Does it affect me?
Before starting to panic about your tax return, double check that you actually have to complete one. HMRC can advise, but broadly speaking, anyone who is self-employed and working as a sole trader must comply, along with any partners or (paid) company directors in a business. Other categories include employees who pay tax through PAYE, but who also carry out self-employed work alongside their main job. Tax returns are also required from higher-rate tax payers seeking to claim back additional tax relief on pension contributions and anyone claiming child benefit and earning over £50,000pa, as they will be required to pay back some of that child benefit via HMRC’s self-assessment system.
Get an accountant
Getting professional help on board is a great way to ease the administration and reduce the nerves about getting this important task right. Even now, with just a couple of months to go before the online submission deadline, asking an expert to cast an eye over your form, or even take over the entire job for you will ensure that everything is recorded and submitted correctly. It could reduce the possibility of HMRC asking questions or raising concerns further down the line. Money spent on expert financial help can usually be recouped by the accountant’s canny tax saving methods and knowledge of the law, which often results in a smaller tax bill for their client. It can also help prevent you from having to pay the £100 fine (plus £10 per day until HMRC receives your tax return) for a tax return being filed too late.
Keep proper records
While this advice may come slightly late in the day this time round, it is always wise to get ahead for next year. This year’s self-assessment tax return covers earnings and other income from the tax year 6 April 2015 to 5 April 2016. Next year, it will obviously cover the twelve months immediately following that. Find a small, sturdy box to keep things dating from 5 April 2016, such as receipts for petrol, refreshments, stationery etc., that you can use to claim expenses back on next year’s return. Bus, train and plane tickets can also be submitted, as can taxi receipts and relevant utility bills or payments for professional services. Keep track of your own invoicing too, noting when each invoice is raised and the date your clients pay. If in doubt, keep the paperwork and pass it to your accountant who will decide what can be submitted and how. It is always a good idea to keep electronic back-ups wherever possible as well.
Make the most of tax breaks and personal allowances
A good accountant will be able to identify and claim for various tax reliefs and allowances, and you should take full advantage of these. For example, there are tax reliefs on costs incurred during the everyday running of a business, such as I equipment, stationery, some utility bills and travel. If you work from home, you can also claim certain expenses relating to that. If you would rather work out what you can claim for on your own, there are numerous ‘tax calculators’ online that can help you arrive at the right figure. Finally, don’t forget to identify your personal allowance, or amount earned that remains untaxed, and take full advantage of tax savings schemes, such as ISAs and children’s savings.