Christmas festivities and taxes don’t seem to go together, but it’s good to start thinking about your self-assessment tax return now, to prevent any surprises come January.
The UK tax year is from 6th April to 5th April annually. Paper return must be filed by 31st October. Online return must be filed by 31st January the following year. “Self-assessment” was put into place in the 1990s. As a taxpayer, it’s your responsibility to “self-assess” or file on time and correctly.
Here’s everything you need to know for January’s self-assessment tax return.
When is the Deadline?
The deadline for online self-assessment tax return is 31 January 2016.
Do You Need to Fill In a Tax Return?
You to fill in a tax return if you were any of the following in the tax year, even if it was just for a part of the year:
- Self-employed and a sole trader
- A partner in a business
- A director of a company, unless you were unpaid for a non-profit or charity
- Employed AND self-employed
- If you and your partner make over £50,000 combined and claim child benefit
You still have to fill in your return even if you don’t owe any taxes. For more information on whether you need to fill in a tax return, you can go to Gov.uk’s website.
What Do You Need to Declare?
Everything you earned in the tax year from 6 April 2014 to 5 April 2015. This includes:
- Income from self-employment
- Income from employment
- Income from property
- Interest on savings
- Gains on investments
Even if your investments and savings are in individual savings accounts and no tax is due, you still have to declare them.
What Preparations Do You Need?
It’ll be important to get your paperwork in order, as that will save time and headache. Any pay slips, invoices, bank statements, household bills, and a detailed record of all your deductible expenses should be on hand.
What If You’re Late?
If you miss the self-assessment deadline of 31st January 2016, HM Revenue and Customs will fine you £100 automatically and £10 a day for subsequent delays, up to a 90-day maximum of £900.
How Can You Cut Your Bill?
The best way to cut your bill is by claiming expenses. If you’re self-employed, there is a whole lot of expenses you can claim, from travel costs, home office costs, and energy costs. Businesses also don’t have to pay a VAT for regular day-to-day expenses.
It’s best to hire a tax consultant to claim all eligible expenses and make sure they’re legal so you can avoid potential investigation. You’ll pay money for the services but it’ll be worth it if your large bill is reduced.
If you think you’ll owe a lot, it’s still wise to file on time. The fines for late payment are less severe than the fines for filing late. Better yet, reduce your stress by filing early, so you can enjoy Christmas and start 2016 right.
If you’d like more information on January’s self-assessment tax return or are looking to use an accountant in East London do give us a call today.