It’s January. Over 20 whole days until the self assessment deadline, and you’re still not sure what you’ve got to do?
Never fear, BusinessZone is here.
Remember, a tax year is from 6 April to 5 April the following year. You will need to submit a return if in the last year you:
- Were self-employed
- Got £2,500 or more in untaxed income,
- Your savings or investment income was £10,000 or more before tax
- You made profits from selling things like shares and need to pay Capital Gains Tax
- You were a company director - unless it was for a non-profit organisation and you didn’t get any pay or benefits
- Your income (or your partner’s) was over £50,000 and one of you claimed Child Benefit
- You had income from abroad that you needed to pay tax on
- You lived abroad and had a UK income
- You got dividends from shares and you’re a higher or additional rate taxpayer and your income was over £100,000
- You were a trustee of a trust or registered pension scheme
If you’re fully sure you need to submit a return, what you may need for this exercise is:
- Snack of your choice
- Your last year’s records and receipts
- The phone number of a good accountant
- Or the ability to handle HMRC’s online filing software
- HMRC’s helplines (just in case). They also answer basic questions on Twitter @HMRCCustomers
Remember, the penalty is £100 if it’s late by three months and if you have a reasonable excuse you can appeal (no, this does not apply to ‘the dog ate it’ or any of these, in fact).
Filling in your tax return is like taking the bin out after a long Christmas break. It’s cold and wet, and you don’t want to, but the sooner it’s done, the sooner you can put your feet up with [insert tipple of choice].
Don’t worry if you need to change something once you’ve submitted, as you’ve got 12 months to either DIY or inform HMRC; but do enlist the help of an accountant or triple check everything to make sure you get it right the first time to escape an admin headache.
Good morning, we are here from 8am to 6pm to answer your general queries. Please don't post any personal details.
— HMRCcustomers (@HMRCcustomers) January 4, 2016
Never fear however, if the thought of a self assessment return is getting your head in a knot, Sharon Pocock, principal accountant at Kinder Pocock based in Hereford is here to answer some of the top questions:
Where do I start?
Sharon says the starting point is to be 100% sure you do actually need to complete a return before 31 January.
“The filing deadline relates to tax returns for the tax year ending 5 April 2015. Firstly, if you’re filing your own tax return, make sure you sign up for online filing now, as you may need to wait for an activation code through the post,” she explains.
Next, think about what information you will need for their tax return, and start pulling it altogether. This includes:
1. Employment: P60 or P45. You’ll need a P11D if you receive taxable benefits
2. Self employment: Details of all business income and expenditure for the period (if your business income is less than £82,000 you can use cash accounting https://www.gov.uk/simpler-income-tax-cash-basis
3. Rental property: Rental income, properly expenditure including mortgage interest, agents’ fees, repairs, insurance etc.
Pocock adds, the longer the list gets, the more likely you are to need an accountant.
Do I need an accountant?
Sharon says that you should already have one, but if you don’t - and get rejected because it’s so busy for accountants this month - keep trying until you find one.
“Ideally you need one as soon as you start trading but if you haven't do it now. Most accountants are ridiculously busy in January and some may not be taking new clients on right now, so persevere,” she tells us.
Receipts: Is a plastic bag okay and what do I do if I lose any?
Fiddly bits of paper can be a boon to hold on to. But despite having (hopefully) been collecting them all year round, try not to arrive at your accountant with them in a bundle. If that’s all you can manage however, Sharon has some tips.
“If that's what you've got then find an accountant using Xero and Receipt Bank. You can then photo your receipts with the Receipt Bank app, or post them to Receipt Bank. Your accountant can then publish these into Xero quite quickly,” she says.
And there are ways around finding lost receipts, too, provided it’s not paid for via cash.
“If you've lost a receipt and paid cash for it you can't claim it so do try to get a copy. If the payment can be seen on a bank statement you may be able to claim it, but ask your accountant.”
How long will I need to put my return together?
This is a ‘how long is a piece of string’ question; it depends on what you need to file for and what kinds of information you need to input.
“It really depends on what is involved, and how much complete information is provided (eg. if you just provide piles of paperwork and you're not using online accounting software it will take a lot longer!),” Sharon explains.
“Also bear in mind that even if it won't take long to do in your mind, your accountant will already be snowed under. We usually allow a one to two month turnaround from receiving records to getting the work completed, so in January we just have to plough through and get it all done.”
What’s the ultimate way to avoid getting penalised?
Nobody wants a penalty. So, Pocock advises getting organised as a way of avoiding them like the plague.
“Definitely get organised as soon as you start trading, or as soon as you can. Your tax return can be completed and submitted any time after 5 April (so 5 April 2015 for this January 's deadline),” she says.
And remember to keep a copy of your return, just for your own peace of mind.
What are your tips for getting through self assessment season? Comment below to share!