The beginning of the year can be a stressful time for everyone, with new resolutions to keep to, the return to work after Christmas excess, and the cold days of winter. For contractors, there’s also the added burden of the self-assessment deadline looming large at the end of January (the 31st to be exact). We can’t ever promise to make doing your tax returns any more fun (although we find a glass or two of wine tends to help), but we can give you some tips to help the process go more smoothly for this year and the years beyond. We know your time is at a premium so we’ll get on with our guide without any further fuss:
Make sure you submit your tax return on time
It might sound like a given, but you’d be surprised at the number of horror stories we’ve heard about contractors leaving things too late and not making the deadline (which, to remind you again, is 11:59pm on 31st January). If your tax return arrives after this point you’ll pick up a £100 fine. So check those internet connections, make sure you know where all your paperwork is, and give yourself more time than you think you’ll need.
Preparing to do your tax return is likely to be towards the bottom of anyone’s list of fun things to do in the evening, but trust us when we say it’ll be more than worth your time. If you leave things to the last minute and have to rush there’s a chance mistakes could me made. It’s also worth bearing in mind that the online filing system tends to get very busy in last few weeks leading up to 31st January.
A few key pointers: Make sure you know where you’re going – you can find everything you need to know at the official HMRC self-assessment page here. Make sure you’ve registered for the HMRC online filing system by 22nd January to ensure you receive your activation pin in time. Make sure you read all the questions carefully before answering, and make sure you’ve got all of your relevant paperwork (P60s, P11Ds and so on) together before you begin your work.
Speak to the professionals
Whilst there are many benefits to filing your own tax return sometimes it’s a good idea to turn to the professionals for help. There are many specialist contractor accountants out there who will be happy to complete your tax return for you. If your tax affairs are relatively complex, or if you think that they might become more complex in the future, then finding an accountant is a good idea if you’re not 100% sure what you’re doing.
Keep a paper trail
We know you might be reading this at 11:30pm on 31st January, in which case it’ll be a little too late to help you this year. But going forward we highly recommend an accurate approach to record keeping throughout the year. Keep accurate records, both business and personal, on a month to month basis. Personally, we use FreeAgent – an excellent tool for the time-starved freelancer and one we’ve recommended before (take a look at this post for other time-saving self-assessment tips.)
Being fastidious and diligent throughout the year will help you avoid the manic January rush and all the scrabbling to pull together all of your relevant paperwork. Make sure you collect all of your business receipts and keep a log of the relevant business transactions that accompany them.
It’s best to keep everything you think might be important, rather than throw something away and regret it later. A single missing statement could cause delays (and a fine) in submitting your self-assessment so it pays to be cautious. HMRC provide an easy to understand, comprehensive guide to keeping documents for tax purposes here.
We know this time of year can be a stressful one for contractors and the self-employed, and we’re here to help. You can call us on 01242 808740, or talk to us on our Facebook, LinkedIn, or Twitter accounts if you want advice. You can also take a look at some of our past posts on the self-assessment deadline here, here, here, and here. If you’ve got any tips on how to avoid self-assessment stress, we’d love to hear them in the comments box below.