Autumn is drawing in. While children are returning to school, Halloween decorations are appearing in the shops (“already?” You wonder). This means that it is time to begin considering your annual tax return subscription.
You may have been registered as self-employed for a while, or you may be totally new to it. HMRC’s guidelines are rather confusing, so read on for some clear instructions on the do’s and don’ts.
DO: send a tax return if you made over £1000 in the last tax year (6th April 2019 – 5th April 2020)
Sole traders and business partners are both obliged to send tax returns. The ones which you will need to think about soon are calculated from 6th of April 2019 – 5th of April 2020. The deadline for registering as self-employed for that period is 5th of October 2020.
DON’T: Ignore the issue and get your forms in late
Make sure you are set up on the HMRC website well in advance of that date. The deadline for submitting your paper tax returns is Midnight 31 October 2020. Lateness can and will result in fines – whatsmore, citing ignorance will not work in the appeals process.
The deadline for submitting your online returns, and for paying your tax, is Midnight 31 January. Set yourself reminders to ensure that you do not forget to pay these taxes. Once again, HMRC can be very unforgiving about this, and, once again, can impose penalty charges.
DO: Remember to include your deductibles
As a sole trader, remember you will only be taxed on your profit. This means that any costs you incur while working are deductible from your tax. This can include anything from work stationery to a portion of your electricity bills.
Make sure you check out our blog post here on some unexpected tax deductibles. Always ensure that you are keeping hold of your work-related receipts, and a running total of what you’ve spent. It could potentially save you hundreds of pounds.
DON’T: Forget to keep track of your accounts
Picture this scenario: It’s the night before the deadline and you have had an absolutely crammed week. You open the form and your heart sinks, because you realise you have no idea about your figures over the year.
This upsetting situation can be avoided through careful and meticulous record keeping. Stay organised, work on your accounts little and often, and you’ll avoid this bucket-load of stress at the end.
DO: Consider whether this is something really worth doing alone
Taxes are complicated, if you lack the relevant experience. Especially if you are just getting started as a freelancer, you will find yourself spinning an almost overwhelming number of plates. Hiring an accountant to do your yearly tax returns will reduce the pressure you are under.
We offer reasonable rates for personal tax returns, as well as support for those needing advice, assistance or even mediation with HMRC. If you would like to book a free no-obligation consultation, fill out this form or ring us on 01908 760293.