If you are not taxed at source through PAYE or have multiple income streams, it is likely that you will need to complete a self-assessment to report your earnings to HMRC. If you file online, you have until 31st January following the end of the tax year the previous April. This comes with a number of challenges.
Compliance and Deadlines
Compliance refers to the legal obligations you must follow. This means keeping records of all income and expenses. It is essential to file your tax return by the deadline of 31st January for online returns or 31st October for paper returns. Your return should be thoroughly checked for accuracy.
As well as being the deadline for filing the return, 31st January is also the deadline for payment. Take care to meet the deadlines as there are fines and penalties for non-compliance that can mount up.
Accurate Records
Although the tax return is only filed annually, record-keeping is something you need to keep on top of throughout the year. This will include income, expenses, and invoices. Failure to keep accurate records can mean errors in your tax return, which can result in audits or fines. They may also result in you paying more tax than necessary due to missed expenses.
Expenses, Reliefs, and Deductions
There is a range of allowances, expenses, reliefs, and deductions that can reduce your tax bill. However, knowing what you are allowed to claim can be complicated, and getting it wrong can result in paying too little or too much tax. Information is available on the government’s website.
It is also worth using an accountant to help with your tax return. To find an accountant, use a search term relevant for your area, for example, ‘accountants Bath’, and this should give you results like https://chippendaleandclark.
Managing Your Cash Flow
It is important to budget carefully so you have money ready to pay your tax bill. While it can be tricky to be accurate, estimating your tax liability will help you set aside enough to meet your obligations.