Are you a new tax filer this year?
If you have just started a side hustle, for example, your own YouTube channel or designing and selling your own T-Shirts. Maybe you've decided to rent out an apartment. Whatever it may be, you're likely to have questions as to whether there are tax implications. You should know that most employees pay their taxes through the PAYE system and aren't required to do a tax return. However, if now you have a new source of income, regardless of your employment, this may well have to be reported to HRMC.
*Filing a self assessment - beginner friendly!
*1. What is a self assessment?
You should know, a self assessment is simply a way of paying tax. The onus is on YOU to notify HRMC and complete your tax return each year. You must also include any employment income (if applicable) and any other income that you have on your Self Assessment tax return, as you must declare ALL your taxable income and gains/losses for the year.
**2. Do I fall within the categories?
For 23/24 tax year, if your 'side hustle' income is more than £1000, then you will need to register with HMRC and file a self assessment tax return. The deadline for this is 6 months after the tax year that you earned the additional income.
An example to illustrate this, if you earned £4000 from your YouTube channel for the 22/23 tax year (between 6th of April 22' - 5th of April 23), your deadline to register with HMRC is 5th of October 23'.
**3. What about my personal allowance?
Every person has £12,570 Personal Allowance which they can receive free of tax each year. However, you must know, even if your side-hustle income does not exceed this threshold, but is above the £1000 minimum, then you must still register with HMRC. The additional income has to be reported but you will not be taxed.
**4. Where do I start?
First, you must register for a self assessment tax return, this can be done by visiting the HMRC website or by calling the helpline. Once you are registered, you will receive a unique taxpayer reference (UTR), a number assigned to you for tax purposes. Then, be sure to round up all information related to your income such as your payslips, any invoices or expenses.
**5. When do I have to submit by?
The deadline for submitting your self assessment tax return for submitting your self assessment tax return and paying any tax owed is January 31st following the end of the tax year. Once you have submitted, you'll be informed of the amount you owe (if any). It is essential that you keep accurate records of your income/expenses because HRMC may request to see them.
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