The chimes of Big Ben signalling the end of another year might seem a long way off, but for those gearing up for the Self-Assessment process, another significant date looms – the October deadline for paper submissions. The often-daunting task of Self-Assessment holds particular weight for Sole Traders and High Net Worth Individuals. Let’s demystify the process together.
Understanding self-assessment:
At its core, Self-Assessment is a system HMRC uses to collect Income Tax. It’s an integral part of the tax system for people who don’t have their tax automatically deducted but have earned additional untaxed income.
The Self-Assessment process is a little like piecing together a financial jigsaw. It’s about providing HMRC a complete picture of your finances over the tax year. Gathering the right components, in this case, documents and details, is essential for accurate tax calculation.
It covers things like:
Income Details:
Business income: If you’re a Sole Trader or a partner in a business partnership, you’ll need to report your share of the business’s profits.
Rental income: Own rental properties? You’ll need details of the rent you’ve received and any associated expenses.
Dividends: Received dividends from shares you own in a company? Make sure to have these figures on hand.
Foreign income: If you’ve earned income abroad, this too needs reporting, even if you’ve already paid tax overseas.
Pensions: Income from pensions, annuities, and any other state benefits must be documented.
Savings and investments: Interest from bank and building society savings, as well as other investment income, is crucial.
Deductible Expenses
Office costs: Think stationery, printing, and potentially even some software subscriptions.
Travel: If you travel for work, you can include vehicle insurance, repairs, fuel, and public transport costs.
Clothing: Uniforms, costumes for actors, or protective gear can be included.
Staff costs: Salaries, bonuses, and even subcontractor costs.
Residential costs: If you work from home, a portion of your rent, mortgage interest, utilities, and more could be deductible.
Marketing: Costs associated with advertising, website maintenance, or hosting events.
Professional fees: Membership in professional organisations or subscriptions to industry publications.
For more information on deductible expenses if you’re working from home, see our article here.
Other things to think about
Student loan: If you’re repaying a student loan, you’ll need to declare this.
Charitable donations: Certain charitable donations can lead to tax relief, so keep a tab on those.
High Income Child Benefit Charge: If you or your partner received Child Benefit and one of you has an income of £50,000 or more, details are necessary.
Other income: This could be from tips, commission, income from property or land, income from trusts, settlements, and estates, or any other untaxed income.
Key dates and deadlines
Marking your calendar is crucial. The 31st October deadline is specifically for those submitting their tax returns on paper. However, if you’re planning to submit online, you have until 31st January of the following year. Remember, there are penalties for delays, so it’s always better to be ahead of the curve.
Up-to-date information on deadlines can be found here.
What documents and details do I need?
Pulling together the correct documents is a task you’ll want to start early. Gather details on your income, from business profits to rental income. Ensure you have records of deductible expenses – things like office costs, travel, or even certain costs of working from home. The key? Detailed, accurate records.
You can find our guide to record keeping here.
Benefits of early submission
Think of early submission as a gift to your future self. It provides peace of mind, ensures you get any tax refunds quicker, and means one less task in the January rush. Plus, the earlier you submit, the sooner any questions or uncertainties can be addressed. And, if you’ve spent the money that you’d saved for the tax bill, you have longer to start to save it up again.
How to submit
Submitting your Self-Assessment might feel like a maze, but it’s a navigable one. For paper submissions, ensure you have the right forms from HMRC, fill them out accurately, and post them well ahead of the deadline. Use the accompanying notes from HMRC to guide you through each section, ensuring all data aligns with your records. Write neatly, and don’t include the pence otherwise you’ll be in for a nasty shock!
Help! I’m struggling!
If you’re of a certain generation you’ll remember the HMRC TV campaign with Victor saying: Tax doesn’t have to be taxing! And it’s true, especially with the right help. If the maze of numbers, forms, and dates feels overwhelming, it might be time to call in the experts.
And, as HMRC closed their helplines in June of this year, leaving taxpayers without support, you need someone else to walk you through the process. That’s where Red76Tax steps in. With a wealth of experience in assisting with Self-Assessments, we’re here to ensure the process is as smooth and stress-free as possible.
With the October deadline around the corner, there’s no time like the present to get a jumpstart on your Self-Assessment. And, as we file electronically, if you’ve missed the October deadline we can help you do it online until the 31st January.
By being proactive, thorough, and seeking guidance when needed, you can navigate this task confidently.