Clarion Futures Self Assessment Guide for HMRC

www.gov.uk/government/publications/self-assessment self-employment-short-sa103s www.gov.uk/pay-self-assessment-tax-bill www.gov.uk/understand-self-assessment-bill/payments- on-account www.1stformations.co.uk/blog/self-assessment-payments on-account/ How much tax and National Insurance will I pay? If you can estimate your business profits then you can work out how much tax and National Insurance (Class 2 and Class 4)* you will have to pay using the self-assessment ready reckoner. This is a helpful tool as you will need to calculate the amount to keep aside to pay your bill in January but also what you may have to pay as an advance in July. https://www.gov.uk/self-assessment-ready-reckoner https://www.gov.uk/self-employed-national-insurance-rates

Doing Your Tax Return HMRC wants to know what your profit was from your business to determine any taxes. This is a simply a matter of deducting your allowable expenses from your business income. This is done on form SA103(S) (S for Short). HMRC will also want to know if you had income from anywhere else e.g. interest on capital, dividends, rent income and also if you paid out into a pension or gave to charity. If you have had a job they will also want to know the information on your P60. (Even though they have this already!) Once you have completed the self assessment online HMRC will confirm what taxes you may be liable for. You can then pay those immediately. There are also options to pay in instalments. If your tax is going to be over £1000 and you didn’t pay 80% of your tax through a tax code (i.e. you didn’t have a job as well you will have to make advance payments to HMRC. These advance payments are based on your future tax burden and ensure you meet your tax obligations.

* In the autumn 2023 statement Class 2 is likely to be abolished with the self employed paying a reduced Class 4 rate on their profits.