A Self-Assessment tax return can look a little daunting, but if you’re prepared, organised and understand what the you’re being asked for, it is easier than it initially looks. This preparation will ultimately save you time, recue your stress and ensure the accuracy of your tax return as the last thing you want is a penalty from HMRC.
We’ve put together some steps that you can take to avoid the stress of your Self-Assessment tax return, and make the whole process more efficient.
Understand your tax obligations
First things first, you need to understand the UK tax system but specifically the requirements for your situation. Know which tax forms you need to complete, what information will be required, and when the deadline is. The HMRC website is the best place to get detailed information and guidance on various tax matters, or speak to your accountant.
It might seem like a chore, but your future self will thank you. Keep all your tax-related documents such as invoices, receipts, financials statements in a folder (if they’re in hard copy form), or a digital system if they’re online. Having everything together will make it so much easier to locate and gather the necessary information when you need it.
Keep accurate records and regularly review accounts
Take the time to maintain accurate and up-to-date financial records throughout the year. A good way to do this is to allocate the same time every week to update information including income, expenses, and any relevant deductions. Periodically, do the same for reconciling your bank statements and reviewing your financial records. By making it routine, you’ll find it much easier to keep on top of it, and then when it comes to completing your tax return, you’ll have all the information you need. This will also help you to identify any discrepancies or errors early on, so you have plenty of time to remedy them before submitting your tax return.
Accounting software or apps
There are a number of different accounting software and apps available that have been designed for small businesses or sole traders. These tools are really useful as they can automate calculations, track expenses, and generate reports. Your accountant will certainly thank you for using one too! Some of them may even integrate with HMRC systems so you can submit your tax return electronically.
File your tax return early
Our ’10 reasons to file your Self-Assessment early’ article lists 10 reasons why it is worth submitting your tax return early, so have a read of that once you’ve finished this one. But the long and short of it is, avoid that last minute rush and complete your tax return well before the deadline. Filing early will reduce stress and allow you to plan for any tax payments or refunds in advance. This proactive approach not only saves you from the hassle of last-minute rushes but also sets a positive tone for your financial year.
Plan for deductions and reliefs
Understanding allowable deductions and reliefs specific to your tax situation will make the process a lot easier. Keep records of any eligible expenses (we’ve listed many of them in our ’10 Self Assessment tax return mistakes and how to avoid them’ article) to maximise your deductions and potentially reduce your tax liability.
Seek expert advice
Completing your tax return can be a bit overwhelming and time consuming, and although HMRC have tried to make it as easy as possible, sometimes you do still need that expert advice. So speak to an accountant, who can ensure compliance, advise you on tax planning strategies, explain allowable deductions, and take care of the whole process for you.
Gateway ID and UTR
Two common mistakes we often see are:
- Forgetting to register for a Government Gateway account, or losing the details; and
- Forgetting to apply for or losing your Unique Taxpayer Reference (UTR) number
These are easy to register for/recover the information, but they may take a few days to arrive so make sure you’ve got these well in advance.
Completing your Self-Assessment tax return comes around the same time every year, as does payments on account, so the sooner you can get into the habit of scheduling time to complete some simple tasks, the better you’ll be in the long run. HMRC does provide some online help, and they have helplines available too, but if you have a particularly complex tax situation, or simply want some help and guidance, a qualified accountant will always be able to help.
If you want to speak a member of the team about any of the points in this article or anything Self-Assessment related, get in touch.