Handy tips from Sage: Top tips to an efficient Self-Assessment process
Owning your own business can boast of many new and liberating opportunities. However, when it comes to your finances there are a number of steps, such as the Self-Assessment tax return, that cannot be avoided. Chris Downing, Director of Product Marketing, Accountants & Bookkeepers at Sage has five top tips for getting your Self-Assessment done and dusted.
What is Self-Assessment?
Self-Assessment is a system put in place by HMRC to calculate how much income tax you should be paying based on your income. Recent research has found that self-assessors are collectively taking a combined 19 million hours to complete, so it comes as no surprise that the task is often pushed aside until it gets down to the wire.
However, it doesnt have to be this way.
With just a few days until the Self-Assessment tax return deadline of 31st Jan 2021, here are some handy tips from Sage to help make filing your next or even your first tax return more efficient and less stressful.
1. Understand if you fit the bill
Firstly, do you need to file a tax return? There is no point getting bogged down if you arent required to file one. Understanding if you are required to complete an assessment can be done through a simple online questionnaire, provided by the government.
2. Get organised and keep your house in order
Completing a Self-Assessment tax return is much easier if you have good records. Once you have registered, this is the next thing to tick on your priority list. Keeping good records (such as bank statements or receipts) will ensure that you are able to fill in your tax return correctly.
Whether it’s by keeping a sleek filing system, using separate bank accounts or using accounting software, tracking your income and expenses throughout the year, rather than leaving it to the last minute will not only give you peace of mind, but can also help to speed up the Self-Assessment process.
3. Register for Self-Assessment
Assuming that you do fall under the bracket, the first step is a simple one – register yourself with HMRC as either self-employed, not self-employed, or as a partner or partnership. The process varies according to your status.
You must make sure you leave up to 20 working days for HMRC to process your application and give yourself plenty of time before the deadline to complete your return.
To register, youll need your National Insurance Number and personal business information.
You can choose whether to file your Self-Assessment tax return by post or online the latter allows you to save drafts, review returns and print tax calculations. If completing your tax return online, you will need to register for online services first. HMRC will send you an activation code. Allow up to at least a week for this to arrive.
Following this, you will need to input the Unique Taxpayer Reference code, activation code and your postcode in Government Gateway or GOV.UK Verify.
Once you’re registered ensure that you have all your tax records, dividend vouchers, receipts and other information in order to complete the online form.
4. don’t be afraid to ask for help, this can save a lot of time and risk
Accountants can often pay for themselves? highlighting tax efficiencies can be worth more than the cost of their services. They can also spot potential mistakes, reducing the risk of you having to face an investigation by HMRC and possible penalties for getting your tax return wrong.
If you are considering getting help, it’s worth appointing an accountant or tax adviser early. The majority of businesses complete and submit their tax returns during the same period of time (typically in December and January). Therefore, if you leave it late, you might struggle to find an accountant who has the capacity to support you.
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