Last minute tips for filing your Self Assessment tax return
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With the deadline for self-assessment tax returns fast approaching, here are some tips for those who are fighting against time
The January 31st deadline for Self Assessment to be submitted is just days away, so if you’re one of the millions of people who still hasn’t submitted their tax return - or even started it - how can you set about successfully tackling it at this late stage?
Emily Coltman FCA, Chief Accountant to FreeAgent - who provide multi-award winning cloud accounting software for freelancers, contractors and micro-businesses - gives her top tips for completing your Self Assessment at the last minute.
Be pragmatic if you’re going to file late
At this late stage, it’s important to be realistic when it comes to filing your tax return. If you haven’t yet registered your business with HMRC - or if you’re still waiting to receive either your activation PIN or your Unique Tax Reference (UTR) from them - it’s quite unlikely that you’ll be able to do this and get the information you need before the January 31st deadline passes.
But that’s not the end of the world. The worst that can happen in the first instance is that HMRC will fine you £100 and you’ll also be charged interest for paying your tax late - but that doesn’t prevent you submitting your tax return after the deadline has passed.
Just don’t get lulled into a false sense of security. HMRC starts increasing the penalties for late filing if you leave it too long, and there are also additional charges and interest to pay when it comes to actually paying your tax bill late. Dawdle too long and those penalties will quickly start to add up!
Be prepared for some hard work
If you’ve got a great accounting system in place - or a good bookkeeping method that you use to stay on top of your financial information throughout the year - then all the information about your business income and expenses should be easily accessible.
You just need to find it and include it in your tax return alongside any other income you’ve earned throughout the year (such as dividends on shares you own, interest on savings accounts etc…).
However, if you store expense receipts in a shoebox and only check their finances once every few months, you’re going to find it less easy. You’ll have to meticulously go through all of those expenses, and check all of your bank payments and transactions, to get the information you need; which could take many hours.
Put in the hard work and don’t cut corners! If you rush your tax return you’re more likely to make mistakes or miss important information out which could mean that either a) you miss out on claiming tax relief on an expense you’ve incurred or b) you get your figures completely wrong and risk being penalised by HMRC for submitting an incorrect tax return.
Follow the rules
Tax is very complicated, so make sure you follow all of the rules to the letter when completing your tax return. For example, be very careful when you’re adding up your income and expenses for your sole trader or partnership accounts because, unless you use the cash basis to prepare your accounts, you have to count income depending on when you did the work, not when the customer paid you.
Also make sure that you’re fully up to speed with rules surrounding business expenses, especially with regard to travel, accommodation, food & drink, entertaining, clothing and the business use of your home. You can do this by checking your proposed expenses against the info on HMRC’s website, or use another reputable source of expenses information for sole traders, partnerships and limited companies.
Check the forms - and submit them correctly
When submitting your tax return online, you will have to complete everything and file the form before midnight on 31st January 2016 otherwise HMRC will issue an automatic fine of £100 - and this applies if you’re even a day late and even if you don’t actually owe any tax!
There are a number of ways you can do this, which include:
Fill in the Self Assessment forms on HMRC’s website and submit them there once they’re complete
Use alternative technology. For example, if you’re a sole trader or the director of a Limited Company, you can complete and file your Self Assessment from directly within FreeAgent, without needing to use HMRC’s website. Alternatively, you can use other specialist software such as TaxCalc to fill and file your return.
Hire an accountant to complete and file your return for you.
Make sure you complete every section correctly and leave plenty of time to double-check everything before you submit it. Remember that a single, simple mistake or omission (such as not ticking the confirmation box at the end) could result in your tax return being rejected by HMRC and you being fined.
Don’t forget to pay
Once you’ve submitted your tax return, don’t get lulled into a false sense of security. There’s still one important step left, which is to actually PAY your tax!
HMRC will charge you interest if you do this late and will also impose penalties on late payment, so it’s important to pay your tax as soon as you can if you want to avoid getting hit with a hefty - and growing - fine!