Self-employed workers who earn more than £1,000 only have until the end of this weekend to make an application. Failing to do so could lead to HM Revenue and Customs (HMRC) issuing severe fines
Self-employed workers earning over £1,000 have only until the end of this weekend to submit their applications, or they could face hefty fines from HM Revenue and Customs (HMRC).
While taxes are automatically deducted from the wages of employed people through the PAYE system, self-employed individuals registered as ‘sole traders’ must complete their own Self Assessment to ensure they’re paying the correct amount of tax.
To do this, self-employed individuals must be registered with HMRC. This is particularly important if you’ve never filed a Self Assessment before, as you could risk a ‘failure to notify’ penalty.
According to HMRC guidelines, the deadline for registering for a Self Assessment is Sunday, October 5. This means time is rapidly running out to register for Self Assessment and avoid a penalty.
Read on for a comprehensive breakdown of who needs to register for Self Assessment with HMRC.
Who needs to register for Self Assessment
Government guidelines stipulate that you must register for a Self Assessment if, during the last tax year, you were self-employed as a sole trader and earned more than £1,000 or if you were a partner in a business partnership. You will also need to complete a Self Assessment if you had to pay Capital Gains Tax when selling or ‘disposing’ of something that increased in value or paid the High Income Child Benefit Charge outside of PAYE.
If you’ve got untaxed income, you might need to fill out a tax return. This could be from:
- Foreign income
- Income from savings, investments and dividends
- Tips and commission
- Money from renting out a property
Failure to notify penalties
If you don’t tell HMRC about the tax they reckon you owe, you could get slapped with a failure to notify penalty. The amount of these penalties can vary a lot, depending on several things, including whether HMRC thinks you intentionally didn’t tell them.
So, the penalties for not telling them usually fall within a range, from 0% to 100% of the potential lost revenue. If you get a failure to notify penalty, you can find full details of how HMRC works out the penalty here.