A common question amongst umbrella company employees is – “I am using an umbrella company; do I need to submit a self-assessment tax return for the 2021/22 tax year”. As we explain in this article, the answer depends solely on your circumstances. Please keep reading for more information.
Umbrella employees are paid similarly to an employee in a permanent role – with Pay As You Earn (PAYE)
Contractors and freelancers who are using the services of a compliant umbrella company will receive Pay As You Earn (PAYE) – HMRC’s tax system. Therefore, if you’re only income during the 2021/22 tax year was paid to you through an umbrella company, you will not need to submit a self-assessment tax return for the 2021/22 tax year. This is because PAYE ensures you contribute the correct legal tax amounts and National Insurance Contributions (NIC) to HMRC. Essentially, you’ve paid your tax and NIC while working and being paid through your umbrella, and you will not be required to pay any more by submitting a tax return.
With the above in mind, there are many situations where umbrella employees will be required to submit a self-assessment tax return for the 2021/22 tax year, as we explain below.
When do umbrella employees need to submit a self-assessment tax return?
There are plenty of scenarios where contractors and freelancers who are using an umbrella company to manage their payroll must submit a personal tax return. Below are the most common (but more apply, and you will need to conduct further research if you believe you may need to submit a tax return). For more information, please visit the government’s website.
- You are a contractor who has operated through a personal service company (PSC) outside IR35 during the 2021/22 tax year (and have taken funds out of your company).
- You are a landlord and have one or more buy-to-let properties that generate income.
- You receive income from a trust.
- You have received inheritance.
- You earn foreign income that should be subject to UK taxes.
- You are not a UK national but earn money inside the UK that should be subject to UK taxes.
- You have investments greater than £10,000.
- You have savings over £10,000.
- You have generated income through the trading of cryptocurrencies.
- You have an annual income greater than £100k (before tax).
- You have capital gains.
- You want to claim back tax, perhaps because you work in construction (CIS) or have expenses.
- You took advantage of coronavirus support packages that you should not have.
- You are a religious minister for faith.
If any of the above applies to you in the 2021/22 tax year, you may be required to complete and submit a self-assessment tax return to the government.
What are the 2021/22 self-assessment tax return deadlines?
The following deadlines apply to the submission of 2021/22 tax returns, and have been taken directly from the government’s website:
| Self-Assessment | Deadline |
| Register for Self-Assessment if you’re self-employed or a sole trader, not self-employed, or registering a partner or partnership | 5 October 2022 |
| Paper tax returns | 31 October 2022 (midnight) |
| Online tax returns | 31 January 2023 (midnight) |
| Pay the tax you owe | 31 January 2023 (midnight) |
You can use the services of a professional accountant to assist you with the submission of your self-assessment tax return for the 2021/22 tax year
It is possible to complete and submit your self-assessment tax return on your own, and there is plenty of online resources to help you. Here are a few we’ve come across that you may find helpful (links lead to external sites where we are not responsible for the content):
- When do I make Self Assessment payments and file my tax return? – A tax guide written by the Low Incomes Tax Reform Group (LITRG).
- Self Assessment tax returns – There is plenty of information available on the official government website.
- 12 tips for buy-to-let landlords filing a 2021-22 tax return – Written for landlords, Which have produced an article with useful tips for landlords who need to submit a self-assessment tax return for the 2021/22 tax year.
- When is the Self Assessment deadline? Tax return dates 2022 and 2023 – Simply Business, a provider of insurance for multiple businesses, has written an article that you may find insightful.
- My Tax Return for 2021/22 Tax Year – If you are interested in submitting your 2021/22 tax return by yourself, Small Business Toolbox has created a video which shows you how to complete the numerous steps on the government’s website. It’s worth checking out.
- Record number of Britons file tax returns on Christmas Day – A bit of light-hearted reading about 2021/22 tax returns is available on the Guardian website.
- Self-Assessment for contractors – completing your tax return – Published on IT Contracting, a very professional and helpful site for the self-employed, there is a guide specifically aimed at contractors who need to submit a tax return.
- The 2021/22 self-assessment tax return deadline is less than a week away (31st of January, 2023) – An article recently written by Churchill Knight & Associates Ltd, FCSA-accredited contractor accountancy with a dedicated in-house Personal Tax Department.
If you would prefer professional assistance with your 2021/22 tax return, most accountants in the UK will have a dedicated personal tax service department. They will be able to help you accurately submit your tax return within the deadlines set by HMRC (assuming you have allowed enough time).
Top 10 umbrella companies
If you’re looking for a compliant umbrella company to join for a new assignment or switch to from a company providing a below-par service, we have the perfect resource for you. Please visit our top 10 umbrella companies. 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.
On the other hand, you may be interested in finding out more about trustworthy and accredited contractor accountants. We have a dedicated directory that can help you, and these accountants will be delighted to help you with your 2021/22 self-assessment tax return.
