Everything you need for the 21/22 SA tax return
A person is self-employed if they run their business for themselves and take responsibility for its success or failure.
This is the definition of self-employed by HMRC and so, whether you have an income on the side or a full-time business that you run by yourself, you are considered self-employed in the eyes of HMRC!
And, if this is you, then it's quite likely that you will need to submit a Self Assessment tax return and pay your bill each year.
A Self Assessment tax return can feel quite confusing, especially if it is your first time. So, we've put together a handy guide to help you navigate whether or not you need to submit a tax return, and exactly how to submit one (with ease!).
What is a Self Assessment?
Self Assessment is the tax return process for self-employed people (e.g. Etsy sellers, Air BnB hosts, freelancers, creators and so many more!).
If you're employed by a company, HMRC will collect your income tax through the PAYE system. However, if you're self-employed (even if it is alongside your employment), you need to work out your income and expenses and then pay a bill each year.
This includes money earned from renting out a property or significant income from savings, investments and dividends.
Do I need to submit a tax return?
You need to submit a tax return and pay your bill if in the last tax year if you:
- made self-employed income above £1,000
- a partner in a business partnership
You may also need to submit a tax return if you have untaxed income from:
- renting out a property
- savings, investments and dividends
- foreign income
- tips and commission
When is the end of the tax year?
Every year on 5 April, one tax year ends and a new one begins. That means the 2021/22 tax year ends on 5 April 2022. The last tax year ran from 6 April 2021 to 5 April 2022.
When should I submit my 2021/22 tax return?
Technically, you have until 31 January 2023 to submit this tax return. But there are a lot of benefits to submitting a tax return early:
- You can spread your tax bill over the months between April and January
- Earnr is offering a 50% discount to anyone who submits their tax return during the month of April 2022. A tax return with Earnr is already free if your earnings were under £3,000. Earnr charges a £99 flat fee on incomes higher than this, so this fee will be £49.50 for the month of April 2022.
- You will be entered into a prize draw to win £1000 off your tax bill (or in cash!)
- Save your self lots of stress around the deadline!!
How do I submit a tax return?
- It's very important to register for a Self Assessment. When you do this you get what is called Unique Taxpayer Reference (UTR). It can take up to 10 days for this to arrive, so we recommend doing this as early as possible.
- Identify your business transactions within Earnr
- Enter your personal details and income sources
- Review your details and hit submit! 🎉
You can speak to one of our team members for support at any time. If you are new to Self Assessment, it can feel daunting, but we're on hand to help and explain every step of the way.
What happens if I don't submit a tax return?
HMRC charges anyone who files their self-assessment tax return late from the first day after the deadline. There's an immediate £100 penalty fee. After that, you will be charged an additional £10 for every day the return isn't filed
These daily penalties are capped at 90 days, so the maximum penalty is £900 along with the £100 initial fine, a total of £1,000.
However, if you're six months late, there's a further fine of £300 or 5% of the money you owe, whichever is higher.
That's on top of the daily £10 charges built up so far.
And after 12 months, another £300 or 5% fine is added.
If you have deliberately not filed your tax return, you could be hit with a fine of up to 100% of the tax due.
How can I get more help with this?
You can speak to one of our friendly team members from within the app. Let us know your question and we will try to help.