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Self Assessment: Is it really that hard?

Self-Assement is it really that hard?
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You’ve had a great idea for a new business, and now it’s time to hand in your notice, and set up alone. Or at least it would be, except for that one black cloud looming on the horizon. And that black cloud is taking the shape of a tax inspector, waving a Self Assessment tax form. Run for the hills!

Save on accountancy bills!

Of course, employing an accountant to take care of your financial affairs would be far easier, but you are a new business and therefore looking to save costs in every possible way.

And this means completing your own Self Assessment form – which worries you enough to make you consider shelving the idea of going solo. But it doesn’t have to be like this. The Inland Revenues TV campaigns actually speak the truth: Tax Doesn’t Have to be Taxing.

The HMRC website is super helpful

The HMRC website has a step-by-step guide to talk you through the process – everything from completing your tax return to keeping records, and even the best software to use.

If you would rather talk to a person, there’s a telephone helpline. It may take a while to get through to, but the advisers are only too happy to help. Most of the queries they will have heard before, so don’t be afraid to test their knowledge.

Online or paper Self Assessment- it’s your choice

You can fill in your tax return in two ways: Online, and paper. Returning it online is preferable for most, as you have three months longer to complete and send it, plus there is no chance of it getting lost in the post. It also saves on printing and paper costs.

Your account is safe, secure and encrypted, and you have a password and a unique user identification number. You also get instant acknowledgement as soon as the HMRC receives your return. What’s more, your tax is worked out automatically and immediately, so you will know precisely how much you owe. Occasionally, the HMRC can end up owing you money, and they can pay you back more quickly online than if you send a paper return.

Self Assessment onlineKeep it simple, pay by direct debit

When it comes to stumping up the cash, you can pay by Direct Debit – once again, it’s safe, secure, and you are far less likely to miss a payment deadline.

Possible penalties

It’s important not to miss the tax return deadline, because the fees soon start to add up. If your return is one day late, you will be hit by a £100 penalty. This applies even if you don’t have any tax to pay, or you have paid the tax you owe. Anywhere up to three months late is charged at £10 a day, on top of the fixed £100 penalty. And, if you submit your form six months late, the fine is £300, or 5% of the tax due – whichever is the higher of the two.

The HMRC do allow for mistakes. For instance, make a mistake, and you have 12 months from the submission date to the end of the next tax year to correct it. Mistakes like this are called ‘amendments’, and to correct them, resubmit the relevant parts of your tax return.

If you are due a refund (joy of joys) you can tell HMRC how you would like to receive it – it can either be deducted from your next return, or repaid directly into your account.

Keep your accounts organised for your own sanity

Before you get started, you will need the relevant paperwork. Getting halfway through your return with an impending deadline, only to find out you are missing vital information can be a nightmare, so preparation throughout the year is essential.

What else do you need?

If you have one, you will need a P60, plus details of any pay and taxable expenses from your employer. You will also need your bank and building society statements, paying-in book, cheques, and any dividend vouchers you may have. You will also need your self-employment accounts, and information on any other income, which can include savings, investments, pension and property.

Keep records

Keep and file your receipts somewhere safe – these can include anything from petrol, to stationery, to computing to office furniture. All of these will be needed when you complete your return.

Although you don’t have to send any of these paper records with your tax return, you must keep them for six years after the end of the tax year. And if you don’t have receipts for what you spent, you can always estimate, but remember to be conservative. Outrageous claims could of course lead to an investigation.

And you’re done!

And last but not least, remember to SIGN your return on the very last page. Sweet relief – the thing is finished, meaning you can concentrate on running your business and earning more cash – until next year, that is…

 

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About Rebecca Robinson

About Rebecca Robinson

After spending the last 8 years juggling life as a mum of two, wife and working full time as a Project Manager for a global telecommunications company, Rebecca Robinson made the decision to follow her love of writing and took the plunge; turning her passion into a full time career. Since becoming a full time writer, Rebecca has worked with various media and copy-writing companies and with the ability to make any topic relevant and interesting to the reader, now contributes to The Working Parent on articles ranging from credit cards to teenage relationships. Ever the optimist, Rebecca's dreams for the future include a house in the country filled with children, dogs and horses in the field!

Website: Rebecca Robinson

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