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What Do I Need To Complete My Tax Return?

by Admin

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If you have earnings outside of PAYE, chances are you’ll need to file a tax return. This is an annual submission, due on the 31st January, that lets HMRC know your taxable income and how much tax you need to pay. If you fail to submit it or forget to pay your tax bill, you could face a fine.

So to ensure that doesn’t happen, we’ve asked Mike Parkes from GoSimpleTax to explain the tax return process and keep you on the right side of the taxman.

Get registered with HMRC

If you’ve been a sole trader or received income from other sources (like property) before, you may have already filed a tax return. If not, you’ll need to register for Self Assessment with HMRC.

Once complete, you’ll receive a Unique Taxpayer Reference (UTR) number that identifies you and enables you to submit a tax return. When your UTR arrives, you’re able to set up your Government Gateway account. It’s here that you’ll file your return (either manually or through software).

Bear in mind that it could take up to 20 days to receive your UTR, so be sure not to leave it too late.

Have all your documents to hand

Now you’re registered, the next step is to prepare the information you need to complete your tax return. This includes:

• Your UTR
• Your National Insurance number
• Employment income and benefits received during the year (forms P60 and P11D)
• Any income you’ve received as part of a self-employed business
• A total of any rent you’ve received
• Certificates detailing interest you’ve received from your bank
• Any income you’ve received from overseas
• Any income you’ve received as part of a partnership (one partner should also file a tax return for the partnership as a whole)
• Information about any dividends received
• All taxable benefits you’ve received from the state
• All capital gains you’ve made by disposing of assets
• Information about any Gift Aid payments you’ve made
• Details of any pension contributions (you may be able to claim some of this money back)
• Details of any tax payments you’ve already made this year

All of the above information only needs to refer to the tax year that you’re filing for. In other words, if you’re filing before 31st January 2021, the period will cover 6th April 2019 to the 5th April 2020.

Don’t forget your expenses

While it’s important to keep track of your income, it’s equally important to keep track of your expenses. Any expenditure you’ve incurred during the year may be allowable and used to lower your tax bill. Whether you’re self-employed or a landlord, HMRC have prepared lists of regular expenses you’d expect to see.

You won’t need to send any evidence with your tax return. However, it’s important that you keep your records safe for up to six years in case HMRC investigates your tax return.

Pay your tax bill

Once you’ve filed, HMRC will calculate your total tax liability. Obviously, if you file early, you’ll be aware of your liability well ahead of the payment due date, allowing you to manage your cash flow better.

There’s no legal requirement to file early though – both the tax return and any money you owe are due on 31st January following the end of the tax year.

This tax year, however, HMRC are allowing some Self Assessment users affected by COVID-19 to spread their tax bill over a period of 12 months. Users that file early will be able to determine how much they can pay right away, and then how much they’ll need to pay each subsequent month, using the government’s Time to Pay service.

You can check your eligibility and set up your payment plan by logging in to the Government Gateway. Alternatively, you can call the Self Assessment Payment Helpline on 0300 200 3822 and talk through your options.

That’s it! You’ve officially completed your tax return. Now to prepare for the next one…

About GoSimpleTax

GoSimpleTax software submits directly to HMRC and is the solution for self-employed sole traders and anyone with income outside of PAYE to log all their income and expenses. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.

Trial the software today for free – add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.

Tags: Employed and Self Employed, HMRC, income tax, national insurance, Self Assessment, self employed, tax rates

Why You Should Go Digital For Your Self-Assessment

by Admin

There are always people who prefer paper-based accounting and self-assessments, reluctant or uninterested to learn to use new tools, they prefer physical copies over digital documents. But this could come at a cost.

By transitioning to digital, your accounts will be easier to manage and they’ll take a fraction of the time to process, enabling you to work on other elements of your business.

We’ve asked Mike Parkes from GoSimpleTax to explain more, and highlight how you can benefit from going paperless.

Real-time answers

Paper, by nature, is chaotic. You’ll need to file and accurately record your accounts – up to six years of your accounts, in fact, to ensure that you are covered if HMRC launch an investigation into your tax return. That’s sure to take up a lot of space, and it also doesn’t provide you with an easy-to-access overview of what you owe the taxman.

Digital files, on the other hand, are much easier to read. Especially if you invest in a tax return solution like GoSimpleTax. Tools like these allow you to record your income and expenditure in real time, meaning that whenever a you wish to know your tax liability it is available in a few short clicks.

Plus, as some tax return software providers also highlight any opportunities to claim tax relief, there’s an extra incentive for you to stay on top of your record-keeping.

Record income more easily

Another benefit of going digital is the ease with which you can record your income. At the moment, you have to log each of your paid invoices into your tax returns. But with invoicing tools, that all changes.

By using software to request payment, any invoices paid will automatically update your accounts. For example, if you receive a payment for an invoice you sent, your predicted tax bill will be automatically updated based on the amount of that payment. This saves you time and also unifies two of your businesses most important admin tasks: invoicing and the tax return.

You can also use these digital tools to understand when to schedule sending invoices as well as the follow-up emails to ensure that customers pay on time. Integrations with online payment solutions like SumUp and PayPal can additionally help your customers pay you more quickly using a debit or credit card, saving you from chasing payments in the first place.

Each of these payments will then filter into your tax returns, making the 31st January tax return deadline much easier.

Enhance security

Tax return and invoicing software also allows you to log all income and expenses in the system. That means no more hoarding scraps of paper – instead, you can take photos of your expenditure and you can upload it to the cloud, where it’s secure and less likely to be stolen.

Be MTD-ready

Last but not least, going digital means you’ll be ready for upcoming legislation. Making Tax Digital (MTD) was a government initiative launched in 2019 to gradually digitalise the UK tax system. It started with MTD for VAT, which stipulated that VAT-registered businesses with a taxable turnover above the VAT threshold would need to digitalise their accounts by 2022.

Soon this will extend to all self-employed individuals with an annual income above £10,000. The reason for this is that the government believes, by using software to submit tax returns, there will be fewer avoidable mistakes. These mistakes cost the government £8.5 billion in 2018/19.

By adopting this software now, you’re well ahead of the MTD for Income Tax roll-out date. So, not only will you be compliant with the incoming legislation, but you’ll also benefit from a streamlined workload well ahead of your competitors.

About GoSimpleTax

GoSimpleTax software submits directly to HMRC and is the solution for self-employed sole traders and anyone with income outside of PAYE to log all their income and expenses. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.

Trial the software today for free – add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.

Tags: Employed and Self Employed, HMRC, income tax, Self Assessment, self employed

Who needs a UTR number anyway?

by Admin

** 25/01/21 HMRC updated their guidance to state that they would not be issuing fines for late self-assessment tax return submissions until 28th February 2021. However, the deadline of 31st January remains for payments and any late payments will incur interest at 2.6%.

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If you are a self-employed sole trader, partnership or limited company in the UK a Unique Taxpayer Reference (UTR) number is required. The number is unique to the individual or organisation and will never change.

You will also need a UTR if you have other forms of income or expenses that require you to file a Self-Assessment tax return.

Should you not yet have a UTR you will be unable to submit your self-assessment tax return and could run the risk of upsetting HMRC. Penalties are introduced by HMRC for late filing**.

So, to help reiterate the importance of UTR numbers and how to correctly acquire your own, we’ve asked Mike Parkes from GoSimpleTax to shed some light on their role in tax return submissions.

What is a UTR?

A UTR helps HMRC identify and process tax returns against the correct taxpayer’s records.

If you have income outside of PAYE or own a business and don’t act compliantly when it comes to your Self-Assessment tax return, you could face criminal prosecution.

Who uses them? 

Any individual with self-employed income or income from rental property probably forms the biggest group that will need a UTR.

These individuals will need to perform a Self-Assessment tax return. For other taxpayers, it may also be relevant when registering for the Construction Industry Scheme or working with an accountant.

How can I get one?

As you won’t receive a UTR number unless you’re registered as either self-employed or a new business, you’ll need to do so on HMRC’s website. Alternatively, you can call them on 0300 200 3310. There is no cost to doing either.

Be careful if you have already started trading. HMRC expects you to register within at least three months of the end of your first month in business. They will consider strict penalties if you fail to do so.

To avoid these fines, register as soon as you can with all the below information to hand:

• Full name
• Date of birth
• Email address
• Home address
• Phone number
• National Insurance number
• The date you started self-employment

Double-check that you have fully completed the process if you’re still waiting on your UTR following registration.

What if I’m already registered?

You should already have a UTR code somewhere. If you’ve misplaced it, start by checking any correspondence that you may have received from HMRC. All previous tax returns will reference it, along with any notices you may have had to file a return, payment reminders or statements of account.

In addition, your HMRC online account will also display the code, provided you can access it. If none of these options prove fruitful, contact the Self-Assessment helpline.

About GoSimpleTax   

​GoSimpleTax software submits directly to HMRC and is the solution for freelancers and the self-employed alike to log all their income and expenses. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.

Get started today, it is free to try – add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.

Tags: HMRC, income tax, Self Assessment, self employed, self employment, tax return

The Paper Tax Self-Assessment Tax Return – What you need to know.

by Admin

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The paper return deadline is this month, 31^st October, therefore we thought it would be useful to invite Mike Parkes from GoSimpleTax to explain how best to prepare for the Self-Assessment tax return submission and file with confidence.

New comers to submitting Self-Assessment tax returns, should know it pays to know that there are three ways of filing. Firstly, you can submit via the HMRC site and receive instant acknowledgement post-submission. You can also use commercial software to do this for you. Or, you can send a paper tax return to HMRC in the post.

Whichever method you choose, it’s important to understand your exact responsibility. For those who are self-employed sole traders or Landlords letting out UK property, paper submissions can be complicated as they involve additional forms and documentation.

1. Be conscious of the deadline

Should you choose to file a paper tax return, don’t forget to file before the 31^st October deadline. We would recommend sending your paper submission prior to the October deadline, either through recorded delivery or with some proof of posting in order to prove your compliancy.

If you miss the deadline for submitting your paper return, don’t be tempted to file it late – you have until 31^st January to complete one online. Just don’t submit both. You will be charged penalties from the 1^st February for any late submissions.

2. Organise supplementary pages

Remember, it isn’t enough to submit the main SA100 tax return. You need to bundle it together with the rest of your documentation that references your property or self-employment income.

For any income as a landlord, all that’s required is to file an additional form (SA105) and submit it alongside your regular Self-Assessment tax return.

However, with self-employment, the additional sections required of you could be either the SA103S or the SA103F. The difference between the two is that the former is for those who had an annual turnover below the VAT threshold for the tax year (£85,000 as of 2019/20), and the latter is for those who earn above the VAT threshold.

3. Be open to online and prepare for Making Tax Digital for Income Tax

While you may have historically always submitted your tax return by paper, the vast majority of tax returns are now submitted online. Improvements in technology and the extra three months to file are the main incentives to submit an online tax return.

Having an online account with HMRC allows you to not only extend your filing deadline but also check your details at any time to see how much tax is due and act accordingly.

If you’re happy to tweak the way in which you keep your records and adopt digital record-keeping, this will help minimise admin further, as well as enable you to submit your tax returns and automatically calculate your tax.

Going forward as of April 2023 you will have to file your self-assessment digitally to HMRC providing updates every quarter via your digital platform.

Preparation is key, adopt the right approach now it could save both time and money, make the move to digital ahead of the deadline for MTD for Income Tax.

About GoSimpleTax

GoSimpleTax software submits directly to HMRC and is the solution for self-employed sole traders and anyone with income outside of PAYE to log all their income and expenses. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.

Trial the software today for free – add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.

Tags: Self Assessment, self employed, self employment, tax return

What the SEISS extension means for you

by Admin

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In the early stages of lockdown, the government announced support for sole traders in the form of the Self-Employment Income Support Scheme, or SEISS.

Just a month after its announcement, 2 million claims were made, totalling £6.1 billion in government support. And now, with a second grant opening in August 2020, a number of sole traders are set to benefit from further financial assistance.

We’ve asked Mike Parkes from GoSimpleTax to explain the terms and help you claim.

How does SEISS work?

The scheme is available to all self-employed individuals that have been adversely affected by COVID-19. This is provided that they:

• Earn the majority of their income through self-employment
• Have average annual trading profits of less than £50,000
• Have filed a tax return for the 2018/19 tax year
• Have traded during the 2019/20 tax year and intend to continue trading in 2020/21

To determine whether or not you were affected by COVID-19, any of the following must apply:

• Government orders have meant that your trade or industry had to close or be restricted in such a way that your trade closed – or is otherwise adversely affected
• You cannot organise your work, or your workplace, to allow staff to work safely
• Your staff or customers are no longer able to purchase from you due to restrictions
• Social distancing has meant that you are not able to safely serve customers
• You’ve had contracts cancelled as a result of COVID-19
• You have either had to care for others since lockdown or have been self-isolating
  

The first grant ended on 13th July 2020, and claimants could receive either £7,500 or 80% of their average monthly profits over the 2016/17, 2017/18 and 2018/19 tax years (whichever is the lower amount). Applications for the second grant will open on 17th August 2020, but you must have confirmed by 14th July 2020 that you have been adversely affected by COVID-19.

Why is there a phase two?

While the government set a three-month cap on the support, it has since been agreed that  COVID-19 is still impacting the earnings of some sole traders. As a result, it is necessary for them to receive another grant in order to stay afloat.

It will also help to support those who may not have initially been affected by lockdown (and so did not claim the first grant) but have subsequently suffered a loss of business.

What’s the difference? 

The differences between phase one and two are limited, although the second grant will be worth 70% of your average monthly trading profits. It’ll still be paid out in a single instalment that covers three months’ worth of profits, but will be capped at £6,750 total – almost £1,000 less than the phase one grant.

Additionally, you can only claim the second grant if your business was adversely affected on or after 14th July.

Can I continue working and still claim? 

Yes, you can continue to work as long as you intend to continue trading in 2020/21 in the self-employed role you’re claiming for. You can even take up other employment if necessary, provided that the SEISS payments still cover the majority of your income. HMRC will not penalise you for topping up your income with a little additional earnings to sustain your household.

Phase two will have a deadline of 19th October 2020. You can find out more about it on the GOV.UK site. If you are still losing out on income or opportunities to earn, we massively recommend you claim the second grant. This is unprecedented levels of government support and could make the difference between staying afloat or falling behind.

About GoSimpleTax

Right now, you can’t afford to be careless with your Self Assessment tax return. And with GoSimpleTax’s free trial, you don’t need to be. Their cloud-based software enables you to take stock of your earnings in real time, meaning you can get a complete overview of your tax obligations for the year. Once you’re certain all your affairs are in order, upgrade your account for just £46 and file your tax return with complete confidence.

Tags: coronavirus, covid-19, Economy, Employed and Self Employed, income tax, Jobs, self employed