If you’re self-employed, now January has rolled round again it’s time to think about your taxes.
With the self assessment tax deadline for filing your 2009-2010 return fast approaching on 31 January 2011, chartered accountant Katrine Richardson shares her tips for completing your return with ease.
1. Check whether you need to complete a Self Assessment tax return
If you have been in charge of a business between 6 April 2009 and 5 April 2010, either as a self-employed person or as a director, you will have to submit a tax return. This is a still a requirement even if you earned less than the personal allowance.
You will also need to complete a return if you received income, above set thresholds, on savings, investments or property.
2. Register online to expedite the process
If you need to submit a tax return you are required to register online at www.hmrc.gov.uk before you can file a return. You will need the following details to hand – your Unique Taxpayer Reference (UTR), national insurance number and post code.
HM Revenue & Customs (HMRC) can provide your Unique Taxpayer Reference if you do now have this, but it will delay your filing. Make sure to register before 21 January as this is the last possible date to complete the registration process and ensure you can meet the 31 January deadline.
3. Don’t leave it until the last minute
If you are late with your filing you are likely to be charged with a £100 fine so don’t delay!
4. Use your losses to your advantage
If you have submitted self assessment returns previously make sure to take into consideration any prior-year losses. These losses should be offset against any profit made in the current tax year.
5. Include all your income received in the tax year
It is important to disclose all income such as rental income, capital gains, dividends from shares and bank interest received. However, keep in mind that interest received on certain national savings and ISA accounts do not need to be disclosed on the return.
6. Don’t be tempted to round-up figures
HMRC has stated that this can indicate a person’s affairs have not been properly maintained and could trigger a further enquiry.
7. Remember to deduct all eligible expenses
HMRC allow individuals to take into account certain costs, such as student loan repayments and personal pension contributions, and deduct these when preparing their self assessment return. Remember to include these costs as they can make a considerable difference to your tax bill.
8. Claim for all business expenses and capital allowances
If you forget to deduct business expenses you will be hit by a double whammy – not only do you end up paying for these expenses out of your own pocket, your tax bill will increase as well.
9. Start saving for next year’s return now
Do not forget that you will have to pay half of this tax year’s tax bill as a payment on account on 31 January, at the same time as you pay your 2009-10 tax bill. However, if you know that your circumstances have changed since last April, you should consider notifying HMRC, as it may be possible to decrease any payment on your account for the 2010-11 tax year.
10. Get professional advice
If your affairs are complicated, consider getting advice. DIY tax returns can end up being a false economy.
* * * *
Katrine Richardson is a director at Metric Accountants, a firm of chartered accountants specialising in accountancy, tax and business advice for entrepreneurs.
If you would like further information regarding self assessment, or any other accountancy query, please contact Katrine on 0845 304 5473 or by email – email@example.com
Metric Accountants is currently offering a 10% discount on first year core accounting services. To get a free, no-obligation quote, simply quote “Twenty Ten Club”.
Metric Accountants does not take any responsibility for losses incurred after acting on the above information and suggests that individuals seek professional advice.
For more information visit www.metricaccountants.co.uk