Do I need to submit a Tax Return if I work via an umbrella company?

With just over a month to go until the self-assessment tax deadline, it is worth double-checking whether or not you have to submit a self-assessment tax return. In many cases, umbrella company employees won’t need to submit a tax return because they are taxed similarly to those in permanent employment (PAYE). However, any additional income may need to be disclosed to HMRC by submitting a tax return. Continue reading to discover whether you need to file a self-assessment tax return. 

What is a Self-Assessment Tax Return?

A self-assessment tax return is a system HM Revenue & Customs (HMRC) uses to collect Income Tax. Tax is usually deducted automatically from wages and pensions via the Pay As You Earn (PAYE) system. If you receive income via other means, you will be required to submit a tax return.

If you need to submit a self-assessment tax return, you must file this annually. The tax return covers the 6th of April to the 5^th of April, with the tax return and any tax payments due by the 31^st of January. Once you have submitted your self-assessment tax return, HMRC will then calculate your tax refund or liability.

Do I need to submit a Self-Assessment Tax Return if my only income is paid via an umbrella company?

For most employees and umbrella contractors, tax is automatically deducted from your wages, pensions and savings (PAYE). If this is your only form of income, you will not need to submit a self-assessment tax return.

Who needs to file a 2020/21 Tax Return?

You must send a tax return if you were self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on) or are a partner in a business partnership in the last tax year (the 6^th of April – the 5^th of April). You may also need to file a self-assessment tax return if you receive any other untaxed income, such as:

• Income from renting out a property
• Tips or commission
• Foreign income
• Income from investments, dividends and savings
• Some COVID-19 grants or support payments

When do I need to submit a Self-Assessment Tax Return?

If you need to submit a tax return and have not filed one before, you will need to register for self-assessment by the 5^th of October 2021. The deadline to submit a paper tax return is the 31^st of October and the deadline to submit an online tax return is the 31^st of January. You must also pay any tax you owe by the 31^st of January.

There is also a second payment deadline of the 31^st of July if you make advance payments towards your tax bill – known as payments on account. Each payment is half your previous year’s tax bill. If you still have tax to pay after you’ve made your payments on account, you will be required to make a ‘balancing payment’ by midnight on the 31^st of January the following year.

You will incur a late filing penalty if you must submit a tax return and miss the deadline for filing or paying your tax bill. Even if you miss the deadline by a minute, you will be issued a late filing penalty of £100, which will increase the later it gets. You’ll also be charged interest on late payments.

How do I submit a Self-Assessment Tax Return?

If you need help or support completing and filing your self-assessment tax return, there is introductory guidance on the government’s website and videos for you to view. You can also appoint an accountant to complete and file your tax return on your behalf.

Our Personal Tax team has completed over 20,000 Personal Tax Returns 

As a firm of expert accountants, we have saved thousands of clients’ hours of stress and confusion. Our team of Personal Tax accountants will complete and file your return to HMRC accurately, lawfully and on time – leaving you free to enjoy Christmas!

Please give our friendly team a call on 01707 871622 if you are interested in finding out more about our tax return service. Alternatively, you can complete the short form on our website, and a member of the team will be in touch!