How To File Your Self Assessment Tax Return
Taxes, the dreaded word. I know, not the most interesting of topics but unfortunately it’s something that we all have to deal with. Today I’m here to talk you through how to file your tax return and hopefully give you a clearer understanding of the whole process.
Firstly, what is a tax return?
A tax return is basically you telling the government what you are earning. You need to know three things. First of all, you need to record how much income you have coming in. Secondly, you need to work out how much you have spent on your business (expenses). And finally you need to take those two values away from each other and work out what you have left (gross income). Confused? Look at the diagram below.
Register for Self Assessment
Once you have the basic principle of tax returns down, the first thing you need to do is register for self-assessment. In the UK we have an online system, so all I need to do is go to this page and enter my details. Once you have entered your details, you will receive an activation code in the post to confirm your identity. Now you’re officially registered as a sole-trader (a.k.a. self employed).
Gather the necessary information
You will need a few things before you can submit your tax return. These may include;
A P60 document
Interest statements from you Bank/s
Records of pension contributions
Any donations you’ve made
Self Assessment tax payers have to record everything they earn
This includes earnings from employment / self-employment or any earnings from investments you have or any properties that you own.
Do it online
Doing your tax return online is by far the quickest and easiest way to do it. It means that you can take your time going over each point, you can save your progress and go back to it later and you also get a digital receipt emailed to you (which you can also print off).
Don’t file your return late
If you file your return late you will receive a fixed penalty of £100. Then if you are still yet to complete your return after a further three months, you will receive a penalty of £10 per day.
Claim for what you can
If you travel a lot for your business you can claim back you business milage. Also, if you have a home office, you can claim back some electricity / heating expenses. Find out more about what you can claim for here.
When NOT to file a tax return
If your only income is from; wages, a pension or interest on savings. You DON’T need to complete a tax return, because it has already been calculated for you.
When should you file a tax return?
If you work on the side, and you are earning more than £2500, then you will need to file a tax return.
5th April - Tax years ends
6th April - New tax year
31st October - Deadline for paper submissions
31st January - Deadline for online submissions + deadline to pay last years tax bill