Everything you need to know before your Self Assessment

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!

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