If you are a contractor working via an umbrella company, you may wonder if you must submit a self-assessment tax return. Our latest article provides an overview of when contractors may be required to submit a tax return when using an umbrella company and examples of when they do not need to submit a tax return.
Do contractors need to submit a self-assessment tax return if they are paid via an umbrella company?
If you are a contractor using an umbrella company, you may wonder if you need to submit a self-assessment tax return for the income you are paid via the umbrella company. Any income paid through a compliant umbrella company is paid via Pay As You Earn (PAYE) – the government’s system for collecting tax and National Insurance from your wages. If you are a contractor using an umbrella company and your only income is paid via PAYE (below the £150,000 self-assessment threshold before tax), you will not likely need to submit a tax return.
When do contractors using an umbrella company need to submit a tax return?
You may be required to submit a self-assessment tax return to HMRC for the tax year 6th April 2023 to 5th April 2024 if any of the following apply:
- You had a total taxable income of £150,000 or more
- You have to pay the High Income Child Benefit Charge
- You receive money or income from renting out a property
- You were self-employed as a sole trader and earned more than £1,000 (before deducting anything you can claim tax relief on)
- You are the director of a limited company and get paid via dividends
- You were a partner in a business partnership
- You received tips or commission
- You received foreign income
- You received income from investments, dividends or savings
- You are a higher or additional rate taxpayer and make contributions to a pension scheme
- You receive any form of untaxed income specified by HMRC, capital gains or losses
If you are unsure if you need to submit a self-assessment tax return, the government’s website has a useful online tool for you to check if you need to send a tax return.
What are the self-assessment tax return deadlines?
If you have not filed a self-assessment tax return before, you must tell HMRC you need to submit one by the 5th October. The deadline for filing a paper tax return is midnight on the 31st October 2024 for a 2023/24 tax return. If you are filing a tax return online, the deadline is midnight on the 31st January 2025 for a 2023/24 tax return.
What happens if you miss the filing deadline?
If you need to submit a tax return and you miss the filing deadline or pay your tax bill late, you’ll receive a penalty.
A late filing penalty of £100 is due if your tax return is up to three months late. If you file even later, the penalty will increase. You’ll also be charged interest on late payments.
Appoint a dedicated accountant to assist you with the submission of your self-assessment tax return
Filing a tax return for the first time can be daunting, and you want to ensure you complete the form accurately and on time. If you do not want the hassle of submitting a tax return, you can appoint a professional accountant to complete and file your tax return to HMRC on your behalf.
Top 10 umbrella companies
If you’re looking for a compliant umbrella company to join for a new temporary assignment, we have created the perfect resource for you to use! Our list of top 10 umbrella companies has been created so you can find a compliant provider to process your payroll. Every top 10 umbrella company is accredited by the Freelancer and Contractor Services Association (FCSA) or Professional Passport, and some have special offers at the moment.
We have also created a directory of accredited contractor accountants if you are interested in finding out about trustworthy providers who could help with your 2023/24 self-assessment tax return. Every contractor accountant in our directory is accredited by either the FCSA or Professional Passport, and you can filter the directory to search for contractor accountants by accreditation.
