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How to do a Self-Assessment tax return

Always liked the idea of being your own boss? Working for yourself is great and there is potential for big money. However, with this level of flexibility, there is more responsibility on your shoulders to take care of your taxes – and that means submitting your self-assessment tax return.

Don’t get us wrong, this can sound very daunting – especially if you’re a new startup and don’t know how to do a self-assessment tax return. But, with a little organisation and some assistance from the experts at Eve Accountants, it’s actually much simpler than it seems.

Here we explain what a self-assessment tax return is and outline exactly what you need to do to complete yours.

What is a self-assessment tax return?

A self-assessment tax return is HMRC’s way of finding out how much income tax and National Insurance a self-employed person needs to pay.

Whilst employed workers typically have tax deducted by their employer before they receive their monthly wage – through a Pay As You Earn (PAYE) scheme – the self-assessment is intended for those who receive an income that isn’t automatically taxed when it is paid.

If any of the following criteria applies to you, you will need to complete a self-assessment:

  • You are a director of a company
  • You have received income from land or property in the UK
  • You have capital gains tax to pay
  • You have received taxable foreign income from a trust or settlement
  • Your annual income exceeds £100,000
  • You are a higher rate taxpayer and receive £2,500 or more from untaxed savings and investments
  • Your income is over £50,000 and you or your partner have received child benefit payments

How to file a self-assessment tax return

Contrary to popular belief, filing a self-assessment tax return isn’t too difficult to do. You can either complete the form online or on paper – providing details on all of your income and expenses for the previous tax year.

If you’re filing the tax return for the first time, you will need to register with the HMRC. You will then be issued with a Unique Tax Reference (UTR) number which you will need to have handy when filling out the form.

If you’re filing the self-assessment tax return online, the next step is to set up a Government Gateway account. You should find instructions on how to do this within the letter that contains your UTR number and, after setting it up, you will receive an activation code in the post. Please note, this bit could take up to 20 days, so you don’t want to leave it to the last minute!

Before you sit down and start the tax return, it’s worth making sure you have all the required information in front of you so you can fill in the form correctly. This includes:

  • 10 digit UTR
  • National Insurance number
  • Details of your income from self-employment – including bank statements, dividends, interest on shares etc.
  • Details of any business expenses
  • Details of any pension or charitable contributions that may be eligible for tax relief

If you earn an income through employment, you will also need to have a P60 from your employer showing what you earn and how much tax you have paid already, a P9D or P1D which outlines any benefits or expenses you received, and a P45 if you have left a job during the tax year.

Having all the necessary documents within easy reach will make the process of filing a self-assessment tax return straightforward and save you a lot of time. This leads us nicely on to the next point.

How long does a self-assessment tax return take?

Regardless of how much you know about tax, doing your self-assessment tax return can often take longer than you think.

There are two sections to a self-assessment:

  • SA100 – deals with taxed an untaxed income in the form of dividends and interest, pension contributions, charitable donations and benefits.
  • Supplementary pages – declaration of extra income from self-employment, property or capital gains that you haven’t paid tax on.

Some people can whizz through the process in as little as an hour, but it takes the average person 2.5 hours to complete a tax return – ensuring that all the information is inputted accurately. It can take others even longer still.

As mentioned above, a great way to speed the process up is to gather all the documents you need before you start. It saves rooting around for something when completing the main income section (SA100) and the supplementary tax return pages.

Once you have completed the tax return and submitted it, you’ll receive a bill from HMRC if you owe any tax. It can take up to 72 hours for the tax calculation to show up in your account and you will need to pay the bill by 31 January – which you can do so via bank transfer, debit card, direct debit, cheque or over the phone.

Start your self-assessment tax return today

If you’re a new startup business or you simply don’t have the time to file your self-assessment tax return, we can help.

For just £150, we can make sure that your tax return is submitted correctly and on time. This way, you needn’t worry about being hit with an initial £100 penalty for failing to submit your return. After all, if your return hasn’t been received three months after the deadline, you will be charged £10 for each day and the costs will only increase the longer you leave it!

If you’re not sure whether you need to file a self-assessment, you can either use HMRC’s online checker or give us a call on 01204 891136, and we will advise you.