It’s the time of the year when you need to file your self assessment and the deadline to do it is quickly approaching. Here are a few tips to take into consideration while preparing to file your return.

The deadline for the online returns is 31st of January and for paper ones it is 31st of October. After submitting your return you will need to pay the tax you owe. The deadline for it is usually 31st of July. However, due to the COVID, the government postponed the deadline for tax payments till January 2022.

1. Who needs to file a tax return?

  • Every self employed trader, earning above 1,000 a year
  • directors of a limited company have to file their tax returns before the deadline, being 31 of January each year.

2. You also need to file a return if you have income from:

  • Renting out a property
  • Tips and commissions
  • Savings, investments and dividends
  • Foreign income

3. What tax will I need to pay from self assessment?

  • Income Tax – you pay this tax along with National Insurance contributions through self assessment
  • Tax on dividends – if you’re a director of limited company

4. There is some basic information you’ll need to complete your return.

  • Your UTR number (this is a reference number that’s assigned to you, when you register as self employed
  • All information about your total earnings for a year
  • Information about your business expenses

It’s important that you keep a record of all your income and expenses such as invoices and receipts.

You can file your return using your HMRC Gateway or using one of the bookkeeping software that is integrated with HMRC.

Allowable expenses:

  • office costs such as stationery or phone bills
  • travel costs such as fuel, parking, and some train or bus fares
  • clothing expenses such as uniforms
  • staff costs such as salaries or subcontractor costs (CIS)
  • things you buy to sell on such as stock or raw materials
  • financial costs such as insurance or bank charges
  • costs of your business premises such as heating, lighting, and business rates
  • advertising and marketing such as website costs

You can still claim business premises costs, but only as a percentage. You can claim back for things like:

  • heating
  • electricity
  • Council Tax
  • mortgage interest or rent
  • internet and telephone use

There are some upcoming changes on how we’ll be filing our tax returns. As part of the Making Tax Digital initiative, in 2022 the government will introduce quarterly tax returns and remove the paper copy returns. It is worth starting to think now about how to keep all your records efficiently (bookkeeping) and invest in software integrated with HMRC. That will allow you to keep all your records digitally and be in line with the government requirements for MTD.