With less than two weeks until the deadline for self-assessment the pressure is on those who are yet to submit their return, writes Pandle founder Lee Murphy.
If you are yet to complete your tax return, you must do it now, particularly as the tax return deadline is also the tax payment due date, so you may need time to get funds together.
Follow my practical guide on how to get to grips with your tax return.
Don’t wait
According to HMRC, some 746,000 failed to submit their return on time in 2018, each risking escalating fines starting at £100. Yet many could have avoided the fine if they had chosen to submit their return earlier.
As the 31 January deadline moves closer, the system for online returns slows as it deals with a higher volume of users. Leaving it until the last few days to file your return could mean you find yourself taking hours for a 15-minute job because of online crowds.
Don’t wait any longer to get started.
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Get your paperwork together
Make sure to have all your paperwork together before sitting down to start the online process as this both reduce the pain and chance of mistakes.
Typical paperwork you will need for the financial year April 2017 to March 2018 to have at hand includes:
- Details of your earnings from your business: salary, dividends and taxable expenses (which will be on your P60) including details of expenses
- Any Gift Aid payments
- Pension payments
- Details of other sources of income, such as savings, shares, rental income and any royalties.
Visit GOV.UK to begin your submission. The website guides you through the process and is user-friendly.
If it is your first time submitting tax return using the online portal you will need to have contacted HMRC for your Unique Taxpayer Reference (UTR) code to be able to activate your Government Gateway account. The Revenue will only send this by post, so if you don’t have it, contact HMRC immediately here
Have you got your books in order?
HMRC will want to see your profit for the tax year ending April 2018. The majority would have diligent records for 2017/18, but for those who may have been too busy, you are in trouble. Immediately set a couple of days aside now to get your books in order.
Your return will need to be supported with paperwork, including bank statements, sales invoices and receipts for expenses, paying in books, cash books, details of any loans, lease or HP agreements. This will ensure that you are paying the right amount of tax and avoid any nasty surprises further down the line.
If you are finding it challenging to get the paperwork together, there are plenty of online tools available to help, many of which are free.
Get with the digital age
Simple accounting software will help you speed up your bookkeeping tasks, saving you a huge amount of time.
With the use of functions such as automatic bank feeds and file imports, transactions can be categorised in seconds meaning you have more chance of making the deadline. Due to the nature of accounting software, it will also reduce the scope for error which means you pay the right amount of tax and reduce your risk of an HMRC investigation.
What if I missed the deadline or I can’t afford to pay?
If you miss the deadline contact HMRC. If money is tight and you are unable to pay you may be able to agree an extension or to pay in instalments. Do not ignore the problem or you will incur fines and perhaps also attract unwanted attention from the taxman.
Once you have the previous tax year complete, carry the bookkeeping on and complete it on a much more regular basis. Doing this will help you see how much money you are making (which can lead to important decisions being made earlier) and how much tax you are going to owe in real-time which can help you save for it.
When April comes around you will be ready for the next tax return early which will mean you have a less stressful Christmas and new year and will have lots of time to prepare for the tax bill payment.
Lee Murphy is the founder of Pandle the cloud bookkeeping software specifically for small businesses and the self-employed.
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