Clarion Futures Self Assessment Guide for HMRC

What is Self Assessment? Any individual who has earned any income that HMRC doesn’t know about has to complete a self assessment. This helps HMRC work out what tax and National Insurance is due on these earnings. If you are paid by an employer then you are already deducted tax and National Insurance from your wages as part of the PAYE scheme (Pay As You Earn). For everyone else, a self assessment must be done. If you are setting up even a small business, you are most likely going to need to register for self assessment. Why is it called Self Assessment? The basic rule is that HMRC expects you to tell them what your income has been for the tax year. It’s your responsibility to do this and to make that declaration as accurate and true reflection of your circumstances. Most people do this online

and the process is relatively straight forward, so you could do this yourself. There are businesses that will offer to support you if you would rather not do this yourself. Who has to register? If you have set up a business as a sole trader or partnership, you will need to register for Self Assessment unless you don’t expect sales over £1000. We will cover that later. If you are going to be a subcontractor and working under the Construction Industry Scheme (CIS) you will also need to register with HMRC and notify them that you are working as a subcontractor under the scheme. If you don’t do this then your contractor can deduct 30% tax from your income at source (rather than then 20% or 0%). If you have a business or an individual that obtains dividends or receives income from other sources, you will also need to register.