How to Avoid Tax Return Panic (A Week Before D-Day)
Great news! You have 8 whole days left to file your 2019 personal tax return and pay the tax you owe on time! And now that we can do it online (which about 9 out of 10 self assessors do) it should be easier than ever. Yet many of us still leave it too late and incur a fine.
So let’s look at how you can get the job done without too much trauma.
First up, it’s not only for the self-employed! If you fit any of the descriptions below, self-assessment is something you need to do:
✅ You are self-employed as a ‘sole trader’ and earned more than £1,000.
✅ You are a partner in a business partnership.
✅ You earn any extra money from income from savings, investments, dividends, renting out property (including Airbnb-ing your flat), selling things you make, or foreign income.
✅ You claim some Income Tax relief. i.e. you pay less tax to take account of money you’ve spent on specific things, like business expenses, or if you get some repaid in another way, like into a personal pension.
✅ You claim Tax-Free Childcare or Maternity Allowance.
✅ You are a "high earner" making over £100,000 per year, even if you’re employed. The taxman will still ask you for a tax return because it can affect your tax-free Personal Allowance.
If you answered “hmmm” to any of these, or are still confused about your status, go to the HMRC website to double check.
So much for the who, when and why. Hows about the how? How can we ordinary over-worked, under-slept people with a to-do list as long as our bank statement actually get the job done? It’s one of those tasks that hangs over you making you feel bad as the January days go by. So check out our 10-step plan for making it happen.
Get started. Like, now. Don't wait to do it on the final day as HMRC website could be down. If you’ve not already registered to submit self-assessment forms for the first time then you need to do it right away on the gov.uk website.
Double check the dates it all refers to: the 31st January deadline is for the income you earned between 6th April 2018 and 5th April 2019.
Get all your paperwork together, i.e. payslips, P60, expenses you earned from work, and also investments, dividends, capital gains and more (outside of pensions and ISAs). Don’t feel bad about asking your employers or clients for this info - they’re used to it.
Make sure you understand what you can claim under business expenses. We freelancers have a habit of saying “I can claim that!” when we buy a big new telly or, err, some cashmere joggers for wearing around the home office. But can you really? Again, the government website is your friend here.
Now, on that Gov.uk site, enter 'Self Assessment' in the search box, and start filling in all your data. Yes, it’s boring but you are getting the job done like a boss! So feel good about yourself as you start to type. Chew the end of your pencil and chuck papers around your office like one of those “hard at work” montages from a movie if that helps.
Oh, don’t forget about your pension! This affects how you’re taxed too, with the government now encouraging saving for old age by giving us tax breaks on pension contributions. Most personal and workplace pensions are taxed at source, but for those in higher income tax brackets or if someone else pays into your pension, you need to claim the tax benefits back yourself.
Press SUBMIT.
Pay your what you owe.
Breathe a sigh of relief.
Reward yourself with chocolate (the most important step) and share with the vestpod community here on our private Facebook group (1,000 of us!) or Instagram using @vestpod in your stories!
Now, if you’ve failed to do all the above steps apart from the last one, don’t worry. You’re not alone. In 2015, a whopping 890,000 people missed the deadline and ended up paying a fine of at least £100. Oops. And if you really can’t face this most grown-up of grown-up tasks, you can always pay an accountant to do it for you.