The deadline for tax self-assessments is fast approaching, and now is the best time to start planning to make their payments.
The deadline for the 2020 to 2021 tax year digital tax return is January 31 2022.
Everyone knows the process of making sure every invoice is correct and every receipt is accounted for always takes longer than planned and you don’t want to incur penalties for a late submission.
More than 10.7 million people submitted a tax return last year and millions more are expected to do it this time round.
Before you start you will need your Unique Tax Number, National Insurance number and details of your employer if you’ve been working as a contractor.
You may also need your P60 end of year certificate, all of your expenses and benefits, a P45 if you at any point in the tax year left employment and payslips or your PAYE coding notice.
On top of this, you will also need to calculate any student loan repayments if you went to university.
Calculating all of your ingoings and outgoings could be even harder this year if you received any grants or payments from the COVID-19 support schemes up to April 2021.
The COVID-19 support packages are still taxable income, if you earned anything from the Self-Employment Income Support Scheme, the Coronavirus Job Retention Scheme or other COIVD-19 payments such as self-isolation grants then you will need to account for that.
Getting started early can significantly reduce the stress of finding that one receipt you remember stashing away somewhere but not quite where.
Around 100,000 people submitted there’s last year on April 6 – the first day of the tax year!
Even if you submit your returns before the deadline you do not need to pay any tax until the 31st of January.
One of the hardest parts of figuring out your tax return is knowing what are valid expenses are what is not.
Expenses cans include:
The costs of running an office like laptops or phone bills as well as things like heating bills.
Uniforms or protective clothing – this only generally applies to clothing needed for work and does not work for suits and formal attire.
Financial costs like insurance and bank charges.
Some or all of the fees paid for professional services such as accountants and lawyers.
Travel costs incurred as part of your work.
Advertising such as website costs of Facebook adverts.
Although this is a good general list, there are dozens of exceptions to the rule and self-employed people often struggle to separate life expenses from work expenses which can make everything ten times harder.
This is where we can assist you, at MCC Accountants we help self-employed people manage their accounts and get their head around their taxes.
We can do most of the difficult parts for you and answer any questions you may have.
Our fees are set so one price will cover all the work that we do for you.