Over twelve million people are now required to submit a tax return and with that number growing each year, more and more people are coming to the process for the first time. The rise in AirBnB lettings, self-employment, the ‘gig economy’ and people having multiple sources of income are the factors driving more taxpayers to self-assessment.
If you’re finding yourself outside the traditional PAYE system for the first time and you’ve got diverse income streams, getting to grips with what has to be declared, when and how can be a challenge.
Prior planning prevents punitive penalties
Like many necessary evils, completing a tax return is typically one of life’s ‘back burner’ activities. But beware, doing your first return on 30th January, with just 24 hours until the submission deadline, is not the best start. So, the first tip is to plan ahead. Did you know that you can submit your tax return anytime after 6th April each year, as it cover the previous tax year which ends on the 5th of April.
Ok, so reality suggests that’s not going to happen, but try to find the middle ground. One key benefit to completing your return sooner than later (other than knowing its done) is access to the information. If its fresh in your mind or you can download a 12 month statement on 6th April, you’ll avoid having to dig back up to 21 months to find the answers you need. If you leave it too late and miss the deadline, you’ll be charged an initial penalty and interest on anything owing from 1st February.
What figures do you need for a tax return?
Unless you’re Richard Branson, the likelihood is you’ll need a few key figures. The majority of self-assessments submitted in the UK will consist of the following
- Salary for each employment – Best to ensure you have access to gross and net, tax paid, bonuses received, commission payments, NI contributions and any sickness payments
- If you’re self-employed you’ll need your sales and expenses
- Dividends – Money received from shares held in UK companies. This is your tax return, not theirs, so its money received by you in the tax year, not the tax year they declared the dividend.
- Tax credits/benefits – Working tax credits, Universal credit, child benefit etc.
- Expenses – Those paid by you in cash or card (not paid by an employer), mileage details/costs claimed
- Taxable Benefits – details of company cars, allowances, private medical cover
- Additional income – Rents, lump sums, cash receipts
- Income from Investments – ISAs, bank interest, bonds
Do I need an accountant to submit my tax return for me?
No. It’s called self-assessment because it has been designed so that individuals can submit their own returns. If you’re income is straight forward, the online portal is simple to use. If you’re worried about getting it right, you’ve got a complex/diverse income stream or your position has changed significantly during the tax year, then you may benefit from the support and advice an accountant can provide.
An accountant or tax specialist will need all the same information noted above and they will present you with the proposed return before submitting it. At this point you could ask them to talk you through the process, so you can choose to manage it yourself in future.
If you’re thinking it’s too much work or you just want peace of mind, then you may be interested to read this related article.