Navigating the complexities of self-assessment tax returns is becoming a common responsibility, not just for the self-employed or business owners but for a wider audience. This process entails reporting various income streams, including PAYE, self-employment, property ownership, and dividends, to calculate your tax liability accurately. What you have already paid is taken off, and the result is your tax bill.

Despite HMRC’s efforts to make sure that the self-assesment form is relatively simple, there are a few things you can do to ensure a smooth, accurate filing process and to avoid overpaying or underpaying your tax.

Key Deadlines and Who Needs to File

A typical tax year runs from April 6th to April 5th of the following year. For paper submissions, the deadline is October 31st, while online filings must be completed by January 31st, which is also when any tax due is payable.

Filing a self-assessment is essential for sole traders, partners in a partnership, or directors of limited companies. To file online, first register for a Government Gateway ID with HMRC. This will allow you to create an account that you can use each year.

Preparing Your Self-Assessment: A Step-by-Step Process

Gather All Income Sources: Compile all of your income for the financial year, including invoices (paid and outstanding), business-related private sales, and other income streams. It’s crucial to maintain detailed records of these income payments.

Separate and Record Specific Income Types: Document interest payments and income from property separately, as you’ll need this later. Collect relevant employment documents like P60s and P11Ds.

Calculate Allowable Expenses: Refer to HMRC guidelines for permissible deductions, covering anything work-related such as travel, software, accountancy fees, and home office expenses. Ensure you have proof of these expenses, such as invoices, receipts or bank statements. Capital expenditures, like computers or vehicles, are declared separately.

Filing Your Return: With all the information at hand, you’re ready to file online or via the written form. Once complete, the system will calculate your tax liability automatically. Remember, you need to settle this amount plus an amount on account by January 31st, minus any payments on account already made.

Avoid Penalties: A £100 fine is imposed for late submissions.

Your Self-Assessment Checklist

  • Determine your need to file a self-assessment and take note of the key dates.
  • Register for HMRC online services and set up your account.
  • Total your financial year’s 
  • income.
  • Keep a record of all of this income.
  • Add up all of your allowable expenses for the year.
  • Declare any large purchases or capital expenditure.
  • Keep copies of all receipts, statements and invoices – these can be scanned and stored digitally.
  • Gather any employment records and forms.
  • Find any bank interest certificates.
  • Add up other income from property or shares.
  • Choose your filing method, or ask your accountant to do this for you.
  • File and submit.
  • Pay your tax bill.

With diligent record-keeping and possibly leveraging dedicated software, compiling your self-assessment can be streamlined, reducing it to a day’s work! Alternatively, enlisting an accountant such as M Squared Accountancy Ltd can give you the peace of mind that you are paying no more than you need to.