The government relies on taxes to fund development projects, offer medical services, and improve security, among other things. If you earn any income or capital gains, you are required to pay income tax.
Ordinarily, taxes are automatically deducted from salaries, savings, and pensions. If you are self-employed or earn additional income that is not automatically taxed, you are required to report and pay it directly to HMRC by filing a self assessment tax return. This can be done online or by sending a paper tax return.
Preparing and filing your self assessment tax return can be time-consuming, complex and intimidating if you do it yourself. Hiring an accountant can help save you the stress and free up your time, but also means you have experts who can help to reduce your tax liability.
Below we’ve listed some vital steps for you to take to ensure you submit your tax bill on time. If you use DS Burge & Co to file your self assessment tax return, we’ll do the majority of this work for you.
With less than two months to the deadline, time is of the essence whichever route you choose.
1. Get an Online Account and UTR Number
To file self assessment tax returns, you will need a unique taxpayer reference (UTR) number. You will only need to apply for a UTR number once. One of the biggest mistakes that people make when it comes to filing self assessment tax returns for the first time is applying for the UTR number too late.
To be safe, you need to submit your application at least a month before the deadline, preferably two. This is because, once you submit your online application, it will take ten days for the UTR number to arrive in your mail. You will also need to activate it, and it may be an additional ten days before you receive the activation code.
2. Gather Key Information and Relevant Paperwork
The process of filing taxes is paperwork intensive. As the end of the tax year nears, begin gathering all the necessary documents. To make the process easy for you and your tax accountant in the future, always file any appropriate documents. This will avoid misplacing them or the last-minute hassle of looking for them.
Some of the key documents you will require include:
- Annual pension statement
- Documents such as receipts indicating business expenses
- Interest earned on savings and accounts
- Gift aid payments
- P60, P11D, and P45 where applicable
- Records of rental income from tenants
- Dividends earned from investments and other income
3. Know Which Taxes to Pay
Depending on the amount of money you make, there are different taxes that you will be required to pay. These include National Insurance, income tax from employment and dividend earnings, and capital gains tax. As such, you will need a record of each and calculate how much you have earned.
4. Make Sure You Claim the Appropriate Tax Relief
For a business to succeed, cost management is essential. As you prepare to file HMRC tax returns, be keen on whether you qualify for tax returns. These are exemptions that you may be eligible for in specific circumstances, that help reduce your tax bill.
Tax reliefs come in two forms:
- Paying reduced taxes to account for things such as business expenses if you are self-employed
- You receive tax relief for contributions you pay to other areas such as your pension
Though some tax reliefs are applied automatically, you will need to apply for others. Some of the tax reliefs and allowances you can get include:
- Dividend allowance
- Personal allowance
- Marriage allowance
- Pension tax relief
- Starting rate band
- Savings bate band
- Trading income allowance
- Investor tax relief if you are using venture capital schemes
5. Understand Payments on Account
Payments on account are when HMRC require you to make two payments during the year to spread your tax liability.
The 31st January payment is to settle your tax bill for the previous tax year and make your first payment on account towards your next tax year’s bill. There is then a subsequent payment on account for next year due on 31st July.
However, there are exceptions where you will not be required to pay those payments on account on 31st January and 31st July:
- If your previous self assessment tax bill was below £1,000
- If the taxes you have already paid are more than 80% of what you owe. This happens in situations such as when there are deductions on savings and interest by your bank
To find out more we have an in-depth article which covers payments on account, including how it is calculated.
6. Know the Deadlines, Penalties, and Fines
To avoid fines and penalties issued by HMRC, you must submit and pay your tax bill on time. Deadlines for submitting your tax returns are:
- The paper tax return deadline is 31st October at midnight
- The online tax return deadline is 31st January at midnight
Payment for both paper and online tax returns is also 31st January. If you are required to make payments on account, the deadline for your second payment will be on 31st July.
Tax Return Penalties
Failure to submit your tax bill to HMRC on or before the deadline will attract penalties. A three-month late payment will attract a fine of £100 and interest on the tax bill will be levied. If you have a reasonable excuse, you can appeal such penalties. However, it is always best to notify HMRC that you will be submitting your tax returns.
DS Burge & Co for financial expertise
It is possible to file your self assessment tax return on your own. However, it can cause a large degree of stress, and you want to ensure you are benefiting from all available tax relief.
Helping businesses and individuals around Surrey & London since 1980, we’ve gained a wealth of experience preparing and filing self assessment tax returns for our customers. We welcome every client with a friendly professional service that focuses on individual needs.
We aim to help you reduce your tax liability and free your time from the regulatory hassle. For example, we can help with:
- Preparation and filing of accounts for individuals, partnerships, and limited companies
- Tax planning
- Preparation of corporation tax returns for online submission to HMRC
- Advising business start-ups
- Construction Industry Scheme (CIS)
- VAT returns
- Payroll and Pension Auto Enrolment
- Raising capital
If you need assistance filing your self assessment tax return, please don’t hesitate to contact us. We can help assess your personal situation and provide the full support that you need. We are ready to answer your questions and discuss how we can help.