Be tax return ready!

With the current climate its never been more important to get your 2019/20 tax return completed and filed.

Many self-employed business owners now find they have more time on their hands so use this time to get your tax return done. If there are any announcements on additional benefits dependant on your earnings during 2019/20 you may need this to be ready to apply.

So what do you need to do?

If you have never filed a return before then, of course, this may seem daunting. You must have registered to file a self-assessment tax return with HMRC and you will need your UTR and Government Gateway login. This comes in the post so make sure you apply if you haven’t done this already.

If you do this annually and are used to it then don’t leave it to the last minute this year and get this done as soon as possible. If you are due a refund, then the sooner you complete your return, the sooner you get the refund!

Get your paperwork straight!

Are your receipts in a box or carrier bag waiting to be sorted!

Gather all the information you need to submit your return. This will be much easier for you if you have been using an online accounting system such as Xero. All the information will be there and all you need to do is ensure it is up to date.

If you have been using excel spreadsheets you will need to ensure you have entered all your income and expenditure.

Make sure you have paid close attention to your record keeping. Check your bank records against your income and expenses and that you have all relevant receipts. Reconcile your bank statement to ensure your figures are correct.

Frequently asked questions

I haven’t made a profit do I still need to do a tax return?

HMRC says that you need to send a tax return and pay your tax bill through Self Assessment if, in the last tax year, you were:

· a self-employed sole trader earning more than £1,000

HMRC have a useful tool which you can use to check if you need to a tax return – click here 

Is there any other income or expenses I must include? 

Here is a list of additional incomes you may have, and you must include 

  • Property rental income – find out more info here
  • Any savings interest or dividends
  • Payments from tips/commission
  • Income from overseas 
  • Pension contributions
  • Benefits including State Pension, Child Benefit and Blind Person’s Allowance

What are the allowable expenses for small businesses?

There are several costs that you incur when running your business that you can claim back against your Self-Assessment tax bill.

Here is a list of the main items small businesses can claim:

  • Office rent & utilities including business rates 
  • Insurance 
  • Marketing costs including advertising, networking, website and IT 
  • Stationery
  • Phone Bills
  • Uniforms
  • Staff salaries or freelancer/subcontractors
  • Anything you need to buy to sell on -e.g. stock or raw materials
  • Bank charges 
  • If you are working from home, you can claim a percentage of business premises costs. This would include utilities, council tax, mortgage interest or rent, telephone and internet. You must find a ‘reasonable method’ of dividing the costs between personal and business use. They suggest using the number of rooms used for business purposes, or the time spent working from home.

Read our blog on tax deductibles here.

Every person/business has a unique set of circumstances and having an accountant who understands the tax system will benefit you by removing any worry or concerns you have. Filing a tax return incorrectly could result in a fine or a repayment later. You want to ensure you are paying the right amount of tax. 

If you decide to file this without speaking to an accountant just check, check and check again!!

We are of course happy to help you and advise you! Just call us.

Get your self-assessment tax return done now!

 

The Tax year ended on 5th April 2019 and if you are a business owner who is organised then your accounts will have been submitted to your accountant and in turn, they will have told you how much tax you need to pay. So, you do not need to read this blog any further! Plus, a big ‘WELL DONE ‘from us.

Procrastination is common!

Unfortunately, many business owners procrastinate over completing their tax return and if you are one of these then you are not alone.

Last year around 750,000 people filed their tax return on the last day of January and around 750,000 missed the cut off date! If you submit last you receive an automatic fine of £100. More than 3 months you will be charged a further penalty of £10 a day for a maximum of 90 days.

Our advice is do not leave things to the last minute! This is because you will then struggle to find all the information you need to get the submission ready.

Do you need to complete a tax return?

The first question to ask yourself is ‘Do I need to submit a tax return?

The answer is clear cut –

You must send a tax return if, in the last tax year (6 April to 5 April), you were:

  • self-employed as a ‘sole trader’ and earned more than £1,000
  • a partner in a business partnership

What do you need to do now?

If you are using an accountant (and of course we would love to help you if you have not appointed one) you must send in all the documentation they need to compile the tax return for you.

Ideally, you will be using an online cloud-based accounting system such as Xero to record your income and expenditure. This makes tax returns much quicker and easier. Plus, you can keep track and your business progress and easily chase payments, keep an eye on expenses and even reconcile your bank statements.

The days of using manual ledgers are over and excel spreadsheets are becoming extinct.

If you are using an online cloud-based software send your accountant details of how to log in and they can use this data to compile the return.

If you are still on excel spread sheets, then email those across to your accountant.

You will also need details of:-

  • Pension income (if you are receiving this)
  • Details of pension contributions
  • Any interest on bank and building society accounts. You should be able to provide a statement or certificate detailing this.
  • Any income from property
  • Any other additional income – discuss with your accountant. Do not ignore as there are fines for under reporting your income and in some cases, you may face prosecution.
  • Details of expenses. Including any Gift Aid payments, car mileage information and wages. Discuss with your accountant all your expenses and they will be able to clarify what is classed as a business expense.

Make sure you keep records of receipts. This is really important and ideally, keep them in date order. You can also consider using receipt bank an App where you can scan receipts into your phone quickly and easily. This interacts with cloud-based systems such as Xero saving you time adding them later on.

If you do your tax return yourself be extra careful!

Making a mistake will cost you! You could be charged a penalty of anything from 15% to 30% of the additional tax owed if you are found to have underpaid your tax. You can also end up paying too much tax because you haven’t claimed for allowable items. If you have overpaid, you can claim back overpayments going back 4 years, but you need to write HMRC and prove the error to them. Using a good accountant will give you peace of mind and ensure your tax return is correct.

HMRC bogus scam emails and texts

Be careful when opening emails and texts if it says it is from HMRC about your tax affairs. HMRC will never send notifications by email about tax rebates or refunds.

Do not:

  • visit the website
  • open any attachments
  • disclose any personal or payment information

Fraudsters may spoof a genuine email address or change the ‘display name’ to make it appear genuine. If you are unsure, forward it to us and then delete it.

Visit the HMRC website here to find out more and if in doubt speak to your accountant or call HMRC to check.

Accountants do much more than tax returns!

Our job isn’t just about completing tax returns once a year. We fully understand and are up to date with all the tax regulations. We can ensure you pay the right amount of tax.

In addition to this, we love to work with our clients to ensure their business is making progress and help you to make the best decisions to grow your business.

We pride ourselves in giving you an honest review of your business and making suggestions about where you can improve. We also offer a business consultancy service so do contact us if you are interested in this. Find out more here .

Relax over Christmas and New Year and let us do the work!

Do not spend the festive season worrying about tax, spend it with your family and have fun at Christmas and not fear about HMRC!