Blog

Everything you need to know before your Self Assessment

Everything you need to know before your Self Assessment

22

November

2024

Everything a Business Owner Needs to Know About Self Assessments

As a business owner, self-assessment can seem like a daunting task. However, understanding the process and staying organised can save you time, stress, and more importantly money. Here’s a comprehensive guide to help you navigate the self-assessment process.

 

What is Self-Assessment?
Self-assessment is the method by which individuals and business owners reporttheir income in the form of a tax return and calculate the tax they owe to HMRCin relation to the previous tax year.

 

Who Needs to Submit a Self-Assessment Tax Return?
You need to file a self-assessment for the 2023/24 tax year if you:

·      were self-employed or a sole trader with income in excess of £1,000

·      were a company director earning dividends or other income

·      received rental income from property

·      earned over £150,000

·      earned over £10,000 from savings or investments (excluding savings held in an ISA)

·      claimed Child Benefit but earn over £50,000 (subject to the High-Income Child Benefit Charge)

·      have untaxed income, such as tips or commissions of £2,500 or more

 

Key Deadlines to Remember

Missing deadlines can result in penalties, so mark these dates in your calendar:

·      Register for self-assessment: 5th October after the tax year ends

·      Paper tax returns: 31st October after the tax year ends

·      Online tax returns: 31st January after the tax year ends

·      Tax payment: 31st January (same day as online return deadline).

 

For payments on account, you'll need to make additional payments by 31st July.

 

What Information Do You Need?

To complete your self-assessment, you’ll need:

·      Your Unique Taxpayer Reference (UTR).

·      Records of all income, including PAYE income(from your P60/P45).

·      Business expenses and receipts.

·      Bank statements and accounting records.

·      Contributions to pensions or charitieseligible for tax relief.

·      Details of rental or dividend income.

 

How to File Your Return

1.     Register for Self-Assessment - First, register with HMRC if you’re filing for the first time. You’ll receive a UTR and instructions for setting up your online account.

2.     Keep Detailed Records - Organised bookkeeping makes self-assessment simpler. Use accounting software to track your income and expenses accurately.

3.     Claim Allowable Expenses - Claiming business expenses such as office costs, travel or expenses as small as postage and stationery, can reduce your tax bill. Check that your expenses are genuinely business-related by speaking to an accountant if you are unsure.

4.     Submit Online or by Paper - Use HMRC’s online system or a trusted accountant to file. Submitting online is faster and provides an instant acknowledgment.

 

Common Pitfalls to Avoid

·      Missing Deadlines: You will pay a late filing penalty of £100 if you fail to file your tax return up to 3 months late. Further penalties will apply if your tax return is more than 3 months late. Penalties will also be incurred if a payment is made late – if 30 days late, you will have a penalty of 5% of the tax that is due followed by further penalties if even later.

·      Forgetting Income Sources: All income must be reported, even side hustles and freelance work.

·      Failing to Claim Expenses: You could miss out on tax savings by not claiming all allowable expenses.

·      Overlooking Payments on Account: If your tax bill exceeds £1,000, you may need to make an advanced payment for the next tax year.

 

How an Accountant Can Help

Self-assessment is time-consuming, and mistakes can be costly. An accountant can:

·      Ensure your tax return is accurate and filed in advance of the deadline.

·      Identify all allowable expenses to reduce your tax bill.

·      Provide advice on tax planning and payments on account.

 

Final Thoughts

Filing a self-assessment doesn’t have to be overwhelming. With the correctpreparation and personnel, you will ensure your tax affairs are in order withoutany stress.

Need help with your self-assessment? Our team is here to simplify the process and keep you compliant. Contact us today to get started!

 

Toast - Webclip

Thank you

Oops! Something went wrong while submitting the form.

Back

Close Cookie Preference Manager
Cookie Settings
By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage and assist in our marketing efforts. Privacy Policy
Strictly Necessary (Always Active)
Cookies required to enable basic website functionality.
Made by Flinch 77
Oops! Something went wrong while submitting the form.