Last-minute tips for completing your tax return
It’s rapidly approaching 31st January, the deadline to complete your tax return online – so if you haven’t done it yet, you might want to think now about digging out that old shoebox of receipts and figuring out exactly what you owe to HMRC.
You need to fill out a tax return if you’re self-employed and work as a sole trader, if you’re a partner in a business or a company director (unless it’s an unpaid position, eg for a not-for-profit), and also if you a run a business whilst being employed, even if you pay tax through PAYE for this.
If you’ve never filed a tax return before, there’s no way to miss your fine of £100 by this point, plus an additional £10 a day (unless you have a valid excuse) - because even if you’re registering to do it online it takes up to seven working days to receive your activation code in the post. You can’t file your tax return without this. But if you have registered before there’s still time to get it done before the deadline. Here are our tips for doing it last minute, because we know you’re busy.
Grab your paperwork
Get ready to settle in to the task by finding the paperwork you need – included but not limited to your P45 if you’ve left a job within the tax year, details of any income you receive, and all the receipts and invoices you need. Having everything ready in one place makes the process just that bit easier.
Set some time aside for hard work
If you have an accounting system or bookkeeping method in place, congratulations! Finding the information you need about income and expenses should be readily available.
If, however, keeping on top of finances isn’t your strong point, you’ll have to meticulously go through every receipt and invoice, and through your bank payments and transactions too. If you haven’t done this in months (or ever) this can take a long time. A really long time. And it’s vital that you don’t rush things, as if you make even a small mistake) you could be fined, even if the mistake is completely innocent. Even something as small as not ticking the confirmation box at the end of the form could see you in trouble.
Make sure, however, that you’ve claimed for everything you’re entitled to. For instance, if you work from home you could be eligible to claim a proportion of your bills and rent as an expense. Every bit helps.
Technology is your friend
To get organised, why not consider going paperless? Photos and scans of your documents are completely acceptable – just make sure that everything is backed up to the Cloud, in case it’s needed at a later date. Platforms like Evernote can keep your information organised, and taking photos of receipts as you go along saves you drowning in random bits of paper come the end of the year.
There are also more and more options when it comes to accounting and tax help. We love TAXO’D, a Virgin StartUp funded business that’s designed to make tax a piece of cake for freelancers. It’s currently in Beta mode, so keep an eye out for the launch.
Learn from your mistakes
If you’re late filing, you’ll pay the £100 penalty – it’s annoying, but if this happens to you learn from your mistakes for next time. What went wrong this year? Were you too late registering your business, were you too disorganised with your receipts and statements, did you fail to set aside enough time? Next year see how you can improve, whether this means putting aside a day every month to go through your accounts, enlisting the help of an accountant, or setting a million calendar reminders in the run-up to tax return time. Even something as simple as updating a spreadsheet with transactions daily can really help.
Remember to pay
So you’ve filed your return and you’re raring to go. Brilliant. But now it’s time for an important step – to pay your tax. Again, you’ll be charged penalties for late payments, so it pays to pay. You have until 31st January to pay any tax owed for the previous tax year (called a balancing payment) and a ‘payment on account’ (which is an advance payment towards your tax bill.) You then have until 31st July to pay your second payment on account. There are other ways you can pay to spread the cost – find out more here.