{"id":7417,"date":"2020-03-20T15:41:00","date_gmt":"2020-03-20T15:41:00","guid":{"rendered":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/?p=7417"},"modified":"2024-04-13T15:12:17","modified_gmt":"2024-04-13T14:12:17","slug":"self-assessment-guidance-for-company-directors-and-shareholders","status":"publish","type":"post","link":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/self-assessment-guidance-for-company-directors-and-shareholders\/","title":{"rendered":"Self Assessment guidance for company directors and shareholders"},"content":{"rendered":"
Self Assessment is an HMRC system used by the self-employed and other individuals to calculate, report, and pay Income Tax and National Insurance contributions on earnings that are not taxed ‘at source’ through PAYE.<\/p>\n
Most company directors and shareholders are required to register for Self Assessment and file personal tax returns with HMRC after the end of each tax year. Self Assessment registration, filings, and payments can all be carried out online.<\/p>\n
Those who are required to register for Self Assessment<\/a>, file their own personal tax returns, and pay Income Tax and National Insurance contributions through Self Assessment include:<\/p>\n However, directors do not have to register for Self Assessment or file returns if all of their income is paid and taxed through PAYE (or similar). In such instances, they are essentially treated as employees for tax purposes. There is also no requirement for directors to register if they do not receive any taxable income at all.<\/p>\n Remember to file your Self Assessment tax return by 31 January<\/span><\/a>\n \n Similarly, company shareholders (who may or may not also be directors), do not have to register for Self Assessment if all earnings are taxed at source and their annual dividends from shares<\/a> are within the \u00a3500 dividend allowance.<\/p>\n In most limited companies, the directors and shareholders are the same people. This means that many such individuals receive both a director\u2019s salary from the company and dividend payments from their shares. As a result, most directors and shareholders need to file personal tax returns on an annual basis.<\/p>\n The way in which you register for Self Assessment depends on your circumstances. If you are a company director and\/or shareholder, you are categorised as \u2018not self-employed\u2019 for Self Assessment purposes. This means that you need to register for Self Assessment using form SA1<\/a>. You can do this online or by post.<\/p>\n To complete form SA1, you will be asked to provide the following information:<\/p>\n After you\u2019ve registered, you’ll get a letter from HMRC within around 10 working days (or 21 if you are abroad). It will contain your UTR and information about your Self Assessment obligations, including filing personal tax returns and paying Income Tax and National Insurance contributions.<\/p>\n Never miss another confirmation statement deadline<\/span><\/a>\n \n If you\u2019re registering for Self Assessment for the first time, you’ll also have to create a new online account after registration and use your UTR to sign up for the Self Assessment online service.<\/p>\n Within 7 working days (or 21 if you are abroad) of signing up, you should receive an activation code in the post. You will need to use this to activate and sign in to your Self Assessment online account for the first time.<\/p>\n You can use HMRC\u2019s Self Assessment online service to complete and file personal tax returns every year. The information you will need to provide on your Self Assessment tax return (form SA100)<\/a> includes:<\/p>\n You may also have to complete supplementary pages for some types of income. For example, if you receive a director\u2019s salary through payroll, you must include form \u2018SA102: Employment\u2019 to record these taxed earnings on your tax return.<\/p>\n This enables HMRC to work out how much Income Tax and National Insurance you owe, as well as any reliefs and allowances you are entitled to, based on your total earnings from all taxed and untaxed sources.<\/p>\n Preparing annual accounts for your limited company<\/span><\/a>\n \n Filing tax returns online is the quickest, easiest, and most secure option. You can also use the service to check and update your Self Assessment details, amend tax returns that you\u2019ve already filed, view and download previous returns and tax calculations, and pay any Income Tax and National Insurance that you owe.<\/p>\n Alternatively, you can send Self Assessment tax returns on paper by downloading and completing form SA100.<\/p>\n Self Assessment filing deadlines are based on the tax year, which runs from April 6th to April 5th the following year.<\/p>\n The deadline for filing online returns is 31st January after the end of the tax year in which the income is earned. Paper tax returns have an earlier filing deadline of 31st October after the end of the tax year.<\/p>\n A Central London Registered Office for your business<\/span><\/a>\n \n For example, your tax return for the current 2024-2025 tax year must be filed by 31st October 2025 (paper return) or 31st January 2026 (online return). All of the income you receive between 6th April 2024 and 5th April 2025 must be included in this tax return.<\/p>\n Failure to meet the filing deadline will result in a \u00a3100 penalty, even if you don\u2019t have any tax to pay. Further penalties will apply if you file your tax return three, six, and 12 months after the deadline.<\/p>\n If you use the online service, your Self Assessment tax bill <\/a>will be available to view as soon as you have completed your tax return. If you send a paper return, your tax bill will be sent to you in the post.<\/p>\n The deadline for paying any Income Tax and National Insurance that you owe through Self Assessment is 31st January after the end of the tax year. This is the same as the filing deadline for online tax returns.<\/p>\n If your Self Assessment tax bill is more than \u00a31,000, you will normally have to make advance payments toward your next tax bill. This is known as \u2018payment on account<\/a>\u2019. The first payment on account will be due by 31st January when you pay the tax that you owe from the previous tax year. The second payment on account will be due by 31st July.<\/p>\n HMRC provides a number of options for paying tax bills, including:<\/p>\n It is important to pay your tax bill by the deadline, otherwise, you will be charged interest and may also have to pay a penalty.<\/p>\n Preparing annual accounts for your limited company<\/span><\/a>\n \n You may find it beneficial to set up a \u2018budget payment plan\u2019 to pay your tax bill in regular instalments throughout the year. This is a great way to effectively manage your finances and avoid having to set aside earnings or deal with a large bill at the end of January.<\/p>\n Should you find yourself in the unexpected position of being unable to pay your tax bill<\/a>, it is important to contact HMRC as soon as you can, to explain the situation and discuss your options.<\/p>\n\n
\n
How to register for Self Assessment<\/h3>\n
\n
Completing and filing your Self Assessment tax return<\/h3>\n
\n
Filing deadline for tax returns<\/h4>\n
Paying your Self Assessment tax bill<\/h3>\n
Payment deadline<\/h4>\n
Payments on account<\/h4>\n
How to pay<\/h4>\n
\n
If you are unable to pay your tax bill<\/h3>\n
Self Assessment tax bills<\/h4>\n