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With the impending Self Assessment tax return deadline approaching, Heather Dore, Regional Manager of Easy Accountancy answers some crucial and commonly asked tax return questions from her clients who are self-employed or higher income parents.

My partner and I have two children and we both work full-time earning over £50,000 a year. We receive child benefit and so I understand that we need to complete a tax return. As we are both earning over the threshold do we both need to complete a tax return?

As of last year parents that earn over £50,000 annually and receive child benefit may have to pay a tax charge known as ‘Higher Income Child Benefit Charge’ and so are required to complete a tax return. In answer to your question you will only need to submit one return and as you are both earning over £50,000 annually whoever has the highest income out of the two of you will need to complete the tax return.

I have had my first child this year and to supplement my income whilst on maternity leave I have picked up some freelancing work amounting to roughly £2000 in total. Do I now need to complete a tax return?

If you receive a second income then you will need to complete a tax return to declare this extra income. Completing a tax return lets HM Revenue and Customs (HMRC) know how much you are earning so they can accurately calculate how much tax you are required to pay.

I am a full-time mum, but I make jewellery in my spare time which I sell on the internet. I earn around £1500 a year, as this amount is below my personal allowance do I still need to complete a tax return?

It doesn’t matter how much or how little you earn, if you are self-employed you must declare your income by completing a Self Assessment tax return. HMRC will then calculate your tax bill based on the amount that you have earned that year.

I used to work as a full time copywriter, but I left my job to look after my two children. Now that they are getting a bit older I would like to do some freelance copywriting work while they are at school, from a financial point of view how do I go about this?

Freelancers complete a job; send their client an invoice for the work and the client will then pay the full amount directly. If you decide to work on a freelance basis you will need to declare your income to HMRC by completing a Self Assessment tax return each year so that HMRC can calculate your tax bill.

It is worth remembering that you must keep proof of income (invoices or sales receipts) for six years following the end of the financial year in case HMRC ask to see them.

When do I have to complete my tax return by?

The deadline for the upcoming 2013/14 tax year is:

• Online returns 31st January 2015

What happens if I miss the tax return deadline?

If you are planning to submit a paper return and miss the paper returns deadline (31st October 2014) then you will need to submit your return online via the HMRC website. If you miss the online returns deadline you will automatically incur a penalty of £100.

If your return is three months late you will incur a further penalty of £10 for each day your return continues to be late up to a maximum of £900 or 90 days.

If HMRC have not received your return six months after the deadline you will incur a further fine of either £300 or five per cent of your total tax bill, whichever is the larger amount.

If your return is 12 months late you will again incur a further penalty of either £300 or five per cent of the total tax due. You may then be liable for further penalties depending on your circumstances.

What happens if I don’t pay my tax bill by the deadline?

If for whatever reason you are unable to pay your tax bill on time it is worth contacting HMRC as depending on your circumstances you may be able to negotiate a deadline extension or the option of paying your tax bill in instalments.

Failure to pay your tax bill on time without first contacting HMRC will leave you liable for further penalties.
Interest is usually charged on unpaid tax bills from the deadline to the date that the payment is received. If your tax bill has not been paid by February 28th then you may incur a five per cent penalty.

If your tax bill has still not been received by July 31st then another five per cent charge will be made, and if the tax is more than a year late you may receive a penalty equal to the amount of unpaid tax.

Can I edit my return once it has been sent in?

It is possible to amend your return once it has been submitted. The deadline for tax return amends is 12 months following the tax return deadline. If you have submitted your return online you can make amends by logging into your online account on the HMRC website. If you have completed a paper return then the usual correction procedure is to send HMRC the correct pages of your paper return and mark them for amendment.

How long does HMRC have to investigate my return once it has been submitted?

If HMRC decide to investigate your tax return they will contact you in writing, within 12 month of receiving your return.

If you have amended your return or submitted your return late, HMRC is entitled to an enquiry window of 12 months following receipt of your tax return and up until the next “quarter day”. The quarter days are
January 31st, April 30th, July 31st and October 31st.

How long do I have to keep my records for?

If HMRC decide to enquire into your return they may ask to see proof of income, expense receipts and other records such as bank statements. It is recommended that self-employed individuals keep copies of these records, in particular expense receipts and proof of income for seven years in case HMRC request to view them.

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