Filing a Self Assessment Tax Return: A Simplified Guide

Do you need to file a tax return online by the Self Assessment deadline of 31 January? If the thought of it overwhelms you, don't worry—you're not alone. Many start early, but if you're not that organised, it's still possible to get it done in time without stress.

Instead of delaying, consider completing your tax return earlier this year. Proper preparation can simplify the process, making it less daunting.

Do You Need to File a Tax Return?

For most employees and pensioners, taxes are deducted automatically. However, if you have additional income above a certain threshold, you must report it via a Self Assessment tax return. This includes:

• Self-employment income over £1,000.

• Income from business partnerships or as a director of a limited company.

• Additional untaxed income, such as rental income, tips, commissions, savings, investments, dividends, or foreign income.

Even if your main income is from wages or a pension, you may need to file if you earn over £100,000 or have other untaxed income.

Key Deadlines:

5 October 2024: Deadline for registering for Self Assessment if self-employed or a sole trader.

31 October 2024: Deadline for filing paper tax returns.

31 January 2025: Deadline for filing online tax returns and paying any tax due.

You may also need to make payments on account for the upcoming tax year.

Preparing to File

Register for an HMRC Online Account: If it's your first time, you'll need to register and receive an activation code, which can take up to 10 working days to arrive. Ensure you do this well in advance.

Gather Necessary Information: This includes your Unique Taxpayer Reference (UTR), National Insurance number, (if you can’t find you NI Number, read this) and financial documents like P60, P45, payslips, and bank statements. Having all these documents ready will make the process smoother.

Completing Your Tax Return

Personal Details: Start by filling in your personal information accurately.

Income Sources: Report all income sources, including employment, self-employment, and other gains. Make sure to include all sources of income to avoid any discrepancies.

Allowable Expenses: Deduct allowable business expenses to calculate your taxable profit. Common allowable expenses include office costs, travel expenses, and costs related to running your business premises.

Charity Donations: Include any charitable donations for potential tax relief. Donations to registered charities can reduce your taxable income.

Avoiding Penalties

Filing late can result in penalties and interest on unpaid taxes.

If you're struggling with the process, please don’t worry, we can help.

Interest on unpaid taxes can also add up quickly.

How to Pay Your Tax

Once you've completed your Self Assessment return online, HMRC will tell you how much tax you owe.

Payments can be made via online or telephone banking, CHAPS, debit or corporate credit card online, your bank or building society, BACS, direct debit, or by cheque through the post.

If the deadline falls on a weekend or bank holiday, make sure your payment reaches HMRC on the last working day before the deadline.

Why Use an Accountant?

Many business owners find that an accountant saves them time and money by ensuring all allowable expenses are claimed and avoiding mistakes.

Accountants stay updated on tax rules and can provide valuable advice and support. The main reasons to use an accountant include:

Expertise: Accountants have the knowledge to ensure you're claiming all allowable expenses and deductions.

Time Savings: They can handle the paperwork and filing, giving you more time to focus on your business.

Avoiding Mistakes: Professionals can help you avoid errors that could lead to penalties or additional scrutiny from HMRC.

Ongoing Support: An accountant can provide advice throughout the year, not just at tax time.

Final Thoughts

Planning and early preparation can make filing your tax return less stressful. If you're unsure about any aspect, contact HMRC or consult a tax professional for guidance. While it might be tempting to put off your tax return, tackling it early can save you from a last-minute rush and potential penalties.

Even if you choose to handle your Self Assessment yourself, understanding the process and staying organised is crucial. Keeping accurate records and setting aside money for your tax bill each month can help you avoid surprises. Remember, the key to a smooth tax return

experience is preparation.

By now, you should be feeling a little more confident when it comes to filling in and sending your tax return online. If you decide to do it yourself but are still not sure of anything, you can always contact HMRC and ask them to ensure that you have the correct answer.

This is worth doing because you could be subject to fines and penalties if you complete your tax return incorrectly.

While many small businesses switch to using an accountant at some point, it could well be worth doing your Self Assessment for the first year at least as you will save some money and have a better understanding of how the tax system works in future.

The key to filing on time is planning. Squeezing in some Self Assessment preparation now will lead to a less stressful experience.