline for your second payment on account for the current tax year.
To check if your payments have been received by HMRC you can view your HM Revenue and Customs online account. It should show as paid 3 to 6 working days later.