It is less than a week until HM Revenue & Customs’ (HMRC) 5th October deadline for new contractors and self-employed individuals to register for self-assessment.
This deadline is arguably one of the least publicised in the financial calendar for professionals, although failure to notify HMRC of a change in your employment circumstances – or the creation of a new limited company – could result in potential financial penalties.
If the way you earn a living changed during the 2016/17 tax year – ending 5th April 2017 – you must liaise with HMRC by next Thursday. HMRC recognises changes of income in the following ways:
- You are newly self-employed or in a new business partnership.
- You have untaxed income of more than £2,500 e.g. rental income – or you have a variety of income streams to reveal.
- Your earnings surpass £100,000 per annum.
- Your income – or your partner’s – was beyond £50,000 per annum whilst being in receipt of child benefit.
- You benefit from income on savings of over £10,000.
- You benefit from income from dividends and shares of over £10,000.
- You have been a trustee of a trust or registered pension scheme.
- You’re required to pay capital gains tax or make a claim for expenses.
If income is omitted from your next self-assessment tax return and you don’t end up paying tax on those earnings, HMRC will consider this as a ‘failure to notify’, resulting in financial penalties which can be up to 100% of the tax due on undeclared earnings.
How to register for self-assessment
Fortunately, signing-up for HMRC’s self-assessment is a relatively straightforward process, taking just a matter of minutes. Simply fill in the form provided here. Bear in mind you will require your National Insurance number, residential status and address to complete this.
Once you’re registered, you will receive a Unique Taxpayer Reference (UTR) in the post within ten working days. All future correspondence relating to your self-assessment will be attributed to your UTR.
Note: Self-assessment tax returns for the 206/17 tax year must be filed either in paper form by 31st October 2017 or online by 31st January 2018.