January 31st is rapidly approaching – and with it, the UK deadline for filling in your online self-assessment tax return. Yep, it’s that time of year again. But don’t leave it until the last minute: avoid a hefty fine by getting your tax return in on time, first time and accurately - here's how...
If your filing system consists of stuffing bank statements and receipts safely out of sight into random drawers or behind the sofa, then unfortunately even these pro tips won’t help you tackle January’s looming self-assessment tax return deadline in just 30 minutes (and we’d advise skipping straight to tip seven).
The good news, though, is that if you’ve kept decent records your tax return should be pretty straightforward. But if you're based in the UK and haven't already done so, you need to get on it now: the deadline for completing your self-assessment form is January 31st, and you'll be hit with a £100 penalty if you miss it.
With this in mind, here are our seven top tax return tips...
1. Sign up
If you’re filing online for the first time, you’ll need a user ID and activation PIN from the HMRC - these will be sent to you via post and could potentailly take a week to arrive, so don't leave it until the last minute to register. To get these, simply sign up to the HMRC's registration page: you’ll need your national insurance number to hand and your 10-digit reference number (which will be on any tax statement).
2. Get a move on
Even if you’re a seasoned pro and familiar with the online system, it’s good practice to complete your tax return as soon as you can - the website can become very busy close to the deadline. So put aside some space in your diary, clear your desk and stop putting it off. After all, it isn’t so much filling out the form that takes the time: it’s hunting down and sorting through all the paperwork.
3. Dig out your P45/P60
You'll need all the relevant information to hand before you can fill out the form – so if you were employed for any part of the tax year you’ll need to find your P45 or P60. Can’t find it? Give the payroll department of the company a quick ring and get the info you need from them. Again, this can be a lengthy process so don’t leave it until the last minute.
4. And the rest…
You’ll also need details of all income earned in the tax year April 2011-12, including self-employed earnings, and income from investments, savings, rentals and capital gains. It might help to print out hard copies of all invoices, bank statements and so on, so that you can quickly access the info when you need it. Check out the HMRC site for a handy checklist of all the records you'll need.
5. Claim it back
Don’t forget to claim back your expenses. Business travel, office rental (or a percentage of your electricity and gas if you work from home), phone costs, postage and so on are all tax deductible, provided they were used for business purposes - and you have the receipts. You can also claim 25 per cent of the cost or value of fixed assets like new equipment and machinery under capital allowances.
6. Check the dates
Make sure you include all income in the tax year that it was actually earned - it’s when you did the work, not when your clients finally got around to paying you. If you partly finished a project before the tax year ended but there was still some work to do in April, then you need to include the income that would have been due on the work completed before 5th April. This is where it gets tricky, so if you’re in any doubt…
7. Call in an accountant
If it’s all become a bit complicated - or you’re worried you’ve made a mistake - don’t just guess. Bring in an accountant to help you fill out your tax return. Not only will they ensure it's done properly (and save you a headache), they’ll also be able to give you invaluable advice on everything from running your accounts to what you can claim back.
For expert advice on everything from how and when to deal with taxes - and what you can claim back - to what to look for in a decent accountant (and much, much more), pick up a copy of The Freelance Handbook - available now online, or from WHSmith in the UK, Barnes & Noble and Books-A-Million in the USA, Chapters in Canada and other retailers worldwide.