If you’ve never had to complete a self-assessment tax return before, the very thought of doing so can be quite daunting. However, like many things it’s easy when you know how. So, before you start putting off the paperwork, read through our go to guide to completing your self-assessment.

We’re here to show you what to do, how to do and when you need to do it by. By the end of this article you’ll feel confident in completing your self-assessment way ahead of the deadline, and you’ll avoid any nasty surprises from HMRC too. Ready? Then let’s get started.

What is a self-assessment?

Self-assessment is one of HMRC’s ways of collecting income tax. Whilst many individuals pay income tax automatically via their wages, pensions and savings, others who earn money outside of these sources are required to report it via a self-assessment tax return.

Self-assessment tax returns are most often filled in by those who are self-employed or those who run their own small businesses. You’ll need to complete one if you’re self-employed as a ‘sole trader’ and you have earned more than £1,000 in the tax year in question, or if you’re a partner in a business partnership.

If your income is entirely based on your pension or wages, it is unlikely that you will need to complete a self-assessment. However, if you have other earnings, for example from renting a property, tips and commission, savings, investments and dividends or foreign income, these do need to be declared via a self-assessment tax return.

How do I register for self-assessment?

If this is your first time completing a self-assessment tax return, you’ll need to start the process by registering. There are different ways to do this depending on your situation.

If you’re self employed, you need to complete HRMC’s online registration form. This must be done by 5 October in your business’s second tax year, in order to complete your Self Assessment and pay Class 2 National Insurance. If you fail to do so you may face a penalty.

Once you’ve filled in the form, you’ll be provided with your 10-digit Unique Taxpayer Reference (UTR), and you’ll be enrolled for the Self Assessment online service at the same time. Within 10 working days you’ll receive an activation code in the post, which you can use to login to your account.

If you’re not self-employed, but need to fill in a self-assessment for other reasons (for example you’re a company director, you receive income from property, you have taxable foreign income or other sources of income listed here) you will need to fill in the SA1 online registration form.

Once you have registered you’ll need to wait 10 working days for a letter containing your Unique Taxpayer Reference (UTR) and activation code. When you receive this you’ll be able to login to your online account, ready to complete your self-assessment.

How do I fill in the self-assessment form?

The self-assessment form itself is relatively simple once you understand how to fill it in. Before you start, make sure you have all the information regarding your earnings for the tax year in question. You’ll also need all the figures relating to any expenses you’ll be deducting, and you’ll need to know your UTR (unique taxpayer reference) number. You can find this on most HMRC letters.

The more organised you are throughout the year, the easier this process is. If you’ve been regularly recording any expenses and earnings throughout the tax year, you’ll likely have all this information at the touch of a button. Accounting apps and online software such as KashFlow are the easiest way to manage your records, however you can also record such information manually via spreadsheets, if you prefer.

The self-assessment form will then ask for all the figures concerning your earnings and expenses, as well as the National Insurance you owe. If you’re self-employed you’ll need to pay Class 2 if your profits exceed £6,205, and Class 4 if your profits exceed £8,424.

If this isn’t your first time filling in a tax return and your tax bill for the previous year was over £1,000, you’ll also be asked to estimate your earnings for the following tax year in order to make a payment on account for the coming tax year. Your payment on account should be roughly 50% of your tax bill.  

When you’ve inputted all the data, your self-assessment calculations will show the exact amount of tax due, as well as National Insurance contributions and any required payments on account.


Which deadlines do I need to know about?

The annual self-assessment tax return must be completed after the end of the tax year (5th April) which is applies to. For online returns, the deadline for completion is 31 January in the following year. If you’re wanting to submit a paper return, it needs to be completed by 31 October of the same year.

For example, if you’re submitting your return for the 2017/18 tax year, it needs to be complete by 31 October 2018 if you prefer to do a paper return, but if you’re sending an online return you can leave it until 31 January 2019 at the very latest.

Your tax bill must be paid by 31st January of the following year (so 31 January 2019 for the 2017/18 tax year). Late payment can incur significant penalties.


What happens if I miss a deadline?

HMRC can enforce penalties on those who submit their tax returns late, or make late payments. If your tax return is up to three months late, you’ll face a penalty of £100. If it’s later than that this penalty increases. In addition, HMRC charges interest on late payments. So, it’s really worth being organised and getting those forms submitted well ahead of time.

If you’re worried that you’ve missed a deadline you can estimate your penalty online. If you have a reasonable excuse for a missed deadline, you can also appeal to have your fine cancelled.


What are the allowable expenses for small businesses?

When you fill in your self-assessment form, you will be required to submit figures relating to any business expenses you have incurred.

If you run a small business, you can claim back money for expenses such as office costs, stationery, phone bills, fuel, parking and train or bus fares and clothing expenses such as uniforms. Your staffing costs also come under expenses, for example salaries and subcontractor costs. You can claim for stock or raw materials and insurance or bank charges. You can also claim some of the costs relating to your business premises, such as heating, lighting, and business rates. Advertising and marketing expenses like web hosting are also allowable expenses for small businesses.

If you are self-employed and work from home, or you run a small business from your own house, you can also claim business premises costs, but these can only be a percentage of your total bills. Allowable expenses include a proportion of your bills for heating, electricity, council tax, mortgage interest or rent and your internet and phone bills.

How can I make this process easier?

Whilst completing your self-assessment manually is straightforward, there’s one sure fire way to make the process even simpler, and make missing deadlines a thing of the past. You guessed it, we’re talking about online bookkeeping software. Software such as KashFlow can be used to take all the hassle out of self-assessment, by automatically generating all the required reports for you. And with HMRC’s Making Tax Digital initiative on the horizon, getting to grips with online accounting software has become more important than ever. To learn more about how KashFlow works sign up for a free trial today.

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