All you need to know about tax returns
The deadline for filing your HMRC tax return form is today, 31 January 2020. Find out more about filling in a Self Assessment tax return here.
If you’re self-employed, a freelancer or a small business owner, the time has come to submit your Self Assessment tax return.
We know how daunting a HM Revenue and Customs (HMRC) tax return is, which is why we’ve created a guide to better understand what a tax return is and what you are expected to do.
Whether you’re filing your tax return for the first time or want a refresher on how to do it, read our guide below to learn more about tax returns and how they work.
What is a tax return and how does it work?
A Self Assessment tax return is a way of paying tax.
Most people in the UK pay their tax through a source, such as Pay As You Earn (PAYE) if they are employed. However, is the responsibility of self-employed workers, freelancers and small businesses for making sure they pay any tax that’s due.
A tax return is a way of declaring all your taxable income and capital gains and calculating how much tax you need to pay for the previous year. It’s also an opportunity for self-employed workers to claim any allowances and reliefs they have accrued throughout the year.
A tax return can be completed on paper or online using the HMRC software. However, be aware that there are different dates for submitting your tax return form by – we explain further down the page.
If you’ve chosen to file your tax return online, you will need to register on the Gov.uk website. Once you have registered, you will be given a Unique Taxpayer Reference (UTR) number to set up an account and to file your tax return. When you submit your tax return, you’ll get a confirmation email and a reference number. HMRC will then calculate the tax you owe and the National Insurance contributions you need to pay.
Do I need to submit a Self Assessment tax return form?
You’ll need to complete a tax return if you’re a self-employed sole trader and earned more than £1,000 in the last tax year, or if you’re a partner in a business partnership.
You may also need to submit a Self Assessment tax return for employees if you have any other untaxed income. For example, you will need to send a tax return if you:
- Have earned money from renting out a property
- Earned tips and commission
- Or your partner’s income was over £50,000, and you get Child Benefit
- Have income from savings, dividends, and investments
- Have a foreign income.
You can check if you need to send a Self Assessment tax return by using GOV.UK’s tool.
When is the tax return due?
The deadline for submitting your 2018-19 tax return online is midnight 31 January 2020. If you miss the deadline, HMRC will automatically charge you a £100 fine. The taxman will bill you an extra £10 for each day it’s overdue, and the bill will keep on increasing until you submit it.
If you are new to filing a Self Assessment tax return, you would have had to let HMRC know by 5 October 2019. You would have also had to submit your tax return by 21 October if you chose to submit it by paper.
What documents do I need to fill out my Self Assessment tax return form?
To submit your tax return, you will need:
- Your UTR number
- Your National Insurance number
- Details of your untaxed income from the last tax year (6 April 2018 – 5 April 2019)
- Details of dividends, investments, interest on shares
- Records of any expenses relating to self-employment
- Records of any contributions made to charity or pensions
- P60 or any other records/forms that show how much income you’ve received which you’ve already paid tax on.
What should I do if I don’t have all of my figures?
If you don’t have the exact figures for your tax return, put in estimates. Your estimates will need to be as accurate as possible, and you will need to clearly state on the form that the figures are estimates. You’ll also need to submit the exact figures later on.
Tax return – what can I claim?
If you’re self-employed, you can claim allowable expenses, which are the costs of running your business. These include:
- Travel costs (fuel, parking, transport fares)
- Office costs (phones, phone bills, stationery)
- Staff costs (salaries, freelancers, subcontractors)
- Financial costs (insurance or bank charges)
- Costs of your business premises (heating, lighting)
- Advertising or marketing costs
If you run your own limited company, what you can claim for is slightly different. You can claim for any business costs from your profits. However, you must record any item you make personal use of as a company benefit.
You can also claim costs as capital allowances. These are any purchases you buy to use in your business, for example, business vehicles, equipment, and machinery.
If you work from home, you may be able to claim for a proportion of your heating, electricity, Council Tax, internet and telephone use, mortgage interest or rent bills.
The key to ensuring you submit your tax return on time is preparation. If you have all your documents and records on-hand, you’ll be sure to complete your tax return in no time!