Your guide to Self Assessments

Published on December 6, 2020

Once we’re into the new tax year, it’s only a matter of time until you need to retrieve your old invoices and expenses, dig out your bank statements and calculate how much you owe HMRC.

“Self assessment” normally strikes fear into freelances, contractors and directors alike however this does not have to be as daunting as it sounds – as long as you are keeping good records and have gotten in touch with an accountant in good time.

Registration

Even if you are a director of a Limited Company, you must still complete a Self Assessment to HMRC. Self Assessments are for anyone who receives income that is not taxed at source.

First off you need to register with HMRC to complete your Self Assessment online – you will need your National Insurance number, your personal details and your business details handy.

When to register?

The tax year is from 6^th April to 5^th April of the following year, you must have registered for Self Assessment by October 5^th of each tax year.

UTR Number

Once you’re registered for Self Assessment HMRC will issue you with a “Unique Taxpayer Reference Number” (UTR Number) which is a ten-digit number –HMRC will send you this in the post and you will need it during submission each year so keep this safe!

Keeping Records

It may seem like a tedious task in keeping proper financial records but it will all make sense when it comes to completing your Self Assessment which will save you tons of time and much less stress.

Here is a list of the most common items you should keep records of, this list is not exhaustive:

Income & business related expenses
Dividends & drawings
Partnership income
Rental income
Foreign income
Penson contributions
Gift Aid / Charitable Giving
Payment on Account
P11D
Capital Gains

Deadlines

If we were living in a perfect world we would complete our Self Assessments at the earliest possible opportunity however we all know this is not the case as we have so many other things to focus on, Jan 31^st will quickly creep round the corner in no time.

The benefit of completing and submitting your Self Assessment early on is mainly from a financial planning perspective as you will know how much tax you owe and can budget effectively so that it is paid by 31^st Jan.

If you do not submit your Self Assessment by 11:59pm on Jan 31^st you will receive a fine from HMRC of £100.

What we can do to help

If you are in any doubt you can speak to a specialist at MTD who can complete all these complicated steps for you.