Mastering Self-Assessment: The Ultimate Guide by PLATF9RM
Running your own business, freelancing, or juggling multiple income streams? Maybe you’re a high earner expecting to surpass £150,000 this year? Whatever your hustle, understanding self-assessment is key. Over 12 million people file self-assessment tax returns every year—you’re in good company! The best part? It’s easier than you think.
At PLATF9RM, we know the self-employed life is full of moving parts. This guide breaks down self-assessment into manageable steps, helping you file your tax return with confidence and clarity.
Who Needs to File a Self-Assessment Tax Return?
Self-assessment is how HM Revenue and Customs (HMRC) collects income tax on earnings not taxed at the source. You need to file if:
- You’re self-employed, freelancing, or running your own business. (Good news: The Trading Allowance lets you earn up to £1,000 tax-free on side hustles.)
- You’re a partner in a business partnership.
- You earn over £10,000 in savings or investment income before tax.
- You have untaxed savings or investment income above your Personal Savings or Dividend Allowance.
- You need to claim tax reliefs or refunds.
- You’ve made capital gains over £3,000 (from April 2024).
- You’re hit by the High Income Child Benefit Charge (income over £60,000 from April 2024).
- You rent out property or earn overseas income (£2,500+ net or £10,000+ gross).
- Your PAYE income is over £150,000.
- You contribute heavily to pensions affected by the tapered annual allowance.
Key Self-Assessment Deadlines
- 5 October: Register for self-assessment (if you’re new).
- 31 October: Paper return deadline.
- 31 January: Online return deadline and tax payment due.
- 31 July: Second payment on account (if required).
Late Filing Penalties:
- £100 fine for being up to 3 months late.
- £10 daily penalties after 3 months (up to £900).
- £300 or 5% of tax due after 6 months.
- Another £300 or 5% penalty after 12 months—up to 100% of the tax due in severe cases.
Filing Online with HMRC: A Step-by-Step
HMRC’s online service is user-friendly and intuitive. Just have your Government Gateway ID handy. The main sections include:
- Employment: Income and benefits.
- Self-employment: Business income and expenses.
- Property: Rental income and deductions.
- Savings and investments: Interest, dividends, and gains.
- Other income: Anything else.
Avoid These Common Mistakes
- Forgetting income streams: Declare ALL your income.
- Claiming ineligible expenses: Only deduct business-related costs.
- Typos and miscalculations: Double-check everything.
Avoid These Common Mistakes
- Forgetting income streams: Declare ALL your income.
- Claiming ineligible expenses: Only deduct business-related costs.
- Typos and miscalculations: Double-check everything.
Maximise Allowances and Reliefs
- Personal Allowance: £12,570 tax-free.
- Savings Allowance: £1,000 (basic rate), £500 (higher rate).
- Marriage Allowance: Transfer £1,260 to your spouse for up to £252 in savings.
- Capital Gains Tax Allowance: £3,000 from April 2024.
Claimable Expenses for the Self-Employed
- Office costs: Software, stationery, printing.
- Travel: Mileage, public transport, accommodation.
- Clothing: Uniforms and safety gear.
- Staff costs: Wages, subcontractor fees.
- Stock and materials: Supplies for production.
- Financial costs: Insurance, bank fees, accountancy.
- Marketing: Advertising, website costs.
- Utilities and rent: Energy, internet, phone.
- Equipment: Laptops, tools, vehicles.
- Training: Courses related to your business.
- Home office: A portion of your home expenses.
Paying Your Tax Bill
Once filed, HMRC calculates what you owe, including payments on account. Key dates:
- 31 January: Full payment and first instalment on account.
- 31 July: Second instalment on account.
Payment Methods:
- Bank transfer
- Debit/credit card (fees for credit cards)
- Direct debit
Can’t pay on time? Contact HMRC early for a Time to Pay arrangement.
Pro Tips for Tax Efficiency
- Stay organised: Use accounting software to track everything.
- Use allowances smartly: Don’t leave money on the table.
- Pension contributions: Lower your taxable income.
- Time your sales: Manage asset disposals to cut tax bills.
Let’s Simplify Self-Assessment
Self-assessment doesn’t need to be daunting. Stay ahead of deadlines, know your allowances, and keep your finances in check. Need extra support? Plus Accounting can make tax time stress-free. Get in touch today and take control of your financial future with PLATF9RM.
Let’s make tax less taxing.
