One of biggest dreads of those who are self-employed or business owners is filling in the annual tax return. Unless you have an accountant to help you, it can become one of those nightmare jobs which you put off until the last minute.
However, with a bit of organisation and forward-planning it doesn’t have to be quite such a baffling task as it might first appear.
Top Tips to Making Tax Filing Easy
Here are five of our top tips for making tax filing an easier and less stressful task.
Check that you are required to file a tax return
HMRC are really good at helping with guidance on when and why you need to complete a tax return so make sure you fit the criteria before you start trying to fill it all in. There are several circumstances under which you definitely do need to file your own tax return:
- You are self-employed (but if you started your business recently you only fie the following year)
- You earned more than £2,500 in untaxed income such as from being a landlord
- Either your partner or yourself earns higher than £50,000 and one of you receives child benefit
- You made £10,000 or more from savings and investments before tax
- You are a company director (see the HMRC website for details)
- You have profited after selling off a second home or sales of shares
As you can see, there are many situations where you do need to file a tax return so make sure you check the criteria for yourself on the HMRC website.
Register for tax with the HMRC
If it’s the first time you are filing, you need to register with the HMRC before you can even attempt to fill in a tax return and it can take a couple of weeks for this to go through, so make sure you register in plenty of time.
Make sure you have all of your paperwork that you need to hand when it comes to completing the form – you will need all of your figures easily accessible as you complete the form and make sure you fill it in with plenty of time to spare before the due date. If it is filed late you could be facing penalty fines.
Understand your expenses
It’s important to understand exactly which expenses you can claim for on your tax form and which are not eligible. There is lots of help on this on the HMRC website and they also run regular training webinars to help new and small businesses understand their requirements. There is also a wealth of information on Crunch, such as advice related to accounting for small businesses, tax implications for freelancers, expenses advice and more.
If you are a landlord, you must understand which of the associated fees and expenses you can claim for on your tax return, and which are not applicable, to make sure you are getting the most benefit – seek advice from a tax expert if you have any doubts.
Other areas which you might not think about claiming for are car mileage costs and membership fees for any professional organisations which you belong to.
Avoid making mistakes
It’s important not to leave out information on your tax return – you need to include all sources of income and all figures. If you need to estimate initially and then update once the paperwork comes through, this is better than submitting too late because you are waiting for figures to come through.
Make sure you check and double check all of your figures before submitting the return – make sure you know if figures are net or gross and make sure you don’t make any typos with too many zeros or a comma in the wrong place.
You also need to make sure you are on the right tax code in the first place – there are many online calculators you can use to make sure you are using the right one and not paying too much, or too little tax each year.
Also Read: Last Minute Filing Tips
Don’t forget to make your payments
Once you have submitted your paperwork you might just breathe a sigh of relief and think that’s it for another year – but it’s important to remember that you also have to pay your tax bill by the deadline of 31 January as well.
Make sure you have the money to pay the bill and make sure you pay in time for the balance to clear by the deadline – it could take a few days to go from your account to theirs so bear this in mind when making your payment.
Filling in a tax return needn’t be a daunting prospect as long as you have all your figures to hand and don’t leave it to the last minute so that you are rushing and panicking. You have plenty of time between the end of the tax year in April and the deadline in October/January to complete the tax return, so make sure you get it done.