Table of Contents
In Short
- As a business owner, you may need to complete a Self-Assessment tax return if you meet specific criteria.
- Deadlines are 31 October (paper) and 31 January (online); penalties apply for late submissions.
- From April 2024, tax returns must be filed digitally under Making Tax Digital (MTD).
Tips for Businesses
Ensure you register with HMRC and gather the necessary financial records, such as receipts and income details, for your Self-Assessment tax return. You may prefer to consult an accountant, but if you do it yourself, stay mindful of the deadlines and MTD requirements.
As an eCommerce business owner, in addition to running your day-to-day business activity, you likely spend a lot of time on your website design and online marketing. This will help improve your business and increase profits. However, all business owners have laws that apply to their companies and obligations to them as individuals running a self-employed business. One of the latter is the requirement for those eligible to complete a Self-Assessment tax return. The idea of completing a Self-Assessment tax return is not usually a pleasant one and can instead feel quite daunting. However, HM Revenue and Customs (HMRC) can give penalties for failing to do so or failing to do so on time. This article will explain Self-Assessment tax returns and the legal obligations of business owners.
What is a Self-Assessment Tax Return?
Self-assessment is an alternative way that HMRC collects income tax rather than automatically deducting it from people’s pensions and wages. To help them know how much to collect, eligible individuals need to complete a Self-Assessment tax return. This has to be completed after the end of each tax year, which is the 5th of April. Therefore, the form details tax due from 6 April to 5 April.
Do I Need to Complete a Self-Assessment Tax Return?
As a business owner, you must likely complete a Self-Assessment tax return. If you meet any of the following criteria, you must complete one:
- your eCommerce brand means that you are self-employed as a ‘sole trader’ and earn more than £1000 before deducting anything due for tax relief;
- you are a partner in a business partnership;
- your total taxable income exceeded £150,000;
- you sold or ‘disposed of’ something which you had increased in value and caused you to pay Capital Gains Tax; or
- you paid the High Income Child Benefit Charge.
If you’re unsure if you are self-employed, HMRC claims you are if you run your own business or are responsible for its success or failure.
To complete a Self-Assessment tax return, you must register with HMRC for your eCommerce business by 5 October of its second tax year.
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What are the Self-Assessment Tax Return Deadlines?
If you need to complete a Self-Assessment tax return, you must ensure you do it by the rfe, not defined otherwise, you will receive a penalty. These are:
- midnight 31 October for paper tax returns; and
- midnight 31 January for online tax returns.
You must pay the tax by midnight on 31 January.
However, as of April 2024, you must do this digitally if you are filing a tax return as a self-employed business for your eCommerce brand. This is also the same for landlords. This is Making Tax Digital (MTD), which makes your tax return easier.
How Do I Complete a Self-Assessment Tax Return?
You may decide to ask an accountant to complete your Self-Assessment tax return rather than complete it yourself. However, if you choose to save money and complete it yourself, you must be prepared for the information you need to put in it. Therefore, you will need your business receipts and invoices.
This is because in the tax return, you need to include your:
- income details;
- expenditure details; and
- details of payments you can claim, such as travel expenses and business insurance.
There are other details you need to include in your Self-Assessment tax return, such as:
- your National Insurance (NI) number;
- your ten-digit Unique Taxpayer Reference;
- your P60; and
- any payments you may make, such as to pensions, which allows you tax relief.
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Key Takeaways
As an eCommerce business owner, you will likely need to complete a Self-Assessment tax return each year for HMRC. This is their way of collecting tax from you, and the form needs to detail how much you owe. You must do this as a self-employed person if you have an annual income of more than £1000 before deducting anything due through tax relief. Making Tax Digital (MTD) was introduced in April this year, which means you now have to do this digitally. To complete a tax return, you will need information available to you, such as your business receipts. You will need to detail, amongst other things, your income and expenditure. You may prefer to pay an accountant to do this for you. If you are unsure as to whether you need to complete a tax return, you should take legal advice.
If you need help understanding Self-Assessment Tax Returns and the legal obligations for business owners in the UK, LegalVision’s experienced eCommerce lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. So call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
A Self-Assessment tax return is a way that HMRC collects income tax forms, for example, from self-employed sole traders earning more than £1000 before tax relief deductions.
In a Self-Assessment tax return, you need to provide various details such as your income and expenditures.
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