What You Need To Know...
Need self employed tax return help? Our straightforward tax guide breaks down deadlines, deductions and filing processes for busy freelancer
Feeling lost with your tax return? You're not alone!
Filing taxes when you work for yourself can feel like trying to solve a puzzle with missing pieces. The forms look scary, the deadlines sneak up on you, and those income tax rules seem to change every five minutes.
Additionally, you must report any untaxed income to HMRC to ensure you are meeting all your tax obligations.
Being your own boss gives you freedom, but it also lands you with tax paperwork that employees never have to think about. Many people who work for themselves put off their tax return until the last minute because it seems so complicated.
Don’t worry! This guide will walk you through everything you need to know about self-employed taxes in simple, everyday language.
What exactly is a self assessment tax return?
A self-employed tax return (officially called a self-assessment) is how you tell HMRC about the money you’ve earned working for yourself. It’s basically your way of saying “here’s what I made, and here’s what I spent.”
Your self-assessment tax return must include all your taxable income, ensuring you accurately report your earnings to HMRC.
If you’re a freelancer, contractor, sole trader or even a company director, you’ll likely need to file one of these forms each year. The tax year in the UK runs from 6 April to 5 April the following year.
If you operate a limited company, you will also need to file a company tax return in addition to your personal income tax return.
Your return shows your business income, personal income, what you’ve spent on business expenses, and helps work out how much tax and National Insurance you need to pay.
Different sections of the form apply depending on how your business is set up and where your money comes from.
When should you register as self-employed?
If you miss the registration deadline, you could face penalties, so it's best to do it early. The process varies slightly if you're in a partnership or running a limited company, so check which route applies to you.
What are the key tax deadlines you need to know?
If you're filing a paper tax return, it must reach HMRC by 31 October following the tax year end. For online returns, you get longer – until 31 January. Most people file online nowadays as it's quicker and provides instant confirmation.
The main payment deadline is also 31 January, when you need to pay any tax you owe for the previous tax year. You might also need to make "payments on account" – advance payments towards your next tax bill due on 31 January and 31 July.
Missing these deadlines starts with a £100 fine and increases the longer you leave it. Put these dates in your calendar and set reminders at least a month before to give yourself plenty of time.
Which expenses can you claim to lower your tax bill?
One of the best things about being self-employed is that you can claim business expenses to reduce your tax bill. Office costs like stationery, phone bills and internet charges can all be deducted if they’re for business use.
If you have investment income, make sure to report it accurately to claim any related expenses.
Travel costs for business journeys are claimable, including train tickets, fuel and parking. Any stock, materials or equipment you buy for your business can be offset against your income.
Marketing costs such as business cards, website fees and advertising are all legitimate business expenses. If you work from home, you can claim a portion of your household bills based on how much you use your home for work.
The golden rule: keep receipts for everything! HMRC might ask to see them up to six years later.
Record Keeping for Self-Assessment
Keeping accurate records is the backbone of a smooth Self Assessment tax return process.
Throughout the year, make sure to keep detailed records of your income, expenses, and any capital gains. This includes saving receipts, invoices, bank statements, and contracts.
These documents will help ensure your tax return is accurate and that you pay the correct amount of tax. Using accounting software can automate much of this process, making it easier to keep everything organised and ready for your Self Assessment tax return.
How do you fill in your tax return online?
Start by logging into your HMRC online account using your Government Gateway ID and password. Select the correct tax year and then the self-employment section (there are other sections for different types of income).
You’ll need to enter your business income first – all the money you’ve earned from your self-employment. Next, add your business expenses under the right categories. The online system guides you through this step by step.
If you have other income like property rentals or investment income, you’ll need to complete those sections too. Before submitting, HMRC’s system will calculate how much tax you owe, so double-check all your figures carefully.
The system saves as you go, so you can take breaks and come back to it if needed.
Submitting Your Tax Return
When it comes time to submit your Self Assessment tax return, you have two options: online or on paper.
The deadline for online submissions is 31 January, while paper submissions must be in by 31 October. It’s crucial to submit your tax return on time to avoid penalties and interest charges.
Depending on the amount of tax you owe, you might also need to make payments on account.
f you’re unsure about any part of the process, seeking help from a qualified professional, such as an accountant, can ensure your tax return is accurate and submitted on time.
Income tax and self assessment: What you need to know
Income tax is a type of tax that’s levied on an individual’s income, and self-assessment is the process of reporting your income and paying any tax owed to HMRC. Here are some key things you need to know about income tax and self-assessment:
- Income Tax Deduction: For employees, income tax is typically deducted through PAYE (Pay As You Earn). However, if you’re self-employed or have other types of income, you’ll need to report it through self-assessment.
- Tax Year: The tax year runs from 6 April to 5 April, and you’ll need to complete a self-assessment tax return for each tax year.
- Reporting Income: You’ll need to report all your income, including income from self-employment, investments, and abroad, as well as any capital gains.
- Claiming Tax Relief: You may be able to claim tax relief on certain expenses, such as pension contributions or charitable donations. This can reduce your overall tax bill.
- Payment Deadlines: You’ll need to pay any tax owed by the deadline, which is typically 31 January following the end of the tax year. Missing this deadline can result in penalties and interest charges.
- Record Keeping: It’s essential to keep accurate records of your income and expenses throughout the year to ensure you’re reporting everything correctly and taking advantage of any tax relief you’re eligible for.
Understanding these key points can help you navigate the self-assessment process more effectively.
If you’re unsure about any aspect of income tax or self-assessment, it’s always best to consult with a tax professional. They can provide guidance and ensure that your tax return is accurate and submitted on time.
What mistakes do people commonly make with self-employed taxes?
Missing the registration or filing deadlines is probably the most common error – and one that always leads to penalties. Not keeping proper records throughout the year makes tax time so much harder and can result in paying more tax than necessary.
Claiming personal expenses as business costs is tempting but can lead to problems if HMRC investigates. Many self-employed people forget to set aside money for tax throughout the year, leading to a nasty shock when the bill arrives.
Overlooking tax-deductible expenses is like giving away free money. Make sure you claim everything you're entitled to. Trying to do everything yourself when you're really struggling can be false economy – sometimes professional help is worth the cost.
How can you make tax time less stressful?
Set up a simple system for tracking income and expenses from day one. Even a basic spreadsheet works well. Put aside about 25-30% of your income in a separate account for tax – you'll thank yourself later!
Keep business and personal finances separate with a dedicated business bank account. Take photos of receipts with your phone so you don't lose them. Some apps let you organise these automatically.
Block out time in your calendar each month to update your accounts rather than leaving it all until year-end. I learned this the hard way after spending three sleepless nights trying to sort through a shoebox of receipts before my first tax deadline!
Consider using Pie, the UK's first personal tax app designed specifically for working individuals. Unlike other solutions, Pie offers integrated bookkeeping, shows your tax figures in real-time, and simplifies the entire process.
Getting Help with Self-Assessment
If the thought of completing your Self Assessment tax return feels overwhelming, you’re not alone. Many people seek help from qualified professionals and software like the Pie Tax App.
An accountant can provide valuable guidance on completing your tax return, claiming all eligible expenses, and ensuring everything is accurate.
Additionally, there are numerous online resources, including HMRC’s website, that offer information and guidance on Self Assessment tax returns.
If you have a complex tax situation or are unsure about any aspect of your tax return, seeking professional help can save you time, stress, and potentially money in the long run.
Ready to tackle your self-employed tax return?
Getting your tax return right doesn't have to be a nightmare. With good record-keeping and understanding which expenses you can claim, it can be straightforward. Remember those key deadlines and try to file well before the final day.
If you're still feeling unsure, getting professional help can save you both money and worry in the long run. Many accountants specialise in helping self-employed individuals and can often find deductions you might miss.
Check out Pie Tax for a modern approach to self-assessment that takes the headache out of tax time. Their app is built specifically for people like you who want to sort their taxes without the confusion!
Conclusion
Filing your Self Assessment tax return might seem daunting, but with the right approach, it doesn’t have to be stressful. Keeping accurate records, knowing which expenses you can claim, and staying on top of deadlines will make the process much smoother.
If you're ever in doubt, seeking help from a tax professional can save you time, money, and potential penalties. Remember, the earlier you start, the easier it will be.
By following this guide, you’ll be well-prepared to complete your tax return with confidence.
