How Does Self-Assessment Work for Contractors

Self Assessment, Tax Return – are they the same thing?

 A self-assessment tax return needs to be completed by contractors as HMRC requires you to ‘self assess’ income tax and capital gains tax you owe to them. You may hear it shortened to just ‘self assessment’ or ‘tax return’ or even see it abbreviated to SATR but essentially they are the same thing.

Who needs to fill out a Self Assessment Tax Return?

 You need to fill out a self-assessment tax return (SATR) if you are self-employed. This covers anyone working on a freelance or contractual basis, so almost all contractors must fill one in.

You must also fill in a tax return if you are a company director, a trustee, a landlord or being paid your income in foreign currency.

A tax return needs to be completed once a year from April onwards every year. Whether you owe tax or not, if you fit any of the criteria above you must submit a self assessment tax return.


When do you need to complete your Self Assessment Tax Return?

The tax year runs from 6th April to the 5th April the following year, so you can complete your tax return from 2013/2014 as soon as it gets to April 6th.

However, for many at this time, they are focussing on getting their 2012/2013 tax return completed and submitted. The deadline for submitting your tax return online is 31st January 2014.

If you complete your tax return on paper you should have already submitted it as the deadline to submit a paper return was 31st October.

If you miss the final tax return deadline of 31st January, then you will immediately be fined £100.

Do you need to fill out Self Assessment Tax Return yourself?

 Working out how much tax you have to pay can be very difficult and many people opt to use a professional accountant.

Many contractor accountants offer this as part of the service. This is no different for clients of ICS that are signed up to our Limited Company Service.

There is a whole host of additional benefits to using a specialist contractor accountant rather than a traditional accountant as we understand you and also the contractor marketplace; we’ve been working with contractors like yourself since 2002.

For more information on self assessment tax returns, you can visit HMRC.