If you’re new to the process, filing your self assessment tax return for the first time can be daunting. Even if you’ve done it a few times before, it is probably still a task that fills you with dread. The tips and advice below will make filing your return less of a headache, and help you get it done quickly and easily.
Who Needs to Submit a Self Assessment?
Self-assessment is a method of informing the government how much money you’ve earned that year, alongside other details about your financial situation, so that HMRC can calculate how much tax and National Insurance you need to pay. If you earn a salary that is paid through PAYE it’s unlikely you’ll have to fill in a self assessment form as income tax is already deducted at source.
Here are some common examples of people who will have to carry out their own self assessment:
- Self-employed people
- People drawing a pension whilst continuing to work
- People with more than one job
- People earning over a certain amount from investments such as property
- Directors and partners of limited companies
- Ministers of religion
There are various other reasons HMRC may require a self assessment, such as if you have income from an AirBnB property. If you’re unsure whether you should be filing one or not you can find a more extensive list on the government’s website.
If you are renting a room out in your own home then you are entitled to £7500 (as of the time of writing) in tax free income under the Government’s Rent a Room scheme. This is income that does not need to be declared to HMRC in a self assessment.
1. Register with HMRC Online
The easiest and most efficient way to fill out and file your tax return is online. It’s of vital importance that you have registered with HMRC and have a login for the Government Gateway well in advance of the 31 January deadline for filing your assessment. It takes up to 10 working days to receive the security code for your Government Gateway login through the post and you can’t file your return without it.
2. Organise Your Paperwork
Before you start, make sure you have all the paperwork that you need. This includes all of your invoices, records of your personal and business expenditure and expenses, a P60 and P45 if necessary, details of dividends for investments, bank statements and receipts.
3. Don’t Rely on Being Able to Call HMRC
If you need help with your return, don’t rely on being able to speak to someone at HMRC. Whilst they are very helpful if you do get through, a large volume of calls don’t get answered due to high demand, especially in January. Look online for answers: the HMRC website has details on every aspect of your tax return and a lot of videos explaining everything from working out your expenses to how to file your completed return.
4. Use an Accountant
The easiest and most stress-free way to complete your tax return is to employ an accountant to do it for you. An accountant will be able to make sure no details have been missed and, because they’re experts and know the process inside out, will often be able to reduce your final tax bill. Putting your self assessment in the hands of an accountant gives you the peace of mind of knowing it has been done competently and no problems will occur.
5. Learn From Your Mistakes
When you’ve done your first tax return, note down all the bits you found stressful or difficult and plan for them in advance for next year. For example, did you spend hours sifting through a mess of paperwork for your bank statement? Then figure out a filing system so you know exactly where everything is. Did you have to go through thousands of emails to find details of all the invoices you sent out? Then save them all into monthly and yearly folders on your computer. If you plan for your tax return throughout the year, it will be much easier to complete come January.
6. Budget For Your Final Bill
Probably the most crucial factor of filing your tax return is having enough money in the bank to pay the bill. Consider opening a specific account just for your tax bill and put a portion of your income into it on a regular basis so that you’ll have enough money to pay the bill. Remember that you have to make payments on account too, which are twice yearly advance payments towards your next tax bill, as well as National Insurance Contributions (NICs) and payments towards your student loan, if applicable.
By getting registered early, pulling all your paperwork together and ensuring you’ve saved towards your bill all year, you’ll make filing your self assessment tax return much easier than leaving everything to the last minute. If you want to make it a completely stress-free experience, the best course of action is to ask an accountant to do it for you. You’ll save time and money and be able to relax in the knowledge that everything has been done completely correctly.