Preparing for your self- assessment

- it’s not too far away now..

Let’s start with some of the obvious things.

If you’re reading this you are more than likely a business owner and director of a company, therefore HMRC require you to complete a Self-Assessment tax return which is due to be completed, filed online (and paid) before midnight on the 31st January 2021.

You can complete the forms yourself or get an Accountant to do this for you, it depends on the perceived complexity of your untaxed income for the period 6th April 2019 to 5th April 2020 and your head for figures, it is not difficult to complete the form just important you get it right.

If you’ve never registered for Self-Assessment you need to get on to Register for Self Assessment - GOV.UK (www.gov.uk) and get the process started as soon as possible.

It can be very frustrating waiting for the code to arrive as the deadline approaches.

Once you have your 10-digit UTR (Unique Tax Reference) you’ll need a few pieces of information be able to complete the SA100 Tax Return.

You will need:

- UTR Number

- NINO – National Insurance Number

- The details of all your untaxed income for the period;

- Self-employment

- Dividends

- Share interest

- Rent from property

- Pension income

- Benefit income

- The details of any expenses you’ve incurred relating to your untaxed income (that hasn’t gone through your company);

- Pension contributions

- Charitable donations

- Other allowances

- Your P60 from paid employment for this period.

With all this information, you should be able to accurately complete the SA100 form. If you have earnt money in the period from Self Employment, outside of a company or LLP, you need to complete the SA103 form which goes into further detail about what expenses you can offset against this income. If you need to report income from property this is on form SA105 and for declaring any capital gains you will use SA108.

If you are considering using an Accountant to complete the work for you, try and make it as easy as possible for them (and therefore cheaper for you) by getting all of this information compiled and over to them as soon as you can. Accountants are usually absolutely swamped with work in January as everyone deposits their paperwork on them for their Self-Assessment to be completed. It is quite usual for Accountants to work up to midnight on the 31st January.

If you miss the deadline, HMRC will automatically issue you with a £100 fine. They sometimes will waive this, if there are extenuating circumstances, however they normally state that the date is the same every year and they spend a lot of money on advertising from December through January to remind you.

Once you’ve completed the Self-Assessment form and know how much you need to pay, if you feel that you are unable to pay, because of difficulties during 2020 with Coronavirus, you can use the Time to Pay scheme on Gov.uk to spread the payments out over the year. Please don’t be tempted to simply not pay, this is HMRC and they have all sorts of power to extract what you owe, talk to them and come to an agreement.

This is not a definitive guide, more a reminder, so make sure you follow the HMRC guidelines or let your Accountant take care of it.

5 tips for a stress free tax return

1. Be organised. The more organised you are the easier this task will become. Gather all the papers you need before you start.

2. Don’t call HMRC. Unless you have endless amounts of spare time, avoid ringing to ask for help or advice. The GOV.UK website will most likely have the information you need.

3. Get ahead of the game. Don’t leave this job to the last mintue. The more time you have to complete it, the less stressed you are going to be.

4. Learn good habits. It’s never too late to start keeping financial records up to date and accurate. In turn this will help you out in all aspects of business, including your self assessment tax return.

5. Don’t hesitate to get an accountant. There is no shame in getting help when you need it. If you find the tax return too stressful, remove that stress and get an accountant!