Filling in a tax return form, or the prospect of having to keep your own books and then fill in your own tax return, can often put people off from starting their own business.
The tax return form in a nutshell, is designed to report your/ your business's taxable income. On the plus side, it can allow people to claim tax allowances and tax relief. The tax year runs from April 6th to April 5th the following year, and you have to fill in a tax return form each tax year.
People don't always realise what jobs/positions etc require you to fill in a tax return form, here's a list from the Citizens' Advice website:
- Self Employed
- People who are Company Directors
- People who have an additional income that is not taxed
- People who have a rental property or income from a property - unless income is less than a certain amount and can be dealt with through a PAYE tax code
The easiest way to complete your Self Assessment tax return, is to do it online.
You will be asked about your business income, and expenses and any other income and gains that you'll have to pay tax on. You should have kept books with income and expenditures/outgoings throughout the tax year to make this easier to fill in. In fact you should keep your records for a minimum of 6 years; so make sure you file everything away in an organised way. Make sure you have all business account details handy and organised as well as evidence of tax and receipts.
HMRC provide a free Self Assessment online service, if you prefer not to hire an accountant to do it for you. You will need to register at least a week before the tax return is due, and you'll have to have your Unique Taxpayer Reference to hand as well as either your National Insurance number or postcode.
When you login to the online service, the first section tells you who can and cannot use the service - check you are elgible and move on....
Section two contains your details, like name, address, telephone number - confirm these are correct
Section three is effectively a filter - answer a number of yes/no questions so that you are provided with the relevant Self Assessment forms that you need to fill in, and none that you don't have to fill in
Section four requries you to fill in details of the business turnover and expenses, and some basic business information like address etc.
The next part of section four requires you to fill in a breakdown of business expenses.
The next part...requires you to enter capital allowance details.
There follows a number of pages/parts that won't relate to most small businesses - then there is a "UK Interest" section, within which you must input things like interest gained on savings accounts. There should be a summary screen that appears once all this information is inputted.
Section 5 asks you to confirm everythrings and section 6 summarises the information. The next page will calculate taxable income etc. and finally, you are asked to print and save a copy of the self assessment form.
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