It’s that time of year again when the deadline for submitting your tax return is fast approaching. In fact, if you’re still persisting with a paper return, the deadline has already passed. For those of you submitting online, however, there’s still time to complete – but you need to act fast!
Why you need to get moving
The paper self-assessment tax return was due in by 31st October (apart from exceptional circumstances) but you still have until 31st January to submit an online return, so there’s no panic just yet. However, of the 10.2 million people in Britain who are required to submit tax returns, almost four million had failed to do so within four weeks of the deadline in 2016. So people do tend to cut it fine and 890,000 missed the last deadline altogether.
If you miss the deadline this year, you’ll be fined £100. After three months, this will increase by £10 a day for a maximum of ninety days, then by £300 or 5% of the amount owed, whichever is greater, and the same again after twelve months.
If you’re thought to be deliberately withholding information, it gets even worse, with a fine of 100% of the amount deemed to be owed. So ignoring the problem will simply make it worse and it’s vital you make the effort to submit your return on time. Only reasonable and genuine reasons (such as hospital stays, computer failure or HMRC issues) will be accepted for failing to do this and will still only delay the inevitable because you are required by law to submit a return.
Your easiest solution is to simple let us take care of it for you. For a flat fee of £99+VAT, we will prepare and submit your Self Assessment. Simply provide your name, company name (if applicable) and email address and we will take care of the rest. It’s as simple as that!
Going it on your own – how to get started
If you’re self-employed, you’ll certainly be expected to submit a self-assessment tax return as a means of determining the amount of tax due. People who are paid by an employer may not need to do so but you must if you are a director of a limited company or a business partner, have additional freelance earnings, paid casual work or fall into other categories such as earning over £50,000 when claiming child benefit, having total income above £100,000, investment income exceeding £10,000 or untaxed income over £2,500.
Those who are required to submit a tax return will be notified by post when returns and payments are due. However, if you’ve never submitted one previously, you’ll need an activation code before you can start. You can obtain one by registering through HMRC’s online services (https://www.gov.uk/log-in-file-self-assessment-tax-return) but will need to provide your ten-digit Unique Taxpayer Reference (UTR) to do this.
You’ll find the reference on correspondence form HMRC and, when registering, you’ll be given an online User ID that you’ll need each time you log in. You’ll separately receive an activation code by post and this may take up to seven days to come. So, if time is getting short, use the intervening period to gather the information you need for the last tax year (6th April 2015 to 5th April 2016).
Preparing and submitting your self-assessment tax return
The whole process will be made much easier if your financial records are well organised. That means retaining and filing correctly all appropriate paperwork and recording accurately and in full every item of income and expenditure. These will include:
- invoices for all freelance earnings
- P60 for earnings and tax paid through employment
- P11D covering expenses and benefits paid by your employer
- interest received on savings accounts
- other income such as dividends from shares and rental from property
- capital gains on investments
- all allowable expenses
The main way of minimising your tax bill is by claiming all expenses that are allowable, which can be:
- travelling and subsistence costs when away on business (although not entertaining expenses or the cost of travel to your normal place of business)
- the cost of using your home for business; calculate this by totalling the cost of running your home (mortgage, light and heat, insurance, etc.) and the proportion applicable to business use. Alternatively, HMRC allows a flat rate charge (https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home) based on the hours of business use.
- equipment and vehicles bought for business use; you must, however, account for private use as a taxable benefit and, when using your own car for business use, claim only the mileage at the allowed rate (currently 45 pence per mile for the first 10,000 miles, then 25 pence and less for motorcycles and bicycles)
- private pension scheme contributions
- professional fees and trade subscriptions that are directly related to the business (an approved list is available at https://www.gov.uk/government/publications/professional-bodies-approved-for-tax-relief-list-3)
- bank charges
- telephone and internet costs.
HMRC publishes a list of expenses that you can claim to reduce your tax payment (https://www.gov.uk/expenses-if-youre-self-employed). There’s also a helpline (0300 2003310) if you get stuck, which is open until 20:00 on weekdays and 16:00 on Saturday, though you may have to wait to get through.
Once you have everything for the full tax year, log on to the Government Gateway (http://www.gateway.gov.uk) and complete your self-assessment tax return online. The advantage of doing this online are that:
- you have three months longer than for the paper version
- tax due is calculated automatically
- completion can be in stages rather that all at one time.
Take care to log in to the actual Government Gateway and HMRC site rather than some look-alike site that charges to complete a tax return. Completing the return is straightforward and there’s absolutely no reason to pay a fee for the service.
Make sure you enter everything accurately and fully, then submit the return. After that, ensure you make a note of what tax is payable and when, and pay fully and on time (usually by 31st January and 31st July), otherwise you’ll be penalised for lateness.
Meeting the self-assessment tax deadline isn’t difficult, providing you’re organised and don’t leave everything to the last minute. It can still be a daunting task, so why not take all the stress out of it and use Phoenix Cloud Accounting to get your Self-Assessment done for a one-time, low fee of only £99+VAT.