Updated 21st January 2023
Anyone who receives income where tax is not deducted at source will need to fill in and submit to HMRC a Self-Assessment tax return. This could be someone who has become self-employed or is receiving income from shares or dividends, or from rented properties, or even from sharing your home with a lodger.
You could also have set up your new business as a limited company where you would be liable to pay Corporation Tax.
HMRC have made many attempts to make the process of completing a tax return as simple as possible, but many people still struggle with understanding everything that is required. However, you shouldn’t feel too bad – even an intellectual giant like mathematics genius Albert Einstein, said:” The hardest thing in the world to understand is the income tax”.
As soon as you realise you will be required to complete a tax return you must register for self-assessment with HMRC.
This is your first and most important task, and it must be done as soon as possible to ensure you avoid paying penalties for submitting your tax return after the specified deadline.
You should be aware that even after you have registered with HMRC, you may have to wait to receive your Unique Taxpayer Reference number (UTR for short) and an activation code which enables you to log into your HMRC account, so allow yourself plenty of time in advance of any deadline.
Your registration can be done online via the gov.uk website
When you have successfully gone through the online registration process, and you have been issued with your Unique Taxpayer Reference and online activation code, you are ready to begin to complete your Self-Assessment Tax Return.
How do I fill out a Self-assessment Tax Return form?
The tax return form or online pages can look quite daunting, but if you can get yourself organised, it will make the process much simpler. You can either complete the online self-assessment tax return, or you can download a paper version (form SA100), print it off and fill it in.
Other specific tax return forms are available if you are completing a return for a business partnership, or as a Trustee.
It would be a good idea to make a list of everything you will be asked for and prepare all the information required in advance if possible. Don’t forget to have your Unique Taxpayer Reference number and your national insurance number to hand.
Documents you will need will include:
- A P60 showing the income you have received from an employer, or pension fund during the tax year to April 5th 2023 and any tax deducted. If you have had more than one employer or income from more than one pension provider, you would need a P60 for each one.
- A P11D form. If you have earned more than £8500 in the previous tax year and have received benefits and expenses which have not been included in the payroll, you will have been issued with a P11D.
- If you are self-employed, you will need to have your business records to hand, which will include invoices you have issued and payments received, plus a list of expenses you have incurred that are essential to the running of your business.
- Your bank and/or building society statements which would show interest and dividends you have received on your accounts.
- Proof of any contributions to charity or to pension funds which could entitle you to tax relief.
If you are filling in a paper self-assessment tax return (SA100), you should read the helpful explanatory notes at the beginning which give guidance on how to complete each section.
Check through the return to ensure there is a section which will relate to all the income you are reporting and any claims you want to make. If not, you will need what is called ‘supplementary’ pages covering areas such as UK property income, foreign income, employees or company directors and capital gains, which can also be downloaded.
When you begin to fill in the pages of your tax return, make sure you follow HMRC’s rules on how to write on the form:
- You have to enter figures in whole pounds without the pence
- You should round down income figures and round up tax paid, and any expenses being claimed.
- If a box or even a whole page does not apply to you, just leave it blank. Don’t put a line through any boxes or across the page.
- Make sure you’ve checked and double-checked your figures before you enter them up on the form. However, if you do make a mistake, don’t worry. Just put a line through the wrong figures and enter the correct ones right next to the box.
- Resist the temptation to write little messages to HMRC.
- When you finally get through to the end of the form, don’t forget to sign and date it before you send it off. So many people feel such a huge sense of relief that they have completed their tax return that they let their concentration slip and forget this important detail.
Unless HMRC has specifically requested you to do so, you should not send any other paperwork (e.g. receipts or invoices), with your self-assessment tax return. It also makes good sense to keep a photocopy of your tax return.
How do I submit my Self Assessment Tax Return online?
Many people are recognising the benefits of filling in a self-assessment tax return online. At the moment, around 94% of all tax returns are being submitted in this way but you can also submit your return via paper form.
If you are just starting out as a self-employed ‘sole trader’, it would be a good idea to get used to this method now. Here are just some of the advantages:
- It’s easy to access via your HMRC online account, and it is available at all times.
- The deadline for submitting paper tax returns is October 31st. Filing online gives you the advantage of an extra three months, as the online deadline is January 31st.
- You can make a start on your online submission and save your work as you go along, which means you don’t have to complete it all in one go. You can save your details and finish it off on other occasions when you have the time.
All you need to do is register with HMRC for an online account, and you can find full details of how to do this on the gov.uk website
Be sure to register well in advance of the online return deadline (January 31st). HMRC will post off to you everything you need to get cracking online including your user ID, activation code and your Unique Taxpayer Reference number, and this letter could take up to 10 (working) days to get to you.
As with the paper form, good preparation for the task ahead is necessary, and you will need to pull together all of the same information. The first section will be your personal details which you need to review and update where necessary. Don’t forget to click ‘Save and continue’ before moving on through each section.
Following on, the second section relates to your income from various specified sources. If you click ‘yes’ on any of these boxes, further questions will pop up asking about the source of the income.
This is quite an important section because it allows you to personalise your tax return so that it relates to exactly the kind of income on which you are reporting, and saves you having to trawl through lots of unnecessary questions.
Subsequent sections include income relating to building society or bank interest, share dividends and pensions, student loans, child benefit and marriage allowances, and follow the same format.
There’s no need to rush through the process. You can take your time and read through each section carefully to ensure you understand the questions before you type in your answers. You can always pause and save what you’ve done so far, then come back to it later or on another day if you need to go away and find further information.
When all is done, it’s worth reading everything through again to double-check the figures, before you finally click the ‘Submit’ button.
Can I do my own Tax Return online?
Yes, of course. There is nothing to prevent you from submitting your own self-assessment tax return online but bear in mind you are totally responsible for all of the information in that return, and for ensuring it is received by HMRC in good time before the deadline of January 31st.
Doing your own tax return means keeping up those good intentions of ensuring your business records are in good order, and not in various bags and shoeboxes.
If you are filling in your own tax return online, it is even more vital to ensure all your figures are correct. You can always go back through the pages and make any amendments before pressing ‘submit’.
You also need to ensure you are claiming all the reliefs and any allowances to which you are entitled.
Section five of the online tax return form helps you double-check everything by giving you the facility to click on each of the sections you have filled in to check all is correct.
Section seven of the online form allows you to print a copy of the return and also save a copy to your computer. You should also print a copy of the acknowledgement receipt.
If you are self-employed, you are legally required to keep all the documentation and records relating to the information you have included in your self-assessment tax return for up to five years after the end of the January 31st deadline. During that time period, if HMRC decides they want to inspect any of your records and they are not available, you could be liable for a fine of up to £3000.
You may feel that doing your own tax return online is a way of saving money, but this may well be a false economy. Many businesses are just too busy to stay abreast of the intricacies of constantly evolving tax rules and regulations. Using our experienced team of professional accountants will ensure you maximise any tax savings and avoid any mistakes or penalties for missing deadlines.
Find out more about how we can help with our Self-assessment Tax Return service