First things first: if you use a registered accountant, or file online, then you’ve got a bit more time to get your tax return completed – the deadline is extended until January 31st. But for everyone else, it’s the end of October. Missed deadlines will result in a £100 fine, so its worth making sure you file on time.
In addition to an extended deadline, the benefits to filing online include: liabilities are generally calculated faster; money owed is repaid more quickly; and an acknowledgement that HMRC has received the return is emailed immediately.
If you really must use the post, then make sure you leave plenty of time for it to arrive – if it gets to HMRC after the 31st October, you may still be liable for a fine.
Preparing for your tax return:
Before you start filling in your tax return, you need to get all your records together and make sure that they’re in order. If you’re doing it yourself, it will make your life easier, and if you’re handing it over to an accountant, it will cut down their costs.
A good accountant should help you out by supplying a template into which you can then insert the relevant figures.
Make sure you keep a thorough record of your cash flow, clearly separating income and outgoings. Catagorise expenses into rent, utilities or stationery, for example. At the end of each month, check this against your bank statement, to make sure nothing’s been missed.
There are various deductions, reliefs and allowances that may reduce your tax bill. In most instances, these are valid for the current tax year and for the previous four years.
Allowable expenditure usually falls into two different types:
- Capital expenditure: for example, buying a van, computer or office
- Business expenditure: any expense that “wholly and exclusively” goes towards keeping your business going
Private expenditures, such as general household costs and the wage you draw from your profits, are “non-allowable” expenses and cannot be claimed against.
Your taxable profits will be worked out by deducting the full amount of allowable business expenditure from your business income. For a guide to expenses, HMRC offers guidance here.
Filling out your return:
Get all your paperwork together, the documents and information you will need include:
- Your employment income, including your P60 and P11D
- Any interest statements from your bank or building society
- Information on dividends and shares
- Details of any deductions such as Gift Aid and pension contributions
If filling in your return online, you must register by January 21st. The online form can be completed in stages – you don’t have to complete it all in one go, so take your time. Save the information on the screen as you go along. If you make a mistake, don’t worry, you can go back to it and make changes later.
Keep all the documents you have used, just in case you have to refer back at any point if there is a query. HMRC may question any significant changes from your last return, so don’t forget to explain differences in your circumstances clearly in the “further information” section.
For help filling in your return, speak to an experienced book keeper. There will be a cost involved, but they may help you save on the amount of tax you have to pay, as well as freeing up your time, which could be better spent growing your business.
Anita Brook is the founder of Accounts Assist, which specialises in book keeping, accountancy and taxation services for small businesses, contractors and freelancers.
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