How Do I Register for Self Assessment?
If you receive income that is not taxed at source through the PAYE system, you will almost certainly have to complete a Self Assessment tax return. This ensures that all of your income is taxed appropriately.
Trustees and beneficiaries are likely to have to complete a Self Assessment at some point. HM Revenue and Customs, though, has no way of knowing when a trust is established or who should complete a Self Assessment. As a result, you must register to receive one.
How do I register?The quickest way to register for Self Assessment is by phone. You can do this by calling the New Registrations Helpline on 0845 915 4515. Registration takes about 15 minutes, and you will need to have a number of pieces of information to hand. These include your contact details, National Insurance number, and your Unique Tax Reference if you have previously been a Self Assessment taxpayer.
You can also register online through the HMRC website. Indeed, the Revenue is gradually moving most of its Self Assessment processes online.
It is important to note that you may not need to register as self employed; you simply need to request a Self Assessment tax return. Make sure that you fully explain your circumstances to the Revenue in order to ensure that you do not incorrectly register as self employed.
What are the deadlines?You will receive a ‘notice to file’ once a year, normally soon after the beginning of the tax year, letting you know that you will have to complete a Self Assessment. You will normally have to return your Self Assessment by 31 October if you wish to file on paper, or by 31 January if you intend to file online. Your Self Assessment will refer to the previous tax year; so income from a trust that you received during the tax year ending in April 2010 must be recorded on the Self Assessment you file by 31 January 2011.
If you miss the deadline even by minutes, you will incur an automatic £100 penalty. More severe penalties will occur if you continue not to file.
There are also strict payment deadlines for Self Assessment tax bills. A settling payment to clear the balance for the previous tax year is due by midnight on 31 January – the same date on which you may be submitting the relevant tax return. Depending on your circumstances you may also be asked to make a payment on account against next year’s bill. This is split into two instalments, the first of which is also due on 31 January. The second payment on account is due on 31 July.
If you miss the 31 January deadline, you will automatically receive a penalty equivalent to 5 per cent of the outstanding balance. Interest will also start to accrue on the amount you owe. If you continually fail to pay, HMRC will take legal action to recover the debt.
Self Assessment is an annoying fact of life for many trustees and beneficiaries. But it is also a legal requirement, and you should therefore ensure that you are familiar with your responsibilities.