
If you’re a self-employed contractor or freelancer, now’s the time to start thinking about completing and filing your annual Self Assessment tax return for 2021-2022. Yes, it’s a headache getting your accounts up-to-date and navigating the complex form that needs to be submitted. But paying the right amount of tax to HMRC – on time – is essential if you want to avoid getting a penalty.
Fortunately, there are some things you can do to reduce stress at tax time and make the process of submitting your return plain sailing. Here are five tips below.
1. Know the tax return submission deadlines
If you wanted to file a paper tax return, the deadline has now passed (31st October 2022). The only option now is to file an online tax return which has a deadline of midnight on 31st January 2023. You also need to pay the tax you owe by this same deadline.
Payments can take a few days to reach HMRC’s account, so it’s worth submitting your tax return a few days before the official deadline.
If you make payments on account, where you also make an advance payment towards your bill for the following year, that deadline is midnight on 31st July 2023. See details of all deadlines.
2. Find your receipts
You’ll probably know the importance of keeping receipts, as every eligible expense can bring down the amount of tax you need to pay. As you tidy up your books and check them for accuracy, ensure you haven’t missed an expense or lost any receipts.
If your turnover is less than £85K per year, you’ll need to put down a total amount for your expenses on your tax return. That’s relatively straightforward. But if your turnover is more than £85K, you’ll need to break down your expenses into categories – and your receipts are crucial for itemising expenses.
3. Gather your business financial information
To make filling in your tax return as simple as possible, ensure you have all the information you need to hand before starting. Here’s a quick checklist for your reference:
- Your ten-digit Unique Taxpayer Reference (UTR) number.
- Your login details for the HMRC self-assessment portal.
- Your National Insurance number.
- Income details for this tax year from self-employment, dividends, property and any other income sources.
- Records of business-related expenses.
- Any contributions you’ve made to charity or pensions for tax relief purposes.
- Your P60, if applicable, showing the amount of tax already paid.
4. Complete all the necessary sections
The sections in the Self Assessment form can be overwhelming and confusing. The main one is the SA100, where you’ll list your taxed and untaxed income, pension contributions, charitable donations and details of any benefits you receive.
Being self-employed, you’ll also need to complete section SA103 and list your total turnover before expenses are deducted. Likewise, you’ll need to enter an amount for your expenses here.
If you’ve earned income from UK property, as you will if you’re a landlord or have a holiday let, fill in section SA105 and detail both your income and expenses amount.
If you need to pay Capital Gains Tax on any income, complete section SA108 and enter the income amount under ‘disposal proceeds’. You can claim for allowable costs here to reduce the amount of tax you’ll need to pay.
There are other sections to know about that are relevant for company directors, business partnerships and non-UK residents. Learn more here.
5. Don’t rush it
The tax return is a lengthy form; it can take time to fill out and make sure your figures are accurate. So leave enough time (before the deadline) so you can tackle your tax return over a few days.
You can save your progress as you go along and revisit the various sections if you’re unsure about something. Double-check all the information you’ve entered before clicking the submit button.
Seek the help of an accountant if you need it
Filing your tax return is a bit tedious and time-consuming. Consider asking an accountant to handle the process if you’re struggling with it. Most accountants charge a cost-effective fee for this work, and they may actually save you money, as they can often spot deductible expenses you might otherwise miss.
Here at SkyTax, we offer tax return filing for self-employed businesses. Get in touch to learn more.