The ultimate fact sheet on UK tax returns and HMRC

The facts to know when filing a tax return in the UK

The basics

1. Taxable income and deductions must be reported in pound sterlings
2. Late filing of tax returns will result in penalties and late payment of your tax liability will result in interest charges.​
3. Income tax returns are used to calculate the amount of income tax owed for the tax year.  Even if you're filing frequent VAT returns, you still must file an income tax return, as it is a separate tax.​
4. Tax returns can be amended up to 12 months from the filing deadline if you find errors or omissions after they've been filed.​

The rundown on self assessment tax returns

1. The tax year in the UK runs from the 6th of April to the following 5th of April. 
2. You must file a tax return if you derived over £1,000 of any form of sole trader business income, self-employment income, or contracting income. You also need to file a tax return if you have earned income that has not already been taxed in the UK - this includes rental income (including AirBnB), income from savings, investments and dividends, tips and commission, and overseas income. 
3. You also need to file a self assessment tax return if you were a partner in a business partnership or you earned £150,000 or more.
4. If you’re an individual and your only source of income is a UK-earned salary or wage, and you earn less than £150,000 a year, you don’t need to file a tax return.  HMRC will contact you directly if they owe you money (or if you owe them!)
5. Taxable income includes salary and wages, interest, dividends, business income, and rental income.  
6. You can claim a tax credit for tax deducted before it was paid to you - for example, PAYE deductions made by your employer, Withholding Tax (WHT), or if you’re a CIS worker.
7. The deadline for filing your self assessment income tax return on paper is the 31st of October after the end of the tax year. However, if you choose to file it online the deadline is the 31st of January after the end of the tax year.
8. Your tax liability must also be paid by the 31st of January after the end of the tax year.
9. Payments on account for Self Assessment are typically due in two instalments: 31 January during the tax year and 31 July following the end of the tax year. These payments are based on the tax due for the previous year. If your total tax bill for the previous year exceeds £1,000, you will usually need to make these payments. If your actual tax bill for the year is lower than the payments you’ve made, HMRC will refund the excess. If your tax bill is higher, the remaining balance must be paid by 31 January following the end of the tax year.
10. Business expenses can be claimed in a tax return against business income as long as they are incurred in the course of your business or trade. You’re not eligible to claim expenses that are for personal use, and if there is an expense that has a personal and business element you will need to split out the business element and claim a deduction for this only.
11. If your expenses are minimal or you did not keep records of your expenses, including receipts and invoices, you could claim the £1000 trading allowance instead.

What about a company tax return?

1. If your company is trading, you must file a corporate tax return, regardless of whether or not your company made a profit. 
2. Your tax liability needs to be paid 9 months and 1 day after the end of your accounting period (except if the company is deemed to be a large or very large company in which case quarterly installment payments are needed). ​
3. Your tax return is due 12 months after the end of your accounting period. 
4. A company tax return is used to calculate the amount of corporation tax owed for the tax year. 
5. If your company generates a loss during the period the tax return calculates the taxable loss that can be carried forward and offset against future taxable profits, therefore reducing your tax liability in future periods. ​Taxable losses can also be carried back and used against profits generated in previous years to claim a corporation tax repayment.
6. Taxable income includes trading profit, interest income, investment income and income from gains made on the disposal of capital assets. 
7. Tax credits are sometimes available, for example, if you carry out research & development and hit certain criteria relating to innovation and making advancements in science or technology then tax credits can be claimed. 
8. Business expenses can be claimed in a tax return against business income as long as they are incurred wholly and exclusively for the purposes of the trade.

Get to know HMRC

1. HMRC can open enquiries into tax returns to ensure compliance with tax laws.
2. HMRC can impose fines and penalties for non-compliance with tax laws.
3. HMRC provides tax tables and calculators to help calculate the amount of tax owed.
4. Employers are required to deduct Pay As You Earn (PAYE) tax from employees' salaries and wages and remit it to HMRC.
5. HMRC can negotiate payment plans for taxpayers unable to pay their tax debt in full.
6. HMRC can issue tax assessments if it finds errors or omissions in tax returns.
7. Tax refunds can be claimed by filing a tax return or by contacting HMRC.
8. HMRC refunds overpaid tax, including PAYE and VAT. 
9. HMRC can offset tax refunds against outstanding tax debts.
10. Sole traders are required to keep their financial records for 5 years from the 31 January filing deadline following the end of the tax year they relate to. For example, records for the 2022/23 tax year must be kept until 31 January 2029.
11. Limited companies must retain their financial records for 6 years from the end of the financial year to which they relate.
12. Employers must keep records of employees' salaries and wages, PAYE tax deducted, and auto-enrolment contributions for 3 years from the end of the tax year to which they relate.
13. Professional help from an accountant can minimise the risk of errors and penalties and help ensure compliance with tax laws.

How can Beany help with UK business tax returns?