12 practical steps to tax self assessment
Anyone with a taxable income not covered by PAYE should fill in a paper tax return and file it by the end of October. If you miss the paper deadline there's another, the 31st January, dedicated to online tax return submissions.
Around nine million of us fill in a tax return every year. And a fair few of us get it wrong. The UK's self-assessment tax form sends shivers down many a self-employed spine. Here's our quick guide to getting your self assessment tax return right.
First, double check you're eligible for a self assessment tax return
Here's a list of the circumstances under which you'll probably be asked to complete a self assessment tax form:
You work as a self-employed person or a sole trader
You filled a tax return in last year
You're a pensioner over 65 with a reduced age-related allowance
You're a business partner or a director of a limited company
You're either an employed person or retired and get more than £100,000 income per year
You get a pre-tax income of £10,000 plus from investments
You're a religious minister
You are a dead person's trustee or legal representative
You are a Lloyd's of London Name
You receive non-taxed income from investments, land or property
You get an overseas income
Your capital gains go over the annual limit
If you've been sent one but you don't think you should have to complete a self-assessment tax return, contact HMRC for confirmation. The revenue should have written to you back in April but if not, you can call their self-assessment Helpline on 0845 900 0444.
12 practical steps to successful self-assessment
Second, follow these steps to register and complete your form online.
1.Find your ten digit Unique Taxpayer Reference, issued to you by HMRC. They can't confirm it over the phone, but if you contact the helpline mentioned earlier they'll post your UTR to you
2.Get your National Insurance number ready
3.If you want to file your return online, register with HMRC online here ( https://online.hmrc.gov.uk/registration/individual), choosing 'Self Assessment'
4.Set up an account using a password and the User ID HMRC send you via email
5.Your account activation code comes through the post, a lot like the special security code you get for credit cards. It takes about a week
6.As soon as your code comes through the post, log on and activate your account. You must do it within 28 days of getting the code, after which it expires and you'll have to start from scratch
7.How's it different from a paper return? There's no difference, except 'supplementary' pages are added as you go instead of being part of the form, ordered up front. Plus you get handy online notes and advice when you hover over each box
8.Before filling in the form, either online or offline, make sure you have your P60 or P45 handy, plus details about your pension contributions, letting income, capital gains/losses, savings and investment income, life insurance gains and refunded AVCs, charity donations you've made and any other kind of taxable income. Plus invoices and details of household bills
9.Bear in mind that if your figures aren't exact you can submit estimates and explain why actual figures aren't yet available – useful when you don't know the final numbers and don't want to miss the self assessment deadline
10.You don't need to complete your online form in one go – you can save it and come back to it later.
11.If you get lost you can call the HMRC Online helpline on 0845 605599
12.As soon as they receive it online, HMRC will acknowledge receipt of your form
Your personal allowances
You must declare everything you've earned over the tax year, including employment, self-employment, income from let property, interest on savings and investments... and ISAS, even though they're tax free. Here are the current allowances.
What can you claim expenses for? Here's a list of on the Government's website
You can currently earn £10,000 before income tax kicks in.
If you were born between 6th April 1938 and 5th April 1948 your personal allowance is £10,500
If you were born before 6th April 1938 you can earn £10,660 before paying income tax
You can save £11,880 in an ISA
You can save as much as £5,940 in a cash ISA
If you've been saving the maximum pension allowance during the year you'll get tax relief up to £40,000.
The capital gains allowance is £11,000
Our 3 most important self-assesment tips?
If you're doing it yourself, our three top tips are simple.
1.First, start the process in good time so you don't end up rushing. The form is a challenge to complete unless you're familiar with the layout and language
2.Second, take the time to make sure you understand everything you're being asked, to minimise your risk of mistakes
3.If you're struggling, you might find it's better to get professional help – it's usually much better than getting your tax matters wrong and having to put things right
Need help with the bookkeeping side of your tax matters?
Contact Aben Bookkeeping for support with every aspect of bookkeeping, including tax matters.
Telephone: 01273 661913 Email: karen@abenbookkeeping.co.uk