If you’re an employee of a business, then the chances are that you’ll go through the Pay-As-You-Earn system whereby all tax deductions are settled before you receive your wages. If you’re self-employed or own a business, then you’ll need to go through the rigorous vetting process of taxes yourself. 

Here, we’re going to discuss whether you, as a director, will need to file a self-assessment income tax return and what the necessary steps might be. For now, let’s go through a few talking points. 

A self-assessment tax return is a disclosure of your incoming and outgoings financially. You’ll have to share the revenue you made and the expenditures that were used in your work. Avoiding this kind of task will end in a penalty which could then lead to harsher punishments. You are not entitled to all of your profits as you must pay your dues. You’ll fill out all of your specific information and let HMRC know the exact numbers. They’ll then provide you with a fee that must be paid before the deadline. This can be done online – it is recommended that this be the way as it’s much quicker and smoother. 

A self-assessment must be filed by anyone bringing in money on their own accord. All revenue must go through the tax system. So, if you’re self-employed as a small business owner, a freelancer, or anything remotely similar, then you must file a self-assessment. 

Typically, a director will not be seen as self-employed for tax purposes or any other kind of legal reasoning as they are an employee of a company. Other areas of life see them as self-employed, however. It’s all entirely dependent on the kinds of formalities and forms that are being completed. 

As mentioned before, the criteria for a company director is that of a typically employed person. The chances are that their income will already be taxed at source like that of a PAYE employee. If you also have a small amount of savings interest or dividends below two-thousand five-hundred pounds, you probably won’t need to file a return. There will be lots of information on the gov.uk website if you feel as though you need to understand even more specific details. 

If, in the event that you must file a self-assessment tax return, it’s wise to know what actions must take place. As a director, you’re going to be listed as ‘not self-employed’. This means that you’ll need to register for a self-assessment using form SA1. This can be completed with HMRC online. It can also be completed via post, but, as mentioned before, it’s a lot smoother to do it online. 

In order to complete form SA1, you will need to provide certain pieces of information. Once this has been completed, you’ll then be able to take further action. 

You’ll need to input your full name and home address. Your national insurance number and unique taxpayer reference will also be included. Your phone number and email address will be necessary also in terms of contact. 

You’ll need to input the date on which income was received from directorship. You’ll also want to include the date on which any other untaxed income was received – such as dividends, etc. 

Once you have registered, you’ll get a letter from HMRC around a week later. It maybe be up to two weeks. It could even be three if you’re abroad. It will contain your unique taxpayer’s reference and information about your obligations linking to your self-assessment.