Hey everyone,
It's that time of year already and there are some tips and general 'need to knows' around tax returns like penalties to be aware of.
First things first, if you're newly self-employed, then self-assessment can seem daunting if you're doing this by yourself but with a little prep and knowledge, you can make it simply stress-free!
What is a tax return?
Each self-employed person needs to inform the HMRC of your net income each financial year, this determines the amount of tax you need to pay.
This can be submitted through paper form SA100 or online here at the HMRC website
Late tax return penalties
If you miss the final deadline of January 31st and pay your tax return (Or 31st July for your second payment on account) You'll be charged a penalty - unless you have an agreement with the HMRC themselves.
First year self-employed tax return tips
1. Put everything in a spreadsheet -
2. Submit it as soon as you can - Whilst you still have plenty of time (April - Jan) to submit your tax return, still do it so you know how much you'll need to pay. You can decide to put it into the HMRC account each month, you can pay it straight away, it just avoids a big bill at the deadline.
3. Prepare for a big bill - You won't just pay what you owe, you'll need to pay half again as a 'payment on account'.
4. Remember your expenses - As a self-employed worker, you may have to pay for utilities, equipment, fuel, a car, uniform and contractors, all of which are allowable business expenses. Be sure to record all of your allowable business expenses throughout the year and enter them on your tax return, as they reduce your profit and therefore the amount of income tax you need to pay.
5. Consider using an accountant – Just because it’s called self-assessment, it doesn’t mean you have to submit your tax return yourself. An accountant can submit it for you if you supply them with the necessary information. You can use our accountant cost guide to get an idea of fees, which are an allowable business expenses and will reduce the amount of tax you owe.
6. Use the Powered Now app – You can use this to manage your invoicing and submit VAT returns directly to HMRC. Find more info in the Members Area on how to download
👉 Click here to read the full article including if you need to do a tax return, FAQs and the self-employed tax return calculator.
Was this helpful?
I'd love to hear your feedback or what you think we can create next?
Thanks
Lauren
It's that time of year already and there are some tips and general 'need to knows' around tax returns like penalties to be aware of.
First things first, if you're newly self-employed, then self-assessment can seem daunting if you're doing this by yourself but with a little prep and knowledge, you can make it simply stress-free!
What is a tax return?
Each self-employed person needs to inform the HMRC of your net income each financial year, this determines the amount of tax you need to pay.
This can be submitted through paper form SA100 or online here at the HMRC website
Late tax return penalties
If you miss the final deadline of January 31st and pay your tax return (Or 31st July for your second payment on account) You'll be charged a penalty - unless you have an agreement with the HMRC themselves.
- Penalty for late filing – The penalty for filing tax returns up to three months late is £100, with a higher penalty if filed later.
- Penalty for late payment – If you don’t pay your tax bill on time you’ll receive a late payment penalty and be charged interest on any money owed. It’s always good to pay anything you can before the deadline to reduce the amount you’ll be charged interest on.
- Exceptions – If you’ve entered into an agreement with HMRC, you may be able to avoid late filing and payment penalties. Also, for the 2020/2021 self-employed tax return, HMRC is waiving late filing penalties until Feb 28th 2022 and you won’t receive a late payment penalty if you pay in full by April 1st. You’ll still be charged interest on what you owe from Feb 1st.
First year self-employed tax return tips
1. Put everything in a spreadsheet -
2. Submit it as soon as you can - Whilst you still have plenty of time (April - Jan) to submit your tax return, still do it so you know how much you'll need to pay. You can decide to put it into the HMRC account each month, you can pay it straight away, it just avoids a big bill at the deadline.
3. Prepare for a big bill - You won't just pay what you owe, you'll need to pay half again as a 'payment on account'.
4. Remember your expenses - As a self-employed worker, you may have to pay for utilities, equipment, fuel, a car, uniform and contractors, all of which are allowable business expenses. Be sure to record all of your allowable business expenses throughout the year and enter them on your tax return, as they reduce your profit and therefore the amount of income tax you need to pay.
5. Consider using an accountant – Just because it’s called self-assessment, it doesn’t mean you have to submit your tax return yourself. An accountant can submit it for you if you supply them with the necessary information. You can use our accountant cost guide to get an idea of fees, which are an allowable business expenses and will reduce the amount of tax you owe.
6. Use the Powered Now app – You can use this to manage your invoicing and submit VAT returns directly to HMRC. Find more info in the Members Area on how to download
👉 Click here to read the full article including if you need to do a tax return, FAQs and the self-employed tax return calculator.
Was this helpful?
I'd love to hear your feedback or what you think we can create next?
Thanks
Lauren
Last edited by Lauren; 22-04-22 at 09:10.
