Most Self Assessment tax returns are filed during December and January. Whilst it’s great to file by the deadline, it’s always better not to leave things to the last minute. With that in mind, it’s always good to have a reminder of the typical things to avoid and not end up with a fine from HMRC – whether it’s because you’ve just gone over the deadline, or made a mistake that HMRC have spotted…
(This article is for individuals; the process for Partnerships is slightly different)
So, right down to business, here are my 7 tips...
1. Filing online for the first time? Leave enough time to receive your UTR code and activation code!
HMRC suggests a 10 day lead time to receive a UTR (Unique Taxpayer Reference) number (where one is necessary) and a further 10 days to receive an activation code, before you can go about completing your figures and details online. In practice, the codes usually arrive in the post in around 5 to 7 days.
2. Have all of the relevant financial information to hand.
Whether filing for the first time or not, it's important to leave enough time for your tax return so that you can contact third parties for any missing information. Typical items needed are:
- P60 and/or P45 for your employment income
- Details of your self employment income and expenses with relevant invoices and receipts
- Records of travel expenses, including mileage for business related car journeys
- Bank statements showing interest received and bank charges paid
- Details of any income from renting property
3. Ensure all income and capital gains are declared.
It sounds obvious, right? However, it can be easy to miss something - especially if you're tight for time and rushing it. For example, your business profit and employment income will be at the forefront of your mind, but have you remembered the interest from all your bank accounts? What about those dividends your received from those shares you haven't thought about for years? Have you sold a property that isn't your main residence, or hasn't been your main address for an extended period? Declaring such things doesn't necessarily mean you'll have a massive tax bill to pay, as sometimes things have already been paid to you net of tax.
4. Be careful what you claim for.
In terms of expenses claimed against your business income, the rules around what is and is not allowable can be very complicated - especially on things like motoring costs. Your taxable profit will not usually be the same as your net profit in your own accounts, and this is largely down to the difference between the expenses you have in your profit and loss account and your tax allowable expenses. Getting this wrong means you could end up underpaying tax and risking a fine and interest charges.
In general, business expenses are deductible (or 'allowable') against your taxable business revenue if they are incurred 'wholly and exclusively' for the purposes of the business. However, as I mentioned, it gets more complicated. You can find more guidance on HMRC's website: https://www.gov.uk/expenses-if-youre-self-employed/overview.
5. Get the details right - check and check again until you're certain that it's right!
Again, this comes down to leaving sufficient time to get it all right, and look into anything you're not sure about. It can be easy us mere humans (taxpayers, or as HMRC might say 'customers' - which I always find amusing) to make 'human errors'... Quite simply - typos on things like your National Insurance number, your UTR number, or an Employer's tax reference number. Submitting your Self Assessment tax return with such errors may result in it being rejected and HMRC imposing a fine. So, it's worth going over the details a second time, as well as 'sense-checking' to ensure it's right first time.
6. Don't forget to pay!
I know... You go through the pain of getting all your paperwork and other records together, answering all those questions, triple-checking everything, and once you hit that 'submit' button and get the (slight) warm, fuzzy feeling of seeing that confirmation e-mail, you think "yeay, I've done it". You can go back to focusing on your business and serving your customers. But... guess what... you still have to pay any tax due at the end of it! The payment deadline is the same as the filing deadline; 31st January. The fines for paying late are not as heavy as filing late, but after all that effort, you deserve not to incur any additional costs.
7. Get an Accountant.
Well, you knew I was going to say that, right? As you may well appreciate, this is by far the best way to ensure you file correctly and on time, and avoid any penalties. It's simply a case of whether you can see how the benefits of hiring an Accountant out-weigh the costs. The Accounting industry is more competitive than ever, and as such the cost of an Accountant completing your Self Assessment might not be as much as you think. On top of that, a good, tech-savvy Accountant will be happy to recommend tech solutions to reduce the leg-work required in completing your tax return, and will nudge you at the right time so that there is no rushing. You can be left to focus on your business and sleep easier at night. Happy days.
HMRC has a lot of guidance available online. For Self Assessment, visit:
as well as:
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