HMRC requires contractors to ‘self-assess’ income tax and capital gains tax owned using a self-assessment tax return. This must be completed and sent in after the end of the tax year it applies to, so after April 5th, and your tax bill must then be paid by the 31st of January.
Why Do I Need to Fill Out a Self-Assessment Tax Return?
Anyone who is self-employed or works as a company director or a trustee must fill out a self-assessment. You will also need to self-assess if your income is paid in foreign currency or if you are a landlord.
If you are registered as needing to submit a self-assessment, you’re required to do so even if you don’t actually owe tax in a given year.
This makes a tax return something you might not have worried about before you made the switch from employee to contractor. It should be no surprise that many contractors in their first year, as well as some veterans, find it can be a challenge.
What Do I Need to Know?
The process for self-assessment is not necessarily complex, but it can be time-consuming. You will need accurate records for all revenue received during the tax year, as well as for any purchases or other expenditures on which you will be claiming tax relief.
You should also take the time to read any regulations and legislation that applies to you (especially anything which may have changed over the course of the year) so you will be familiar with all relevant tax obligations and opportunities, and so that your return will be properly compliant when submitted.
If you already work with contractor accountants, you probably have access to a service which can create and submit these assessments on your behalf. At ICS Accounting, we also offer this service to contractors using our limited company service.
By engaging the services of a professional accountant, you can be confident that your return will be prepared on time and that it will be compliant and comprehensive. Our specialist team has been working with contractors like yourself since 2002, so we’re confident we have the experience and expertise to support you.
If you have any further questions, don’t hesitate to get in touch.
