ICAEW has reminded people that if they do not sign up for self assessment they may face penalties of up to 100% of the tax they owe.
Many individuals have begun letting property, become self-employed, or started earning from a second source of income, such as selling products online, during the past year because of the coronavirus pandemic. They may not be aware that they need to register for self-assessment and pay any tax that is due on sources of income that started between 6 April 2020 and 5 April 2021.
The deadline is 5 October 2021 and the quickest way to register is online through HMRC’s website. Individuals can also complete an online form, or phone HMRC.
Caroline Miskin, ICAEW Tax Faculty Technical Manager said:
"Many people’s lives have changed during the pandemic, and some may have new sources of income that they will need to declare to HMRC. You must register for self-assessment if you’re self-employed as a sole trader and have earned more than £1,000, or if you’re a partner in a business partnership. You may also have to register if you’ve earned money from renting out a property, from tips or commission payments or if you have income from savings, investments and dividends.
“The deadline is now just days away, but there’s still time to register and avoid having to pay a fine. The deadline for submitting a paper tax return is also fast approaching, on 31 October, so you should also check whether you need to do that.”
How to find an accountant
Once you’ve registered, one of the best ways to make sure your tax return is filled in correctly is to get help from a chartered accountant. Here are five tips on how to find one that’s best for you:
- Look for a chartered accountant who works with clients who do similar work to you. They will be more understanding and have experience of the problems you might face.
- Speak to several different ones before deciding on one. This will ensure you get a range of opinions and prices, and a good idea of what services different people offer such as business advice and planning.
- Check what qualifications they have and make sure that they are members of a recognised accountancy body. Also make sure they have professional indemnity insurance just in case.
- Establish who at their accountancy firm will be dealing with your work - it may not only be the person you speak with first. Make sure it’s someone you get on with, someone you can work with, and you feel happy that they will be able to help you develop your business.
- You and your accountant should always keep in touch, not just at the end of the tax year when you need to do your tax return. You should tell your accountant as soon as possible about changes in your business or circumstances, and any problems, so they can advise you on whether you need to make changes to how you run your business.