Things to consider when doing your self-assessment tax return

Are you new to contracting? Do you know the basics when it comes to doing your self-assessment tax return? With the deadline looming (31 January 2022 for online tax returns) we’ve covered a list of things to check before submitting your tax return 2021.

Are you submitting your return for the right tax year?

One common mistake is submitting your return for the wrong tax year. First thing to remember is that the tax year is not a calendar year. It runs from April to April.

The last tax year ran from April 6th 2020 to April 5th 2021. Therefore, the tax return you submit in January 2022, will be for that period (up to April 2021). Any income you make after that cut off date, will be included in next year’s return.

Are you registered?

If this is your first HMRC tax return, you need to make sure you’ve registered for self-assessment. This lets HMRC know that you are earning untaxed income as a contractor. You can register for self-assessment online via Gov.uk here.

When you register, you’ll be sent a Unique Taxpayer Reference (UTR) number. You need a UTR number to submit your tax return, and it can take months to get one so make sure you apply as soon as possible.

Once you’ve received your UTR, keep it safe! Take a photo of it so you have a digital copy, and file it somewhere safe and protected such as Dropbox (to safeguard against online fraud).

Do you have a filing system in place?

If you do your own tax self-assessments, you’re basically your own accountant. For this reason, it’s important you create a filing system that is easy to access, efficient and private. Create a folder on your desktop or via a file hosting service (like Dropbox) and store the following:

  • Your accounts (usually in an excel spreadsheet, listing your clients, fees raised, clients and business expenses)
  • All your invoices (make sure they’re named clearly with the name of the client and invoice number)
  • Copies of past tax returns (you get a digital copy of these once you’ve submitted your return)
  • Digital copies of receipts (for declaring any allowable expenses in your tax return)
  • Contracts of employment (any contracts from your clients, this includes any PAYE work you’ve completed)
  • Payslips (store digital copies and thank us later!)
  • P45s (again, store digital copies)

Is your tax code correct?

If you have some PAYE jobs, you’re taxed directly from your salary via a tax code. But if your tax code is wrong then you could end up paying too much tax. If in doubt, contact HMRC before submitting your self-assessment tax return online, to ensure you’re paying back the right amount of tax.

Can you claim tax reliefs?

Before submitting your online tax return you should familiarise yourself with the ways you can reduce your tax bill. You can only claim expenses for costs that are ‘wholly, exclusively and necessarily’ for your business. Any other costs are known as ‘disallowable expenses’.

You might be able to claim tax relief on the following:

More information on claiming tax relief for your job expenses on Gov.uk.

Do you have PAYE jobs?

Some contractors supplement their self-employed income with PAYE jobs. If this is you, when submitting a self-assessment you need to declare the income you have made from a PAYE job (even though tax has been deducted throughout the tax year).

The tax you have already paid via PAYE, should automatically feed through on your HMRC online account. You can also get this information via a P60 or P11D (from your PAYE employer).

Do you have a business bank account?

It may seem obvious, but a business bank account can be a real game changer. It’s crucial that busy contractors can separate their business and personal finances.

Not only is it really useful when it comes to submitting your tax return, but it saves you from having to manually sift through your bank statements (which, let’s be honest, you don’t want to be doing at the eleventh hour on the 31 January!).

Is it all too much? Let us help!

If you want to remove the headache associated with managing your accounts, why not consider working through an FCSA accredited Umbrella Company?

Eden Umbrella is a cost-effective way to ensure you are being paid correctly. We can calculate what the difference would be in your take home pay, and check the right deductions have been made.

Eden Umbrella is part of Eden Group, providing back-office support and back-office services for recruitment agencies in the UK. We provide payroll services through Eden Pay & Bill and brilliant back-office software through Evertime.

Contact Beverley for a quote on 01276 688050 | 0844 686 8360 or bstanding@edenoutsource.co.uk. You might be surprised to hear how affordable Umbrella services our services are.

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©2020 Eden Outsource Limited
Company Reg: 04384396
VAT Number: 795281783
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Tuscam House
Trafalgar Way
Camberley
Surrey
GU15 3BN
©2020 Eden Outsource Limited
Company Reg: 04384396
VAT Number: 795281783
Terms & Conditions
Privacy Policy
©2020 Eden Outsource Limited
Company Reg: 04384396
VAT Number: 795281783
Tuscam House
Trafalgar Way
Camberley
Surrey
GU15 3BN
Terms & Conditions
Privacy Policy
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