Do you work for yourself, operate in a partnership, or have lots of sources of income? If the answer is yes to any of those, the chances are you’ll need to complete a self-assessment tax return.
The deadline is quickly approaching on 31 January, so it’s worth getting ahead of it as soon as you can.
You’ll get peace of mind that it’s all done, and give yourself proper time for accuracy checking. When you get your tax bill early you’ll also be able to factor it into your financial plans, so you don’t have any surprises in the new year.
Who needs to file a self-assessment tax return?
For the most part, self-assessment is for people whose income hasn’t already been taxed throughout the year, such as through PAYE.
You’ll need to file a return if, during the tax year:
- you were self-employed as a sole trader and earned more than £1,000 (before deducting any expenses)
- you were a partner in a business partnership
- you earned £100,000 or more.
You might also need to send a tax return if you received:
- some COVID-19 grant or support payments
- money from renting out a property
- tips and commission
- income from savings, investments and dividends
- foreign income.
There are some other situations where you’ll need to complete self-assessment, such as if you need to pay the high income child benefit charge.
If you’re not sure whether you need to complete self-assessment, you can find out on the Government website – or speak to us.
What’s included in a self-assessment return?
If you need to file a self-assessment return, you’ll need to prepare your paperwork in several areas.
Income
Your income should be the first item on your self-assessment tax return. This can come from a variety of sources:
- Employment: this includes your salary if you’re a limited company director. You should be able to refer to your P60 or P45 when reporting this.
- Self-employment: if you own a business as a sole trader, you must account for all your income and expenses on your tax return.
- Rental property: you’ll need records on the details of the property being let, rental receipts during the tax year, expenditure on the rental property, and mortgage payments.
- Property sales: If you sold a property in the tax year, you should also provide information on the selling date, selling price, legal fees and other costs on the sale.
You will also need information on other sources of income for your tax return, including:
- dividends
- pensions (state and private)
- state benefits (jobseeker’s allowance and maternity allowance)
- capital gains (if you sold any shares or assets in the tax year)
- bank interest
- foreign income.
If you have any other sources of income, speak with us to see if you need to include them on your tax return.
Reliefs
Expenses
If you work for yourself, you can claim expenses which are deducted from your income to reach your profit.
It’s easiest to keep a running record of these throughout the year, to avoid having to work through a stack of receipts at the last minute. Cloud accounting software can help with this.
Pension contributions
If you contribute to a personal pension scheme and want to claim additional tax relief, you will need to include the name of your provider, your membership number, the amounts and dates of the contributions, and your annual pension statement.
Charitable giving
You can also claim additional tax relief for charitable giving if you are a higher-rate taxpayer. To do so, you need the charity name, donation date and amount, and confirmation of whether gift aid was claimed.
We’re here to support you
Everyone’s finances are different, and tax legislation is complex – so the above should serve as a general summary rather than a comprehensive guide to self-assessment.
Make sure you talk to a professional about what’s needed in your return, especially as a sole trader, partnership, or high-earning individual with a variety of income sources.
If you let us handle your tax return, we’ll ask for the information mentioned here, but we’ll also stay on top of all the extra legislation that you might not be aware of. It’s our job, after all.
Get in touch with us today to get your self-assessment tax return done and dusted ahead of the deadline.
