Five steps to tackle the last-minute tax return

Despite the government relaxing or extending certain deadlines for several annual financial outgoings, such as insurance policies, mortgages and MOTs, the call to extend the 31st January 2019/20 self-assessment deadline was rejected.

This has left many in a sticky situation and perhaps, now more than ever, a lot of freelancers or sole traders are worried about getting their assessment finished on time.

But there’s no need to panic yet! For those who still need to do a tax return, here are a few hints and tips to help you get back on track.

1) Get all your documents in one place before you even open the form

The amount of information needed by HMRC can seem overwhelming. Before you even download and/or open the form, make sure you have all your documents ready in front of you.

You will need your P60, P45, Interest Statements from any bank accounts, total of your income, dividends and shares, Unique Taxpayer Reference, National Insurance number and details of any contributions to charity or your pension. One you have these together, then you can start the form.

2) Only claim the relevant expenses

You can claim tax relief on certain expenses that are relating to the operation of your business. The test I always tell clients to use is the ‘wholly and exclusively’ test. Was the expense you want to record wholly and exclusively purchased for the purpose of your business or would you have purchased it regardless?

For example, one expense which will never get past HMRC is your TV license. It’s 99.9% likely that you would have had a TV license anyway, so that has not been wholly and exclusively purchased for your business.

However, a collection of practice music books used by a peripatetic music teacher, or hundreds of kilos of cement for a builder are both much more likely to be wholly and exclusively used for business purposes.

Like every rule there are of course exceptions - particularly for cars, travel and mobile phones. If you are in any doubt, then have a look at small business advice forums online or the HMRC website - there is all sorts of guidance available at your fingertips. If you still are confused, then contact an accountant and they will be able to advise you.

3) Keep records of your financial information

From time to time, HMRC may do random spot checks on individuals who complete self-assessment tax returns in order to help avoid any fraudulent activity. Because of these checks, it is important that you keep records of your finances for up to five years. This includes your income, expenses, VAT, PAYE, Drawings and SEISS.

Ideally file these documents digitally via Drop Box or on the cloud. Not only does this mean your files can be stored safely and found easily, but you aren’t clogging up your computer memory either.

All proof of documents must be kept in a non-editable format like a picture or PDF format. This proves to HMRC that the numbers have not been tampered with or changed in any way and are compliant.

4) Visit the HMRC website if you have any questions

If you’re stuck on any element of the tax return, don’t be afraid to search for the answers. The HMRC phone lines are very busy at this time of year but the website is full of very helpful resources and guidance. If you have a question, it’s highly likely that someone has asked it before.

Other websites such as the Money Advice Service and Which also have great guides and advice sections, designed to make the process faster and much easier for you.

5) Learn for next year

A final piece of advice for your next tax return - start it sooner! Find a way to keep your finances organised - whether that’s digitally, physically or through an accountant. There are lots of online resources out there, like Mazuma, that don’t break the bank, but will enable you to keep a close eye on the financial health of our business.

Plus, you may benefit from further advice on how to operate at your most tax efficient. This will take some of the stress off future returns and will no doubt save you time in the long term - as well as preparing you for the tax you might need to pay.

Startup Details

Startup Details

TOTAL FUNDING AMOUNT
CB RANK (COMPANY)

Mazuma Money

Mazuma offers online and remote accountancy and bookkeeping services to small businesses across the UK.

  • Headquarters Regions
    Bridgend, West Glamorgan, Wales
  • Founded Date
    2006
  • Founders
    Lucy Cohen, Sophie Hughes
  • Operating Status
    Active
  • Number of Employees
    11-50