Frequently asked questions

Individuals are required to register for Self-Assessment in the following circumstances: 

• Become a company director 
• Receive a rental income of over £ 2,500 from land and property in the UK
• Have taxable foreign income of more than £300 a year 
• Receive yearly income from a trust or settlement 
• Sell shares, property or other assets liable to Capital Gains 
• Have yearly income over £100,000 
• Get untaxed income that can’t be collected through your PAYE tax code 
• Have income over £50,000 and you or your partner carry on receiving Child Benefit payments 
• Have Capital Gains Tax to pay 
• Have become a partner (member) in general partnerships and limited liability partnerships (LLPs). 
• Employees claiming expenses in excess of £2,500/tax year

Income Tax is charged at varying rates. Every person born after April 5th 1948 with an annual income below £100,00 is entitled to a Personal tax-free Allowance of £11,500 (2017-18 tax year). Income above this amount will be subject to the following tax rates:

• 20% Income Tax rate on annual income up to £33,500 (or £45,000 if you incl. the tax-free Personal Allowance) 
• 40% Income Tax rate on annual income between £33,501 – £150,000 (or £45,001 -£150,000) 
• 45% Income Tax rate on annual above £150,000

Most people who are registered for Self-Assessment will pay Class 2 and Class 4 National Insurance Contributions:

• Class 2 must be paid when annual taxable income reaches £6,025. It is charged at £2.85 per week. 
• Class 4 must be paid on annual taxable income above £8,164. You will pay 9% class 4 on income up to £45,000. Above that amount, you will pay an additional 2%. 

National insurance should be paid through self-assessment by January 31st after the end of the tax year.

A sole trader is an individual person who is self-employed through their own small business. As a sole trader, you must register for Self-Assessment, file an annual tax return and pay Income Tax and National Insurance on all taxable income. This is one of the easiest types of business structures to set up and run. It is particularly beneficial for people with small businesses with an annual taxable income below £20,000.

A limited company director is technically an employee of the company, even if he or she is the owner of that business. Directors usually receive a salary through PAYE. Their personal tax and Class 1 NI will be deducted at source. However, directors may also receive dividend payments, directors’ loans, benefits and expenses, none of which are taxed through PAYE. Directors must therefore register for Self-Assessment to report this additional income. Any personal tax liabilities arising from sources of additional income will be paid through Self-Assessment.

LLP members are self-employed individuals who collectively run a business as a partnership. A limited liability partnership itself is not taxed. LLP members are taxed individually on their share of business profits. It is for this reason that LLP members are required to register for Self-Assessment and file Self-Assessment tax returns each year.

Your unique taxpayer reference number, or UTR number, is a unique code that identifies either an individual taxpayer or an individual company. UTR numbers are ten digits long, and may include the letter ‘K’ at the end. Unique taxpayer reference numbers are used by HMRC to keep track of taxpayers, and is the ‘key’ that the HMRC uses to identify all of the different moving parts related to your tax affairs.

You might need your unique taxpayer reference in a number of circumstances. The most important of these is to complete your Self-Assessment tax return. However, you might also need it if you appoint an accountant or other financial professional to help you deal with your tax affairs. You’re also likely to need your UTR number when you communicate with HMRC for any other reasons.

Make sure you pay HM Revenue and Customs (HMRC) by the deadline. You’ll be charged interest and may have to pay a penalty if your payment is late. The time you need to allow depends on how you pay:

• Online or telephone banking (Faster Payments) 
• CHAPS 
• By debit or corporate credit card online 

• 31 January - for any tax you owe for the previous tax year (known as a balancing payment) and your first payment on account
• 31 July for your second payment on account If you prefer to pay regularly throughout the year, you can use a budget payment plan.

You can get help if you can’t pay your tax bill on time. New Paragraph