Many people do not fully understand what the term ‘self assessment’ that is frequently used by H M Revenue & Customs (HMRC) actually means.
In short, self assessment refers to the procedure whereby you report to HMRC the amount of income and capital gains (profits made on certain assets, such as a second home) that you made during the tax year. You do this by completing a tax return. It is called “self assessment” because you have sole responsibility for ensuring that you report the correct amounts, and there are fines for those who fail to do so.
Perhaps the reason why people find the concept of filing a tax return confusing, is that not everyone needs to do complete one. The main group who need to file a return are the self-employed, but other people are often required to file a tax return too. If you receive a return from HMRC, then you have an obligation to complete it, even if you have no income to report.
Given the vast range of penalties that exist for incorrectly completing your tax return, many people engage an accountant or tax consultant to prepare their return for them. If you would like Favourites Finance to recommend a tax professional specializing in Foster Care to help with the preparation of your tax return, or if you are unsure if you need to file a return, please do not hesitate to contact us on 0845 602 6032.