That time of the year again: self-assessment season!
Although January 31st may still seem a long way off, it might be time for freelancers and small business owners to start considering how they need to prepare. Or what they can do to be ready for their Self Assessment tax returns.
While there is a large amount of information available regarding who needs to file a self-assessment, what information they’ll need to complete it, and how they can do so, this can sometimes seem overwhelming and conflicting.
It doesn’t need to be. HMRC provides a fairly clear and straightforward resource for self-assessment, starting with an online wizard to help you determine whether you need to do so.
If you have any questions, HMRC has made it easy to contact them either online, by phone, or via post. Be aware, however, that phone wait times can easily be as long as 47 minutes!
Staying on top of your accounts throughout the year will make this process a lot less painless. Reliable invoicing and accounting software can help.
If you find that you do in fact need to fill in a self-assessment return, it’s important to your business and financial health to consult with an accountant.
So what do you need to have ready for your self-assessment?
To complete your self-assessment tax return, you’ll need to have some basic personal and business information ready, depending on which sections apply to you:
- Your employment income and forms P60 and P11D
- A statement from your pension provider outlining your contributions
- Information about any donations you’ve made to a charity
- Property investments (buy-to-let, second home, etc.)
- Any employment expenses that weren’t covered by your employer or business (mileage, apparel, etc.)
- Assets eligible for Capital Gains Tax
- Home office expenses
- Any additional income
- Memberships to professional organisations related to your field
It may seem like a lot, but they may not all apply to your situation. Which is another reason to consult your accountant and ensure you’re not doing more work than necessary.
Common self-assessment pitfalls
Completing your self-assessment comes with it’s share of common mistakes. Some are more obvious than others, but here are three of the top mistakes made:
- Getting the timing wrong. From waiting too long to register (it can take up to 20 working days to complete an application - a full month!), to leaving it too late to ask for help from an accountant, to failing to file before January 31st. Timing can be everything.
- Losing or forgetting your log in details. After 3 unsuccessful attempts, you’ll be locked out for 2 hours. If you don’t remember your details, you’ll need to contact HMRC to get them reset. This can take up to 7 days by post. Or register online to get faster service.
- Filling out the form incorrectly. This can include forgetting to fill in important parts like PAYE, using invalid characters such as # or ‘ in certain sections, or neglecting to include information from your pension provider.
And an extra one, that is arguably incredibly important:
4. Forgetting to click ‘Submit’ when it’s all filled out. You’d be surprised how often this happens.
Those are just a few of the reasons it’s best to consult with your accountant. They can also help ensure you’ve made the correct calculations and not just rough estimates, which will put you in a better place financially and with the tax authorities.
Not to mention that an accountant is often aware of tax allowances and expenses that can be claimed that aren’t part of common knowledge. Thereby helping prevent you from overpaying.