Whilst we'd recommend employing the services of a qualified accountant to prepare and submit your personal tax return for you – it's always worth getting clued up on the basics yourself. It really helps with adhering to solid standards of record-keeping and keeping you in tune with your finances on an ongoing basis.

 

Let's break this seemingly daunting task down into clear steps, to help build your knowledge of the process.

 

 

Getting it right: why does it matter?

Before we get down into the finer details, it's important to clarify that (for those with income outside of PAYE, earning over £1000) filling out an accurate tax return for your personal affairs is a legal requirement.

 

Also, it's about ensuring that you pay the right amount of tax – no less and no more than necessary, and maintaining your finances.

 

 

Complete record-Keeping: A strong foundation

This really is the bread-and-butter, the foundational backbone of a personal tax return – which is why we always recommend people KEEP RECORDS AS THEY GO ALONG. We cannot stress the importance and the benefits of this enough. It's a simple tactic and injection of discipline which will thank you fifty times over when it comes to filing season.

 

Here's a summary of what you will need to track and file away:

  • Your bank statements (all relevant ones including business and personal)
  • All invoices you've sent and received during the year
  • Paperwork relating to income and expenses such as invoices and receipts (yep, even the small transactions)
  • Employment records
  • Investment income statements

 

Pro tip: Make use of a digital, HMRC approved bookkeeping software like Xero. Not only do they make it far easier to log and track your transactions throughout the year, but once you've uploaded digital copies of everything to the software, you can bin all your receipts and invoices.

 

 

Understanding expenses: Allowable or Not?

 

In the spirit of ensuring that you don't pay more tax than is necessary, it's worth getting to grips with the most common expenses that reduce your taxable profits for the year (and in turn, reduce your overall tax liability). Allowable expenses for self-employed individuals can often include:

 

  • Office costs (from stationary to phone bills)
  • Travel expenses (as long as incurred in the act of working – fuel, parking, train fares)
  • Work clothing (branded uniforms and PPE)
  • Staff and labour costs (subcontractors and employees)
  • Financial expenditure (such as accounting, insurance and banking)
  • Marketing and advertising (SEO, website, PPC advertising etc)

 

Pro tip: Make sure to familiarise yourself with HMRC's guidance on allowable expenses, this will help ensure you claim everything you're entitled to. If you do this, you'll likely stumble across information on…

 

 

Further allowable expenses

Beyond the basics, there are further expenses to consider claiming which, if applicable, can reduce your taxable income even further:

 

  • Home office costs (if you work from home, you can claim a proportion of your household bills including rent, utilities and internet)
  • Capital allowances (for large purchases such as machinery, business vehicles or equipment, you may be able to some or all of the value of an item from your ‘pre-tax profits', potentially reducing your tax liability)
  • Pension contributions (depositing money into your pension can reduce your taxable income, so ensure you consider this during the tax year)
  • Membership fees and subscriptions (if you are a member of a recognised organisation as part of your work, and you have to pay fees to continue your membership, this may be an allowable expense to be aware of)

 

 

Critical deadlines: diarise & plan 

Please put these deadlines (yes, these are deadlines, meaning they can/should all be actioned earlier than this) in your calendar. Do it now!

 

  • 5th October: Self-assessment registration deadline for people who are self-employed or receive other forms of un-taxed income.
  • 31st October: Deadline for the submission of paper tax returns.
  • 31st January: Deadline for the submission of online tax returns and the payment of personal tax liability.

 

To reiterate – make sure you set your own reminders for these dates, and plan ahead to ensure you begin work on your tax return EARLY, so that you can seek help and guidance if required.

 

Missing these dates will incur penalties, so let's get organised ahead of time!

 

 

Require professional help?

Despite having access to all the required information for preparing your own self-assessment, when it comes to implementing it all cohesively and making the correct judgements, it can often be much less time-consuming and cost effective (given the demands of day-to-day life and running a business) to ask an accountant to do the work for you.

 

This is especially apparent where the individual circumstances are more complex.

 

An accountant worth their salt will provide specialist insight tailored to your specific circumstances and maximise your deductions, whilst ensuring you remain 100% compliant with the various UK tax laws.

 

Working with a chartered accountant is a value investment, ensuring you avoid costly errors and providing you with peace of mind in a multitude of contexts.

 

 

 

 

If you would like help with your self-assessment tax return, or indeed implementing any of the processes within this Knowledge Hub Guide, please get in touch with us.

 

For all general accounting enquiries, please give us a call or fill out our enquiry form.