Completing a tax return can be a daunting task, especially for self-employed individuals and sub-contractors. However, the process can be made significantly easier with some preparation and organisation. Here are some top tips to help you file your tax return smoothly and avoid common pitfalls, drawing on expert advice from Sage.
Get Organised Early
One of the most important tips for an easy tax return is to start early. Don’t wait until the January 31st deadline to begin gathering documents and filing your self-assessment. Start preparing as soon as the tax year ends on April 5th. This way, you’ll have plenty of time to find all the necessary documents, identify any missing information, and make sure your accounts are up to date.
Keep Accurate Records
Accurate and detailed records are essential when filing your tax return. Make sure to keep track of all income, expenses, and receipts throughout the year. Good record-keeping will make it easier to complete your tax return and can help avoid errors or omissions. Using accounting software, such as Sage, can help you stay organised by recording income and expenses, generating invoices, and keeping everything in one place.
Know What Expenses You Can Claim
Understanding which expenses can be claimed as tax deductions is vital. As a self-employed person or sub-contractor, you can usually claim expenses that are considered “wholly and exclusively” for business purposes. These may include:
- Travel expenses (e.g., fuel, parking)
- Office costs (e.g., stationery, equipment)
- Marketing and advertising costs
- Professional fees (e.g., accountant fees)
- Training related to your trade
By claiming all allowable expenses, you can reduce your tax liability and potentially save a significant amount of money.
Use Accounting Software to Simplify the Process
Using accounting software like Sage can make tax returns much easier. Sage’s tools are designed to simplify financial management, from tracking expenses to automating tax calculations. Accounting software can also help generate financial reports, estimate your tax bill, and ensure that you stay compliant with tax regulations. With Making Tax Digital (MTD) initiatives, using digital tools is becoming increasingly essential for submitting tax returns.
Double-Check Your Tax Return for Accuracy
Mistakes on your tax return can lead to penalties or delays in processing. Before submitting, make sure to double-check all figures for accuracy and completeness. Verify that all your income is accounted for and that you haven’t missed any allowable expenses. Sage recommends reviewing your return line by line to ensure nothing has been overlooked.
Submit Your Tax Return on Time
Filing your tax return on time is crucial to avoid penalties. The deadline for online tax returns is January 31st, following the end of the tax year. If you miss the deadline, you could face a £100 late filing penalty, even if you don’t owe any tax. If you anticipate any issues with meeting the deadline, consider filing as early as possible or seeking help from an accountant to avoid penalties.
Seek Professional Help if Needed
If you’re unsure about any aspect of your tax return, it’s worth seeking help from a tax professional. An accountant can provide valuable advice, ensure your return is accurate, and even help identify ways to reduce your tax liability. Many people find that the cost of hiring an accountant is worth the peace of mind and potential savings they can help achieve.
Filing your tax return doesn’t have to be stressful. By starting early, keeping accurate records, and utilising tools like Sage accounting software, you can make the process much more manageable. Remember to double-check your return for accuracy, claim all eligible expenses, and file on time to avoid penalties. If needed, don’t hesitate to seek professional help to ensure your tax return is completed correctly.
For more guidance on self-assessment and tax return tips, visit Sage’s blog or consult Subbie Tax for professional tax services tailored for sub-contractors.