The Self Assessment deadline is fast approaching – and you need to act now in order to make sure that you meet it.
Self Assessment forms must be filed online by 31 January, and for many first-time Self Assessment taxpayers this deadline can be a daunting one. So how can you ensure that your tax return is filed with the minimum of fuss?
1. Make sure you’re registered
If you are completing your Self Assessment online for the first time, you should understand that you need to apply for a username and PIN before you can use the HMRC Online Services platform. You can do this through the HMRC website, but you should note that your activation code will arrive on paper through the post, and this can take as much as a week. You should therefore act now to make sure that you are registered in time.
2. Get your documents together
You cannot complete your Self Assessment until you have all of the necessary documentation together. Ideally you will have been collecting all of your invoices and receipts in an orderly fashion throughout the year, but in reality this is often not the case. Spend some time sorting out your documents. This can be a time-consuming process, and doing this now can help to ensure that you meet the deadline.
3. Invest in bookkeeping software
Some Self Assessment taxpayers still prefer to do their calculations using pen and paper, but for the rest of us it makes sense to invest in bookkeeping software. This will help you keep track of your income and expenditures more effectively – and, depending on the software you choose, it can also help you manage your invoicing processes better. Many bookkeeping packages now offer automated invoice chasing, meaning that you can keep a tighter grip on your credit control throughout the tax year.
4. Don’t round up
It can be tempting to round figures for the sake of ease – but HMRC has indicated that doing so can cause them to think that you are not taking sufficient care. Avoid rounding up figures, and instead ensure that you give accurate amounts, in order to minimise the chance of an investigation – and, of course, in order to make sure that you are paying the right amount of tax.
5. Remember the payment on account
In most cases, as well as the tax you owe, you will also be required to make a payment on account. The payment on account is a compulsory way of spreading tax payments. Under the system on 31 January you pay an amount equivalent to 50 per cent of your bill for the tax year for which you have just filed, and the remaining 50 per cent on 31 July. Then, the following 31 January, you make up any shortfall, in addition to the next year’s payment on account. You should already have set aside money to pay your tax bill this month, but it is important that you don’t forget the payment on account, as this can cause a nasty surprise.
6. Don’t miss the deadline
Missing the 31 January deadline is an expensive prospect. You will receive an automatic £100 fine which, after three months, will be increased by £10 a day for up to 90 days. The fines increase yet further after six and 12 months. In addition you will have interest added to the tax due: 5 per cent after 30 days, and a further 5 per cent at both six and 12 months.
7. Don’t throw things out
Finally, you might think that you no longer need your records once you have filed your return. This is definitely not the case. Business owners and the self-employed are legally obliged to keep records for six years, and you will be required to present these in the event that you are the subject of an HMRC investigation.