Chapter 6 - Self Assessment Flashcards
Who would generally be expected to submit a self-assessment?
Self-employed
Company directors
Higher rate taxpayers with a degree of complexity to their tax affairs
What are the important deadlines for a paper based self assessment?
To be submitted by the 31st October after the end of the tax year to which it relates
Tax to be paid by the 31st January after the end of the tax year to which it relates
What are the important deadlines for an online self assessment submission?
Tax to be paid by the 31st January after the end of the tax year to which it relates
How is tax paid via self assessment
There are usually three instalments.
2 payments on account and 1 balancing payment. These are paid 31 January in the tax year concerned, 31 July after the end of the tax year.
The balancing payment is made on the next 31 January.
How is the tax at each payment on account and the balancing payment calculated?
Each payment on account is usually half of the previous years liability. The balancing payment makes up and additional due. If too much is paid on the payments on account then a refund is claimed from HMRC.
What penalty is applied to unpaid or underpaid tax over 30 days?
5% penalty. If it is still unpaid for another 6 months a further 5% is added
What penalty is applied to un-submitted returns
£100, if this goes on over 3 months then a £10 daily penalty up to 90 days.
Whose responsibility is it to deduct tax and NI via PAYE?
The responsibility lies with the employer
What is the relevance of the coding on a wage slip?
The coding will indicate the amount of tax free allowance the individual has.
For example 1150L indicates £11,509 as the tax free amount
What would a K indicate on a coding on a pay slip?
That the individual has benefits in kind
A P11D form must be submitted to HMRC every year for all employees what does this document?
All taxable benefits received that year
What does a P60 form document?
All taxable income for the year
What does the Ramsay principle relate to?
Steps in a transaction that have no commercial purpose other than tax avoidance. Generally when assets are passed around in a circle to end up more or less in their original position but with no tax consequences.
For example;
HRT assigning a bond to a BRT encashing with no tax. Then passing back the money to the HRT to re-invest.
