pays income tax?
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 2019/20 runs
from 6 April 2019 to 5 April 2020.
what income do I have to pay tax?
will pay tax on the annual profits or gains from your trade
, profession or vocation and on any other income you might
have. If your annual accounts are normally made up to a date
other than 5 April, you will be taxed on the profits of your
accounting year e.g. if your accounts are prepared for the
twelve months ending on 31 December, the profits for the period
which ends in the tax year will be taken as your profits for
the tax year. There are special rules for commencement and
cessation years. See basis of self assessment page for further
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.
tax and when will I have to pay it?
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
- On 31 January in the tax year pay your first payment
on account of tax
- On 31 July following the tax year pay your second payment
on account of tax
- On 31 January following the tax year pay the balance
of your tax due for the year
- On 31 January following the tax year you must also have
submitted your self assessment tax return or you will incur
- ongoing business
tax liability for 2018/19 was £8,000 and £10,000
for 2019/20, hence your tax payments for 2019/20 will be;
- 31 January 2020 1st payment on account £4,000
- 31 July 2020 2nd payment on account £4,000
- 31 January 2021 balancing payment £2,000
Note on 31 January
2021 you will also pay your first payment on account for 2020/21
I be notified of my tax liability?
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.
What happens if I do not pay my Tax
is charged from the first day payment is late plus a further
5% for amounts overdue by 28 days or more.
must I submit my tax return?
self assessment you have a legal duty to submit your tax return
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.
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.
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.