Income tax is payable individuals on income earned in the tax year. As an employee tax is deducted from your salary through the PAYE system. As a self employed person you are responsible for paying your own tax through the self assessment system. The tax year begins on the 6 April and ends on 5 April in the following year, e.g. the income tax year 2021/22 runs from 6 April 2021 to 5 April 2022.
You will pay tax on the annual profits or gains from your trade , profession or vocation and on any other income you might have up to 5 April. There are special rules for commencement and cessation years. See basis of self assessment page for further information.
You will also pay tax on any other income you receive such as investment income, rental income etc. This tax is based on the income earned in the tax year, i.e. from 6 April to the following 5 April.
As a self employed person you will be taxed under the self assessment system. Under this system you will:
Note that the payments on account will equal the previous years tax liability.
The tax liability for 2021/22 was £8,000 and £10,000 for 2022/23, hence your tax payments for 2021/22 will be;
Note on 31 January 2023 you will also pay your first payment on account for 2022/23 of £5,000
Yes. As a self employed person you will receive, from the HM Revenue & Customs, a statement of account showing amounts payable. These notices are generally sent out in January and July. However it is your responsibility to ensure you pay sufficient tax even if you do not receive such a notice.
Interest is charged from the first day payment is late plus a further 5% for amounts overdue by 28 days or more.
Under self assessment you have a legal duty to submit your tax return every year
The Inspector of taxes will issue tax returns to all persons on record who are considered likely to be liable for tax. However it is your responsibility to see to it that you get, complete and submit your return on time.
Your tax return must be submitted by 31 October following the tax year if you submit a paper return, or 31 January following the tax year if you submit your return on-line. The address to which the return must be submitted will be on the front of the tax return.
If you submit your return after the due date, even by one day, you will incur an automatic penalty of £100 and then increasing depending on certain circumstances.
All Rights Reserved | © Gerald Charles & Co