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The ultimate guide to your Self Assessment tax return

It’s not something you’re going to necessarily enjoy, unless you have a masochistic streak, but if you work as a freelancer then completing your Self Assessment tax return is something you are unable to avoid. To make the whole process a little less painful, we have compiled the ultimate guide to Self Assessment tax returns to help you fulfil your obligations correctly and on time.

Introducing Self Assessment tax

Self Assessment tax is the system used by freelance and self employed workers to pay tax on their income. Workers who are employed are taxed on their salaries through PAYE and are not required to complete a Self Assessment tax form. Self Assessment tax returns are issued every April, and must be completed retrospectively to cover the previous 12 months.

Who should complete a Self Assessment tax return?

If you work for an employer and have only one job, you will probably never be required to fill out this kind of tax return. If you have registered with the HMRC then you will receive your form automatically, either online or through the post, depending on how you usually file your return. However, if you’re yet to register with the HMRC, which freelance workers should do at their earliest opportunity, or HMRC haven’t sent you a form for any other reason, it’s your responsibility to ask for it.

You may be required to complete a Self Assessment tax return if:

  • You’re a company director;
  • You’re self employed;
  • You receive an income from letting a property or land you own;
  • You’re a minister of religion;
  • You benefit from significant capital gains or income which is collected via a PAYE tax code;
  • You are the beneficiary of a trust or settlement, or receive income from an estate left to you in a will;
  • You receive a taxable foreign income, even if you are not normally resident in the UK.

Your first steps

During the year it is imperative you keep records of all the income you receive and expenses you incur through the course of your work. All this paperwork can be infuriating, particularly if you find the precise piece of information you need is missing, so keeping organised records will benefit you in the long run.

If you’re self employed as a sole trader or receive rental income, you are legally obliged to keep records for at least five years and 10 months after the end of the tax year. As a freelancer you should keep records of income and any capital gains for at least 22 months after the tax year has ended, just in case there are any irregularities spotted further down the line.

The list of items you should keep a record of is extensive, and includes:

  • Details of your income and taxable expenses;
  • Bank and building society statements;
  • Cheque book stubs;
  • Your P60;
  • Dividend vouchers;
  • Self employment accounts;
  • Any capital gains received over the course of the year;
  • Details of claimable expenses including those incurred through incurred through the course of your work and charitable donations;
  • Details regarding any other income received, including savings, investments, property, pensions or benefits.

It is not usually a requirement for you to send these documents to HMRC, although if they do request to see them, send them a copy and keep the original.

Filling in the form

The core tax return element of the Self Assessment pack is the SA100 form, which must be filled in, along with possibly one or two additional sections depending on your individual circumstances.
HMRC will usually send you the parts of the Self Assessment form you particularly need to fill in, but if they don’t, or if you misplace part of the form, the pages you need can be printed off from the HMRC website.

If you find any of the details on the forms are incorrect, you should contact the HMRC at your earliest convenience to let them know. The HMRC are also on hand to provide you with guidance and assistance if you are struggling to understand how to fill in a particular section of the form.

You should take care to fill in the form as best you can. If a return is completed incorrectly you might be subject to a penalty. On the other hand, if you’re deliberately cheating the system you may face a criminal conviction.

Deadlines

Different deadlines apply depending on whether you intend to file your Self Assessment tax return online or by post. The tax year finishes on 5 April, and during April you will receive your papers for the previous tax year. They must be completed and returned by 31 October if you’re returning the papers by post, or by 31 January (so three months later) if you’re completing your return online. Any tax owing must be paid by 31 January.

Penalties for missing the deadline can be severe; even missing them by a day could incur a £100 penalty. You will also be susceptible to further penalties and interest charges on any unsettled tax bills and surcharges can also apply if you are significantly late. However, the payment of all tax on time may result in HMRC removing a late filing penalty.

Once your tax return is complete…

You have sent off your Self Assessment tax return before the deadline; now it’s the waiting game to see if you are owed or owe money. Reaching this stage may sound relatively simple, but for those of you who know just how tedious completing your Self Assessment tax return can be, there are plenty of professionals out there who are happy to help, with a one-off, fixed price tax return service.
Author: If you’re looking for an affordable and prompt Self Assessment tax return service, taxdoctor will complete your forms online on your behalf before filing them directly to HMRC for a fixed price of £99 +VAT.

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