What You Need To Know About Self Assessement
The first thing that not many new freelancers and small businesses know is that you can submit your tax return anywhere between the start of a new tax year and the deadline of January 31 of the following year.
Self-assessment brings a lot of worry for those who are tackling it – because it only takes a small error to make a big problem. Anyone who is even a small bit worried about their numbers is better off with a self assessment accountant.
So, what do you need to know?
What even is a self-assessment?
The HMRC doesn’t know how much people who are self-employed need to pay in terms of tax. Filling in a self-assessment gives them this information.
Small business owners, contractors and freelancers all need to submit this information and pay whatever is asked.
Does everyone need to fill out a self-assessment?
If any of these apply to you, then you need to fill out a self-assessment tax return:
- You were a partner in a business partnership.
- You have to pay high-income child benefit.
- You have an income of more than £100,000 (taxable).
- You are a sole-trade and earned more than £1,000.
- You receive money from renting out a property.
- You earn tips and commission.
- Foreign Income.
- You have income from investments, savings or dividends.
To be double sure if you need to send a self-assessment tax return, check here: Check if you need to send a Self Assessment tax return – GOV.UK.
What if you make a mistake on your self-assessment tax return
Before you submit your tax return, you will be asked to check for errors. However, it is a good idea to check the tax return a few weeks later. You can make amendments up until the following year’s self-assessment deadline.
If you miss the deadline, you’ll need to contact HMRC.
Do I have the right to expenses?
Yes, but everything that you expense should relate to your work. If you have an income below £85,000, you don’t need to itemise them; you can just put the total. However, it is good housekeeping to make sure that you are keeping track of what you buy and when.
You won’t be asked for those receipts at the time of submission, but you need to keep them for five years as you might be asked at that time to produce them.
How long do I have to pay any self-assessment taxes?
With a paper tax return, you will get a bill in the post; with online submission, the calculation will show you what you owe immediately. You pay your taxes twice a year – once on the 31 of January and once on July 31st. These payments include your class 4 NI payments. If your payment doesn’t add up to the amount you owe, you’ll need to top up the account.
Saving taxes through the year will mean that you have some money to use instantly. Try to keep at least 20% of what you make per week back in a pot for taxes.
Many people are put off from living their freelance best life because of self-assessment, but it’s a small part of what could be a great adventure: A Life Well Spent: Begin Following Your Freelance Dreams – Tilly-Jayne.