Everything You Need to Know Before 31 January
As the January 31st deadline for self-assessment tax returns looms large, many people find themselves scrambling to file their returns on time. Whether you’re a freelancer, contractor, or small business owner, it’s essential to stay on top of your tax responsibilities to avoid penalties and interest. This guide will walk you through the basics of self-assessment, provide a step-by-step filing process, and highlight some common mistakes to avoid. Plus, we’ll share how our business can help with last-minute filings, so you don’t miss that critical deadline.
What is a Self-Assessment Tax Return?
A self-assessment tax return is a system used by HM Revenue & Customs (HMRC) to collect Income Tax from individuals and businesses. Unlike employees, whose tax is automatically deducted from their wages through the PAYE system, self-employed individuals or those with additional income must file a self-assessment tax return. This allows you to report your income, claim allowable expenses, and calculate how much tax you owe.
Step-by-Step Guide to Filing Self-Assessment Tax Returns
Filing a self-assessment return can seem complicated, but breaking it down into manageable steps makes the process much easier:
- Register for Self-Assessment
If you haven’t filed a return before, you’ll need to register with HMRC. This should be done by 5 October of the year following the tax year you are filing for. Once registered, you’ll receive a Unique Taxpayer Reference (UTR) number. - Gather Your Documents
Before starting, make sure you have all the necessary documents:- Your UTR number
- P60 or P45 (for employees)
- Details of any additional income (e.g., freelance work, rental income, dividends)
- Records of business expenses (if self-employed)
- Bank statements
- Details of pension contributions and charitable donations
- Log into HMRC’s Online Portal
Using your Government Gateway ID, log into the HMRC portal to start your tax return. If you don’t have an account, you can easily create one. - Fill in Your Tax Return
Complete the required sections based on your income. There are specific sections for employment income, self-employment income, savings, and other sources of income. Be thorough in entering information to avoid errors. - Double-Check Your Entries
Carefully review all the information you’ve entered before submitting. Incorrect entries can lead to penalties or delayed processing. - Submit and Pay
Once you’re happy with your return, submit it electronically through the HMRC portal. Don’t forget to pay any tax due by the 31 January deadline. You can make payments online, by bank transfer, or via direct debit.
Common Mistakes to Avoid
- Missing the Deadline: Missing the 31 January deadline can result in an automatic £100 penalty, even if you owe no tax. Avoid this by filing early!
- Failing to Include All Income: Make sure all sources of income are included, including freelance work, rental income, and investment earnings.
- Incorrectly Claiming Expenses: Only claim allowable business expenses. Incorrect claims can lead to penalties and interest charges.
- Not Keeping Proper Records: Poor record-keeping can lead to mistakes when filing. Ensure your financial documents are organised and up to date. See our bookkeeping guide to ensure your keeping proper records.
Need Help with Last-Minute Filings?
At Beckett Taylor, we understand that filing your tax return can be overwhelming, especially as the deadline approaches. If you’re feeling the pressure or haven’t started your return yet, we can help! Our experienced team can assist with last-minute filings, ensuring everything is completed accurately and on time. Don’t risk costly penalties—contact us today for support in making sure your self-assessment is filed before the 31 January deadline.
Remember, a little preparation can go a long way in reducing stress and avoiding fines. Let us take care of the details, so you can focus on what matters most to you!