Is there a better Christmas gift than the peace of mind that comes with the knowledge you’ve taken care of your tax for another year?
Well, maybe. But you can’t deny that it’s a great feeling. Getting it out of the way with sooner rather than later means that you can spend more time growing your business, working with your clients, and enjoying a stress-free winter break – unlike the 4,757 people who submitted their returns on Christmas Day last year!
To help you achieve this, we’ve put together our top 10 tips for getting your Self Assessment tax return in order before the deadline of 31 January.
1. Get into good habits early
Ideally, from the moment you start your business you should maintain accurate, up-to-date records of your income and expenditure over the course of the year. However, if you’re not currently doing that, it’s never too late to start.
It doesn’t have to be done manually – accounting software like Xero, Quickbooks and Sage that automates your record keeping can take away the hassle. Find out more about the automated accounting solutions that we can offer you.
2. Make sure you’re registered for Self Assessment
If you didn’t submit a form for the previous tax year, you’ll need to register before you can submit a Self Assessment tax form.
You can register for Self Assessment on the HMRC website.
Once you’ve registered, you’ll receive a Unique Taxpayer Reference (UTR) number to set up your account. The whole process can take up to 20 working days, so make sure you register with plenty of time to spare.
3. Carry out a monthly reconciliation
Each month you should compare your income and expenditure with your business bank statements to make sure that everything adds up. The bank balance in your records should be identical to the actual bank statement.
By doing this monthly instead of rushing to do it right before the deadline each year, you can rest assured that all the figures you send to HMRC are accurate and complete.
4. Complete your tax return as soon as possible
The earlier you complete your tax return, the better. It’ll mean that you’ll know how much tax you owe early enough to budget for the payment.
Even if you realise that you’re missing some information, you can save the work you’ve done and return to it later once you have all the necessary information.
If you’re struggling, don’t forget that we can provide you with professional Self Assessment tax return help – just get in touch.
5. Have all your documents to hand
The process is relatively simple if you’re prepared with all the information you need. Make sure you have:
- Your Unique Taxpayer Reference (UTR)
- Your National Insurance (NI) number
- Details of your untaxed income from the tax year, including income from self-employment, dividends and interest
- Records of any expenses relating to self-employment
- Any contributions to charity or pensions that may be eligible for tax relief
- A P60 or other records showing how much income you’ve received that you’ve already paid tax on
6. Don’t be late
If you only take one thing away from this article, make sure it’s that you need to submit your Self Assessment tax return before the deadline. Any late submissions will result in an immediate £100 penalty, and this will increase to daily penalties of £10 per day after three months.
You’re also liable for interest on outstanding payments, so you should pay your Self Assessment tax bill on time too – if you haven’t paid by the end of February, you’ll be hit with a surcharge of 5%.
7. Claim all expenses to which you’re entitled
You’ll be able to select which expenses you wish to claim if you’re using HMRC’s online software to complete your Self Assessment tax return, as they’ll have their own declaration section on the form.
Before you start filling in the tax return, it’s best to go into the process knowing which expenses you can claim for when you’re self-employed, especially if it’s your first time.
You can read up on the expenses you can claim for in this article from Sage.
If you’re in any doubt, just get in touch and we’ll happily advise you.
8. Avoid mistakes and inaccuracies
While you should claim every expense to which you’re entitled, don’t try to claim expenses to which you are not entitled. Whether it’s deliberate or not, the penalties for false claims can be severe, and failure to declare income can even lead to prosecution.
Using accurate, up-to-date records will help to ensure that your Self Assessment tax return and bill are accurate. Take your time when entering figures and double-check everything.
If you do make a mistake, you’ll usually get 12 months from the deadline of 31 January to amend it.
9. Pay your tax bill
As part of the process of submitting your tax return, your tax liability will be calculated. This can be accessed by logging into your online account.
If you’re employed and pay tax via PAYE, owe less than £3,000 via Self Assessment, and submit your online form by 30 December, you can pay your bill through your tax code, which spreads the payments over a year by increasing what you pay through PAYE each month. This is set up automatically unless you state on your tax return that you’d rather pay a lump sum.
10. Get an accountant to do it for you
There’s no shame in asking for help. Experienced, professional accountants like the team here at Benson Wood will make sure that everything is done correctly and on time. They’ll check that you claim for everything that you’re entitled to and find ways of maximising your tax savings while ensuring you avoid mistakes. Get in touch [internal link] to find out how we can help you.
And remember, the sooner you submit your Self Assessment tax return, the better!
