Self-Assessment Tax Returns … it’s a necessary evil for any individual – something that’s often dreaded and misunderstood in equal measure. Yet it really needs not to be a complex, time-consuming and potentially expensive task you imagine it to be. Here’s all you need to know (minus the jargon) to complete your tax affairs with minimal stress, in minimal time.
First Things First: Do You Need To File Self-Assessment Tax Returns?
If you only receive income from your employment in the form of wages, or a pension, you aren’t required to complete Self-Assessment Tax Returns. If you do receive income from sources outside of these areas, such as from self-employment, a rented property or savings and investments, you do need to file a self-assessment.
What Does a Self-Assessment Detail?
A self-assessment calculates your taxable income minus your allowable expenses. You can choose to list this in the form of a detailed breakdown (listing every element of income and expenditure, such as each invoice and every bill) or you can choose to provide a simple breakdown – providing annual totals of your income and expenditure.
Example: Your turnover is £40,000, and you claim £10,000 in allowable expenses. You only pay tax on the remaining £30,000 – known as your taxable profit.
Whilst you don’t need to provide copies of invoices or receipts, you do need to keep robust records of both income and expenditure – not doing so can land you with a £3,000 fine for ‘bad record keeping’.
Allowable Expenses – A Comprehensive List
The following expenses are tax deductible. Find out more about each one by clicking on the link to see more detail and advice on the HMRC website.
- Office costs (including rent, rates, energy, insurance, phone, stationary etc.)
- Travel costs (including fuel, insurance, hire fees, hotels, vehicle licensing fees, parking, train or bus fares etc.)
- Clothing expenses (including uniforms, protective workwear, costumes etc.)
- Staff costs (including salaries, agency charges, bonuses, pensions, employee National Insurance, subcontractor costs etc.)
- Resold goods (including retail stock, raw materials, costs involved in production etc.)
- Legal and financial costs (including accountants, insurance, professional indemnity insurance, bank charges etc.)
- Costs of your business premises (including heating, lighting, council tax, business rates etc.)
- Advertising and marketing (including mail shots, advertising in a newspaper, website costs, free samples, flyer printing etc.)
Filing Your Self-Assessment Tax Returns
Filing Your Self-Assessment Tax Returns by Post
Filing your self-assessment by post has an earlier deadline than online filing. If you’re happy to file early, you need to download and fill in form SA100 for individuals, or use the correct form from the list below if you own a business partnership, non-resident company or you’re a trustee.
Type of tax return
Forms and guidance notes
SA800 (including supplementary pages)
|Trust and estate|
SA900 (including supplementary pages)
|Trustees of registered pension schemes|
You’ll then need to send the form to: Self-Assessment, HMRC BX9 1AS, United Kingdom.
To file your self-assessment online follow these simple steps:
- Create a Government Gateway account
- Enrol for the online self-assessment service
- Activate the service using the code that arrives by post – this must be done within 28 days
Dates to Add To Your Calendar
Confusion commonly arises from the way the tax years work. Let’s clear that up:
Tax returns are always based on the year previous. For example, a self-assessment submitted online on the 31st January 2018 will be based on financial figures running from 6th April 2016 to 5th April 2017.
|Register for Self-Assessment if you’re self-employed or a sole trader, not self-employed, or registering a partner or partnership|
|File self-assessment if filing by paper|
Midnight 31st October
|File self-assessment if filing online|
Midnight 31st January
|Settle your outstanding tax bill|
Midnight 31st January
|New tax year begins|
Pay your advance payments towards the next tax year
(See our below section: What are advance payments? For guidance as to who this applies to and why)
Midnight 31st July
Answering Your Burning Self-Assessment Tax Returns Questions
What Happens If I File My Self-Assessment Tax Return Late?
You’ll automatically receive a financial penalty. If your tax return is less than 3 months late this penalty will be £100, for any timescales after this you’ll receive a customised penalty depending upon the exact circumstances and how late you file.
Always keep HMRC up-to-date with your circumstances if you believe that you’ll need to file late. They are able to extend the deadline that applies to you if they deem your circumstances to be no fault of your own.
You can also appeal a penalty should you have a reason for filing late that’s deemed reasonable, including:
- A serious or life-threatening illness
- Fire, flood or theft of items essential for your tax return
- Unpredictable postal delays
- Delays owing to your disability
- Failure of your computer or software while preparing your online return
- Passing of your partner or another close relative shortly prior to the tax return or payment deadline
- An unexpected admittance to hospital
- Service outages on the HM Revenue and Customs (HMRC) website
What Happens If My Self-Assessment Tax Return Is Inaccurate?
If you make an error on your tax return you should correct it quickly, here are the dates to remember:
- 31 January 2018 for the 2015 to 2016 tax year
- 31 January 2019 for the 2016 to 2017 tax year
Unfortunately, after this date, you open yourself up to potential penalties, and while HMRC does say that they differentiate between deliberate mistakes and simple errors, a large proportion who apply for changes are later declared to have made these errors on purpose.
|Wrong return attributed to|
Number of penalties (2012-13)
Number of penalties (2013-14)
|Deliberate action by taxpayer|
|Error, carelessness or otherwise not deliberate|
Figures from The Telegraph: Mistake on your tax return? HMRC is increasingly likely to say you did it on purpose
In order to tell HMRC of an inaccuracy you’ll need to write to HMRC, and tell them:
- Which year the errors pertain to
- Why you believe you’ve paid either too little or too much in tax
- How much you think you’ve either over or underpaid.
What Are Payments On Account?
Many entrepreneurs and business owners are thrown by suddenly being required to pay in advance. Allow us to clarify this… ‘Payments on account’ are advance payments that go onto your next tax bill (including Class 4 National Insurance if you’re self-employed). This will come into play when your last Self-Assessment tax bill is more than £1,000.
Self-Assessment Tax Returns are far from straightforward, and the penalties for inaccuracies or filing late can seem intimidating for those inexperienced in matters of tax. Yet as accountancy services are tax deductible, it pays in more ways than one to consider a professional service for your self-assessment.
If you’d like to speak to experienced experts, we’re right here – let’s talk: firstname.lastname@example.org | 0121 629 7768 | 0207 078 4001