Do’s & Don’ts for your Self Assessment Tax Return
Most people dread hearing or seeing the words ‘Self Assessment’ & ‘Tax Return’ but it really isn’t as daunting as you think... or at least it doesn’t have to be.
The initial feeling is no doubt fear. Fear that you will be drowning in paperwork & complicated calculations, lengthy forms to fill in, tax to pay (more tax than anybody else) and the worry that you will do it wrong! That is why we are here to help you.
Whether you’ve been in Self Assessment for many years or maybe it’s your first time, I have some very important Do’s & Don’ts for you to consider.
What you should do:
1. Find out if you’re due to complete a Self-Assessment tax return.
HMRC have a fantastic free (yes free!) facility for you to check online.
The most common reasons you would need a Self Assessment are:
- self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on).
- a partner in a business partnership
- taxed Income such as:
- some COVID-19 grant or support payments
- money from renting out a property
- tips and commission
- income from savings, investments and dividends
- foreign income
It is also possible to choose to complete Self Assessment if you:
- claim some Income Tax reliefs
- prove you’re self-employed, for example to claim Tax-Free Childcare or Maternity Allowance
- claim Child Benefit- If your income (or your partner’s, if you have one) was over £50,000, you may need to send a return and pay the High Income Child Benefit Charge.
2. Always make sure you carry out yearly reviews especially if your income changes at any stage.
3. If a return is required and you haven’t already complete one - act now & register.
This will allow you to view your personal and/or business tax account, Self Assessment, Corporation Tax, PAYE for Employers & VAT.
4. Download the HMRC App for quick and easy access. This will enable you to make some changes and updates to the information held by HMRC.
5. Complete your tax return as soon as possible after 6th April or we are here to do it for you.
If you are due a refund you will get it back quicker. If you are due to pay tax you will have more time to budget and save before the tax due dates arise.
6. Remember for Self Assessment you need to declare your income for the tax year that has just ended. This will be for the previous tax year beginning 6th April and ending 5th April.
7. If you are due a refund of tax, remember to provide your bank details. This is the quickest & easiest way for HMRC to repay your overpaid tax. Alternatively HMRC will send a cheque to your home address so DO remember to keep your personal details up to date with your accountant & HMRC.
8. Keep a copy of your tax return for future reference. We will always send you your tax return for your review and signature before making any submissions to HMRC therefore please
keep a copy for your own records.
9. Keep a copy of your tax calculation, also known as SA302. This is often required when applying for a mortgage, re-mortgage etc. If you need a ‘Tax Overview’ you can obtain this from your HMRC Online Account.
10. If you find you no longer fit the self assessment criteria part way through a year (perhaps because you’ve ceased self employment or sold a rental property) it’s very likely you will still need to complete a tax return.
11. Keep good records, supporting documents & keep all receipts for any expenses you may be claiming. When sending these to us, whether that be in an organised file or a carrier bag, DO remember to check your files & bags first. You’d be surprised what we come across!
12. Do report and pay any Capital Gains Tax on most sales of UK property within 60 days. You are required to complete a separate CGT Tax Return and pay over the CGT due within 60 days from the date of sale therefore please let us know straight away to enable us to assist with this. You can complete paper forms but the quickest and easiest way to make the declaration is online. There are a few steps to follow first therefore please contact us if you require assistance with this and we can guide you through the process.
13. Do consider using Cloud Based Software sooner rather than later especially if you are Self-Employed and/or have Rental Income. Checkout our blog on the best cloud accounting software for your needs. With ‘Making Tax Digital’ just around the corner its even more important for you to act now. Self Employed businesses & Landlords with annual business property income above £10000 will all need to be compliant with Making Tax Digital by 6th April 2024. You will need Cloud Accounting software (compatible with MTD) and Quarterly returns will need submitting to HMRC with details of income & expenditure.
We are always here to help, get in touch today.
What not to do:
1. Don’t panic - you are not alone, at Crouchers we are always here to help.
2. Don’t ignore your tax return obligations; ignoring it can only make it worse.
3. Don’t leave everything until the last minute as you’re more likely to panic, cause yourself unnecessary stress and make mistakes. If you’re likely to be due a refund, the sooner the return is completed and submitted the sooner you’ll receive your money back & the sooner your tax liabilities are established the sooner you can start budgeting.
4. Don’t withhold any income details. If you’re unsure as to whether it needs declaring, we are always happy to answer your questions. Withholding information will be classed as a ‘non- disclosure’ by HMRC and could lead to penalties and very high interest rates.
5. If you realise you’ve made a mistake don’t ignore it - act now! Contact us and we can help you to put it right.
6. Don’t forget these important filing dates:
- 31st October for Paper Tax Returns
- 31st December for Online tax Returns (if you would like HMRC to collect the tax you owe from your wages or pension)
- 31st January for Online tax returns
7. Don’t forget to Register for Self Assessment if you’re self-employed, a sole trader or registering a partner or partnership.
If you’re Self Employed:
If you have to send a tax return and did not send one last year, you need to register for both:
- Self Assessment
- Class 2 National Insurance
How you register depends on whether you’ve sent a tax return before or not.
If you’re not Self employed but need to complete a tax return:
Did you complete a return last year? If so, you should continue to receive one but you may need to check with HMRC.
If you're a partner or partnership:
You will need to register your partnership if you’re the ‘nominated partner’.
You must also register for Self Assessment if you’re a partner in a partnership.
8. Don’t forget the Tax due dates. Pay any tax due by 31st January. For example for your 2021-22 tax return any tax due will be payable by 31/01/23.
9. Don’t be surprised if you get asked to make Payments on Account towards the following years tax liabilities. This will normally occur if your tax liability is over £1000 and less than 80% of the tax will be collected via a PAYE source of income. If payments on account are required you will be due to make 2 Payments, the 1st payment due by 31st January and the 2nd payment due by 31st July. Each payment is half your previous year’s tax bill. These ‘Payments on Account’ will be included in the calculations when the following years tax is finalised.
10. It may sound silly, but don’t Forget to pay your tax (including any Payments on Account) by the due dates. If you fail to pay or are late paying you will incur penalties & interest. If you are unable to pay, get in contact with HMRC as soon as possible to arrange to pay by installments. You may even be able to set this up via your HMRC Online Account depending on the circumstances.
11. Don’t forget to ask for help - We are here for you so please contact us for any assistance you may require, no matter how big or small. We can help with all your business needs, not just tax returns, checkout our blog on choosing the right accountancy services for you.