It’s an all too familiar scene for many sole traders, landlords and other Self Assessment taxpayers. Despite leaving it until a week or two before the online-filing deadline on 31 January, you’re not too worried about completing your Self Assessment tax return. What could possibly go wrong?
Then you make a start, believing it will take you no time to get it all done and dusted, but you soon come to an abrupt stop. You haven’t got all of the necessary information to hand. You start to feel frustrated.
The minutes turn to hours and you have to put off making any progress with your Self Assessment tax return, because you need to go away and get together key information. You leave it for a few days. The online-filing deadline gets closer and you begin to worry. You forgot that, as with many things in life, – sound preparation is key to successfully completing your Self Assessment tax return. So, what’s the best way to prepare for doing your Self Assessment tax return?
What if You’re not Already Registered?
- If you need to send a tax return to report taxable income to HMRC via Self Assessment, you’ll need to register if you did not send a tax return in the previous tax year – even if you’ve sent one before that.
- You must register for Self Assessment before 5 October following the end of the tax year (5 April) in which you earned taxable income. If you do not register for Self assessment, you risk having to pay a fine.
- You can register for Self Assessment via government website GOV.UK. The registration rules are slightly different for different types of Self Assessment taxpayer.
- Once registered, you can fill in and file your annual Self Assessment tax return at any time following the end of the tax year (5 April), before the filing deadline (31 January for online filing, which is how 96.8% of taxpayers submit their tax returns).
How to Prepare to Fill in Your Self Assessment Tax Return
1 Decide How You’re Going to File
About 12m people file a Self Assessment tax return each year and only 385,000 of them (3.2%) use paper forms. HMRC wants to phase out paper Self Assessment tax returns as much as possible, preferring for taxpayers to keep digital tax records and file their tax returns online. Completing a paper tax return takes longer and it’s a pretty arduous task, while mistakes can be more likely, which could mean you’ll need to start again.
Filling in and filing your Self Assessment tax return online is quicker and easier, with mistakes less likely, especially if you use Self Assessment tax return-filing software. Automatic prompts tell you which figures you need to enter and where, which provides additional peace of mind and may even help to ensure that you don’t pay too much tax.
Need to know! Some Self Assessment taxpayers can only use filing software to submit their tax return digitally, one example being expats with UK rental income to report. Filing software can cost just £50 or so for the tax year.
2 Know What Supplementary Pages you Need to Submit
As well as the main SA100 tax return, you may have to fill out and submit supplementary pages to report taxable income and tax expenses. Different types of taxable income have different supplementary pages, which each have their own number. The most common examples include SA103 Self-employment, SA105 UK Property and SA108 Capital Gains Summary. If you have more than one self-employed role that generates taxable income, you’ll need to complete an SA103 for each.
Need to know! Supplementary pages can be downloaded from government website GOV.UK or conveniently accessed via Self Assessment filing software.
3 Make Sure That you Know Your UTR
In your SA100, you’ll need to include your 10-digit UTR (ie Unique Taxpayer Reference), which you’re given when you register for Self Assessment. It will be stated on your previous tax return, if you’ve submitted one. You’ll also need to state your National Insurance number.
Need to know! If you can’t find your UTR, you can also call HMRC on 0300 200 3310 for assistance. You’ll need to have some information to hand for security questions, such as your personal details and your National Insurance number.
4 Get Together Other Vital Information
When filling in your Self Assessment tax return other information you need can include:
- an accurate summary of taxable income from self-employment, renting out property or land, overseas income taxable in the UK
- if relevant, details of any previous loss made that you wish to offset against income made within the tax year to which your tax return refers
- summary of income earned from employment, as well as taxable benefits (you may be able to get these from your P60, P45 if you left during the tax year or a P11D form from your employer)
- details of taxable interest received from your bank as well as any taxable share dividend payments
- details of any income you’ve received as part of a business partnership (one partner should also file a tax return and SA104 supplementary page for the partnership)
- any taxable state benefits you’ve received, as well as any taxable pension payments
- details of any taxable capital gains you’ve received after disposing of assets (eg a business, personal possessions worth £6,000 or more, etc)
- information about any Gift Aid received (you can claim tax back for this)
Need to know! The above information should be relevant only to the tax year in which you are reporting taxable income to HMRC.
5 Get your Expenses in Order
You’ll also need summaries of your “allowable expenses”, which are costs that you can claim as tax expenses that relate to taxable income earned from self-employment, renting out property, overseas income, a business partnership, etc.
Claiming allowable expenses will reduce your tax bill. If you’ve been organised and you’ve been recording your allowable expenses throughout the tax year in a spreadsheet or accounting software, this will be simple to do. If not, having to wade through piles of sales receipts, invoices and bank/credit card statements could take a while, which is another reason why you should complete your tax return long before the filing deadline.
Need to know! If you’re not already doing so, start recording your costs into a spreadsheet or accounting software regularly, so that claiming them as tax expenses becomes much less time-consuming, while also giving you a better idea of your spending and expenses.
6 Find out Which Personal Tax Allowances you can Claim
Personal tax allowances are amounts you can earn or receive in income without paying tax. The main UK personal tax allowances are available to sole traders and landlords, while others are available only in certain circumstances. HMRC won’t tell you if you can claim a personal tax allowance, you must find out for yourself if you plan to fill out your own Self Assessment tax return. The most common personal tax allowances are:
- the personal allowance (£12,570 a year for the 2023/24 tax year)
- the trading allowance (£1,000 a year, if you don’t claim allowable expenses)
- the property allowance (£1,000 a year, if you don’t claim allowable expenses)
- dividend allowance (£1,000 a year for the 2023/24 tax year)
- marriage allowance (you can transfer up to £1,260 of your Personal Allowance to your spouse or civil partner, which can reduce their tax by up to £250 in the tax year or vice versa).
Don’t Wait – File Now!
Getting your Self Assessment tax return completed and filed as soon as possible is highly recommended. You can file any time after the end of the tax year (5 April) in which you received taxable income, there really is no need to leave it until weeks, days or hours before the online-filing deadline (midnight on 31 January).
Filing early doesn’t mean you’ll have to pay your tax bill sooner, but you will be able to find out how much tax you owe. You may even find out that you’re due a tax rebate. Getting your Self Assessment tax return out of the way earlier could certainly make your life much less stressful.
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