For many people, a new year entails making resolutions, starting new diets, and purchasing gym memberships. For others, however, it means only one thing: the 31st January deadline is looming, and soon they will have to file their online tax return.
The good news is that tackling your return doesn’t need to be taxing. With IBISS & Co’s series of helpful blogs, we’ll give you some pointers on filing your return without fear. Keep reading for five of our top tips (a further five will appear in the next blog, so do check back soon!):
#1: Sign up for a Government Gateway Account
First things first: if you’re intending to file an online tax return, you’ll need to sign up for a Government Gateway Account. To do so, you’ll be asked to provide a few details, so do ensure that you have your Unique Taxpayer Reference (UTR) plus your National Insurance number (or postcode) to hand. Once you’ve submitted the necessary information, an activation code will be posted to you. This code will enable you to log in to the Self Assessment section of the website, through which you can complete your return.
Please note that the activation code can take a week to arrive, so be sure to do this well in advance of the deadline.
#2: Use the Cloud
A key benefit of filing an online tax return (as opposed to filling out a paper return) is that the process goes hand in hand with online financial management. There are plenty of cloud-based programmes that will allow you to store and access useful information at the touch of a button.
It couldn’t be easier for you to keep on top of things throughout the year if you use cloud-based software for storage. Online bills can be downloaded and stored, receipts can be photographed and saved, and expenses and income can be organised and tracked (for instance, platforms like Evernote, 1tap receipts and Receipt Bank allow you to create online ‘notebooks’ and records through which you can collate supporting documentation – as well as spreadsheets of your finances – into one handy folder). This will allow you to keep track of your income and expenditure with ease, as well as ensuring that there’s not a last-minute scramble to track down the necessary details for your tax return.
Certain platforms will also allow you to work more closely with your accountant. If you both have access to the same software, it’s not only easier for your accountant to manage and check on your accounts, but it also gives you the chance to draw on their expertise more readily.
#3: Be Prepared
As mentioned above, we’d recommend doing whatever you can to avoid that last-minute hunt through countless scraps of paper to seek out an elusive receipt or invoice.
The best approach is to keep a comprehensive record of your incomings and outgoings. Whether that’s online, on your computer, or even on paper, put together a spreadsheet that you fill out regularly (every week, if possible), detailing all your income and expenditure. It may seem like a hassle to begin with but it will save you a lot of time and stress in the end – and it’ll also allow you to keep an eye on the ‘big picture’. Indeed, your calculations throughout the year may show that your tax bill isn’t set to be as hefty as initially expected!
#4: Have Documents to Hand
There’s nothing more irritating than sitting down to fill in your tax return and realising that you don’t have a vital piece of information. As covered in the tips above, you’ll need the necessary account information to hand, as well as details of your income and costs (anything that relates to business expenses, such as purchases for stationery and travel).
However, there are a number of other documents that you may also need:
- If you’re filling in an online tax return, chances are you’re self-employed. However, if you’ve also been employed during the relevant tax year, you’ll need to provide details of your employer and employment.
- You’ll also need your P60 or P45 – these will provide details relating to your income and tax deductions.
- If you received any taxable benefits (such as a company car), you should have a P11D form.
- HMRC also requires you to disclose details of any interest received from savings accounts. You can request a summary from your bank if necessary.
#5: Don’t Be Late
In recent years, HMRC has become much stricter about missed deadlines. At present, if you’re late – even if you’re only a day late – you will be liable to pay a £100 fine. If you’re more than three months late, additional charges will apply. You can check how much you’re likely to be charged by visiting the HMRC penalties calculator – but our advice is to avoid this wherever possible!
If you’re feeling daunted by the prospect of filing a tax return, or would simply like some advice on how to best manage your accounts, please don’t hesitate to contact IBISS & Co. Specialists in both accountancy and tax advice, our experienced, expert team will help your business grow – and allow you to get on with the business of running it.