20 Jan Seven Tips for completing your tax return this year – 31st January deadline!
1. Get your finances in order
Ensure you have a separate account for your business and personal accounts, as this means you can easily identify your business expenses and save time trailing through statements for transactions. If you have struggled this year, try to keep positive and carry any lessons into the next tax year. If you haven’t already, I’d always suggest using accounting software to track your income and expenses to ensure your accounts are correct. I’d recommend Xero, Sage, or QuickBooks because you can link with your accounts, and they will do all the accounting for you.
2. Be clear on what you can claim back
There are various allowable expenses you can claim, and the more you write off, the less tax you will pay. Usually, self-employed people can claim on various expenses such as:
- Travel (fuel, parking, train, or bus fares),
- Office costs (stationery or phone bills)
- Advertising and marketing costs (website)
- Staff costs (salary and subcontracting
Also, if you work from home, you can claim a proportion of heating, electricity, council tax, mortgage interest or rent, internet and telephone use. Don’t forget the government are here to help, and if you are at all confused, you can find out what you are entitled to by visiting https://www.gov.uk/expenses-if-youre-self-employed or by ringing the Self-Assessment helpline 0300 200 3310.
3. Pay into a pension
When you pay into a pension, you receive tax relief (self-employed), so for every £100 you pay, you get £20 tax relief (basic rate taxpayers). Tax relief helps reduce the amount of tax you pay. If you are a limited company, any contributions you make into a pension are classed as a tax expense so you can contribute this towards your retirement goals and reduce tax all at the same time – it’s a win-win!
4. Declare any Covid Support
This year, you’ll also have to declare if you received any grants or payments from COVID-19 support schemes up to 5 April 2021, as these are taxable. This includes the following:
- Self-Employment Income Support Scheme (SEISS)
- Coronavirus Job Retention Scheme (CJRS)
- All other COVID-19 grants and support payments such as self-isolation payments, local authority grants and those for the Eat Out to Help Out scheme
5. Seek professional help
Avoid unnecessary mistakes as they can cost you! Speak to an accountant to offer you tax-efficient advice and help you reduce risk to the business but try to give at ideally 3-6 months before the deadline as this can take up to several weeks for some accountants to submit due to workload and leaving it to the last minute may cost you extra. An accountant will charge for their services, usually costing somewhere between £100- £1000 depending on business needs and complexity – but the benefits may outweigh the costs and save you money. When looking for an accountant, I’d always recommend keeping in mind professionalism, qualifications, and expertise if you have specialist needs. Personal recommendations are the best, so ask around your friends, family, or financial adviser to see if they have someone. Alternatively, if you happen to find a good accountant local to you that is chartered with good reviews, that will also suffice.
6. Register early
Give yourself plenty of time to submit your self-assessment return. You want to ensure you have the right information to hand in to submit successfully before 31st January. Throughout the year, it’s useful to keep a folder of all your business bank statements, receipts, invoices, and any other important documents, so they’re on hand when you need them. Usually, they request this from October, and you have until January to file, but this way, if you make any mistakes, you have an opportunity to correct them. This is because if you make any mistakes, you have an opportunity to correct, as once the deadline has passed and accounts are submitted there is no going back.
7. Pay tax on time
You want to ensure you have the right money set aside to cover your tax bill. Create a plan, ideally a year ahead and regularly allocate money in a separate account to cover your tax and ensure you don’t fall short by the due date.
Follow Makala Green on Instagram at @TheWealthCheck and check out her website www.makalagreen.com