5 top tips for filing your 2020 self-assessment tax return
The self-assessment tax return deadline is just around the corner for all self-employed professionals in the UK. If you were self-employed at any point from 6th April 2018 to 5th April 2019 and you earned more than £1000, then you need to file a self-assessment tax return and pay any tax you owe before January 31st.
If you don’t submit your self-assessment by January 31st then you face receiving a penalty charge of £100.
Understandably, filing your tax return can be a stressful time. So, together with a handful of PeoplePerHour community experts, we’ve put together five top tips for filing your 2020 self-assessment tax return.
1. Hire an accountant to help you with your 2020 self-assessment tax return
Okay, so it may seem like an obvious solution but hiring a qualified accountant really is the best option when it comes to filing your 2020 self-assessment tax return.
Accountants will know about all of the deductions you can make. And often, these are things that freelancers and small business owners forget about. Things like the use of your home office space, depreciation of essential equipment that your business might use, or even how to claim a portion of your utility bills if you work from home.
“Having the right help and support is key to filing your self-assessment tax return on time and paying absolutely no more taxes than are necessary,” says chartered accountant, Gary Green, from Key Business Consultants.
Accountants can also help you to keep your financial affairs in order throughout the year and make smart business decisions that will have a positive impact on your tax. They’ll also be able to help you if you need to pay tax on account.
2. Ensure that you’re already registered with HMRC
First thing’s first, if you don’t want to encounter problems with your self-assessment tax return, make sure you have registered with HMRC.
When you first start out on your exciting new venture, there are a whole host of things to do. Getting an amazing website up and running, printing your business cards, organising your work space… The list goes on. But, if you’ve forgotten to register as self-employed with HMRC, when it comes to the end of the tax year, you might get caught out.
“Ensure that you have registered for an HMRC online services account and activated the Self Assessment Service,” says certified Accountant and qualified bookkeeper, Anita Benge. “If you haven’t, you will have to wait for the activation code and it can take some time to receive it. If you’ve left it to the last minute, though, a registered HMRC agent can file on your behalf.”
3. Don’t ignore the 2020 self-assessment tax return deadlines
It’s crucial that you hit the deadline for filing your self-assessment tax return.
If you’re still working on a paper return, then it’s already too late. The deadline for filing a paper return is October 31st following the end of the tax year. However, for online tax returns, the deadline is January 31st. This is also the date that you should pay the tax that you owe.
“Don’t ignore the deadlines or assume it’s okay to be a few days late,” advises Laura Bolton, director of Simple Accounting (NW) Ltd. “If you reach February and still haven’t filed your return, you’ll be walloped with a £100 fine. That’s just for starters, of course. Seriously – don’t leave it too late!”
If you do miss the deadline for whatever reason, then call the HMRC helpline and get some advice on what to do next. You might catch them in a forgiving mood!
4. Include everything in your 2020 self-assessment tax return
One of the most common mistakes to make is assuming that HMRC doesn’t care about your eBay sales sideline or the handmade teddies that you sell on Etsy. In 2018, eBay released it’s UK retail report, revealing more than 1065 traders with a turnover of more than one million pounds, in the UK alone.
If your income in any one tax year exceeds £1000, then you need to file a tax return.
5. Learn from your mistakes
Not keeping receipts, not keeping a track of your expenses, forgetting to log invoices, not opening a savings account for your tax money. Sound familiar? Learning from your mistakes is all part of becoming a successful freelancer/small business owner.
Make it your mission to keep hold of everything that you may need to file your self-assessment tax return at the end of the next tax year. Invest in some professional support, or self-employment software such as Quickbooks, Kashflow, or Xero.