The deadline to submit your self-assessment tax return is 31 January. With just over two weeks to go, it’s a good time to go over the 5 steps you need to follow to complete your self-assessment tax return.
The purpose of the return is to tell Her Majesty’s Revenue and Customs (HMRC) how much you earned in the last tax year, and based on the information you provide, the appropriate income tax you need to pay is calculated.
If you are self-employed – so you don’t earn a salary from which your tax is automatically deducted – or have more than one source of income, this applies to you!
If you do decide to do it yourself, there are 5 steps I suggest you follow. Before I tell you what those are, there are a few things you need to know:
- Tax years in the UK run from 6 April to 5 April, e.g. from 6 April 2016 to 5 April 2017.
- The deadline to submit your return and pay the tax due is 31 January after the end of the tax year*. Using the example above,the deadline is 31 January 2018.
- Act NOW if you haven’t already, because late payments attracts a penalty! If you suffered from a serious illness, family bereavement or a natural disaster you’ll be given a pass, but forgetting or being away on holiday do not count as reasonable excuses. So don’t put this off any longer!
Here are the 5 steps you need to follow to complete your Self-Assessment Tax Return:
Check to see if you qualify
You have to complete and submit a tax return if you were self-employed in the last tax year, or earned more than £2,500 in untaxed income.
For example, for landlords with rental properties, or people who rent out rooms in their homes, if the income after expenses is more than £2,500, a tax return must be submitted.
Some of the other criteria to consider are earned interest or dividends more than £10,000.
Register with HMRC
If you haven’t filled in a self-assessment tax return before, you’ll need to register with HMRC before beginning the process of filling in the return.
You can do that here.
HMRC will send you a Unique Taxpayer Reference – or UTR –which you’ll need when completing the return online.
Collate all the information you’ll need
Before you start filling in the return, I’d recommend you get all your records and information ready.
You’ll be asked to provide details for a whole raft of things which I’ve listed below:
- The total of what you earned in the year. That includes income from your business and any employment.
- Any income earned from dividends.
- Any income earned from rent.
- Any income earned from business interests you may have outside the UK.
- Any interest earned on your savings.
- Any interest you paid on borrowings.
- Any contributions you made to a pension.
- Any benefits you received, such as state pension, Child Benefit or unemployment benefit.
- Any perks you received, such as private healthcare or a car allowance.
- Any income earned from the sale of property or shares.
- The sum of any valid business expenses.
Complete the return online
Now, you need to fill in all this information online.
Log into the HMRC system here, and input the relevant information when prompted.
You can fill sections in, save, and come back at a later time to complete it, if you need to.
Organise your records
Haven’t been that prepared this year? You can always start now to organise your records, so next year’s return isn’t as tedious! These are some of the documents I’d recommend you start filing.
- Bank statements
- Pension statements
- Benefit documentation
- P11D expenses and benefits form.
HMRC requires that you keep records for up to 5 years after the deadline.
So even though you’ve completed this year’s return, it’s never too early to get your digital or physical filing in place for next year. I do both for a catch-all approach – you can never be too careful with the taxman!
There is a range of online accounting software you can use to keep track of all these items, and you can also file away hard copies.
And if you get stuck?
HMRC has lots of resources online which you can look through.
And remember, you can appoint a qualified accountant to do this for you.
* The 31 January deadline applies if you do your returns online. You can go old school with your returns if you prefer, but the deadline for paper returns is 3 months earlier in the October.