October is an important month when it comes to taxes, with two key deadlines landing during the month, affecting side hustlers and the self-employed alike.
If you earn taxable income from anything other than pay-as-you-earn work, then you will likely have to declare this to HMRC by submitting a self-assessment tax return.
This money could come from a side hustle like selling clothes on eBay or Vinted, your full-time self-employment, or from renting out a property.
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If any of these apply to you, then you will want to take note of two important dates in October to make sure you complete self-assessment without unnecessary complications.
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Deadline to register for self-assessment: 5 October
Anyone newly self-employed or earning untaxed income such as rent needs to inform HMRC and register for self assessment by 5 October.
The process of registering does not take long, and doing so will mean you get a unique taxpayer reference number that you can use to complete a tax return later on. You can register online at gov.uk.
You usually need to register for self-assessment if you are newly self-employed or a sole trader and have earned gross income over £1,000, received any untaxed income including pension income above £2,500 or if you received income of more than £1,000 from trading or providing services online.
Landlords also have to register if they received income from property, while investors may need to declare dividends or capital gains above the tax allowances.
You don’t need to register if you have already informed HMRC of your status in previous years.
If you need to complete self-assessment but don’t register before the 5 October deadline, you may receive a ‘failure to notify’ penalty from HMRC. This could be worth up to 100% of the tax owed if HMRC thinks you are deliberately concealing income.
If you are confused over whether or not you need to file a tax return, HMRC has a free online tool that helps you to check whether you need to submit a self-assessment tax return.
31 October - paper tax return deadline
If you don’t want to complete self-assessment online and instead prefer to submit a paper tax return you will need to submit it by 31 October.
If HMRC does not receive your forms by 11:59pm on 31 October and you do not complete an online tax return by the 31 January deadline, you could get a late filing penalty.
Submitting late gets you an initial £100 penalty. Then, after three months you get additional daily penalties of £10 up to a maximum of £900.
After six months of not filing, a further penalty worth 5% of the tax due or £300, whichever is greater, is added to your tax bill. After 12 months this same penalty applies again.
When to pay your tax bill
Whether you file your tax return by paper in October or online, any tax you owe HMRC must be paid by 31 January.
That means that if you file a paper form in October, you have the option of either paying your bill at the same time or waiting a few months until January.
You may prefer to keep your own cash in the bank until your tax bill needs to be paid, but there are benefits to filing and paying any taxes owed ahead of the self-assessment deadline, whether you use paper forms or go online.
Myrtle Lloyd, chief customer officer at HMRC, said: “Self Assessment doesn’t need to be overwhelming, by starting early you have time to prepare properly and complete your tax return in manageable bitesize chunks, which is always better.
“Whether you are gathering the information you need or have already made a start on your Self Assessment, there is plenty of help online. Go to gov.uk to start today.”
If you need to make payments on account, the first deadline is 31 January.
