The dread of the Tax return
About a year ago I did a blog on “Do I need to be
self-employed”. That blog was on the
accounts side of things and I am hoping this blog will be more about filling in
a tax return for self-employed businesses.
I will set this out as question & answers. If I do not cover something you wish to know
please comment and I will try to help.
Q1. Tax return paper
or computer?
At this present time you can still file a paper tax
return but they are phasing this out. I
personally would recommend using the Revenue & Customs own software on
their website to complete your tax return.
The software works out the tax due for you and you can even pay online. You will need to register in good time to use
this service however.
Q2. How do I register
on-line?
To register online is easy. Just go to the following link and answer the
questions. HMRC will send you a code
through the post in about 7 days. Once
you have this you can log onto the online services and pick the services you
wish to use.
Q3. What sections of the tax return should I fill in?
On the first page of the tax
return it will ask you to cross the sections that apply to you. The most common sections are employment and
self-employment. There are two sections
for Self-employment. SA103S is a short
version to be filled if your turnover is below £77,000 or SA103F which is a
full length version to be filled in if your turnover is £77,000 or more. If you have more than one business you will
need to fill in a separate self-employment page for each business.
The employment section is easily filled in. All the information you need will be on your
P60. You will only need to fill in your
gross wages and the tax deducted, these should be clearly indicated on your
P60. If you have more than one
employment you will need to fill in a separate employment page for each one.
There are other sections you may need to fill
in. Like interest received. You will get this information from your bank
accounts. If it is a joint account
remember to split the interest evenly between all account holders. If you have a number of bank accounts add
all the interest together. If you have
received any dividends in the year you will need to put this information on the
return. You will normally receive
dividend vouchers showing the information you need. Pensions, if you receive or pay into a
pension you will need to fill this section too.
Make sure you read the form well and that nothing
else applies to you. If you have a
refund then remember to fill in your bank details or indicate if you would like
to receive a cheque otherwise your refund will be kept on account and go against
any future tax payments due.
Q4. How can I pay my tax?
There are a few ways to pay
for your tax. If you fill in your tax
return early enough then you will receive a tax calculation through the post
with a payment slip attached which will tell you how to pay. If you do your return online then you can pay
online. You can also pay via standing
order or direct debit but unless these are payments made in advanced then
interest may be incurred. The last way
is through your coding notice, if you are employed then you can pay the extra
tax through your wages or if you have a taxed pension it can be taken from
this. You can pay lump sums off your
tax bill at any time you do not have to wait till the deadline to pay your tax
bill.
Q5 What are the deadlines?
The deadline for filling a paper return is the 31st
October, to file online is the 31st January. If you do not fill the return in by the
deadline then you will incur a £100 fine, after 3 months this will increase see
line below for details
Deadline for tax payments are 31st January for
the first year tax due plus the first payment on account. After the first year you will have to pay the
first payment on account and any balancing payment due by the 31st
January. The second payment on account
is due by the 31st July.
Payments on account are worked out on the following year’s tax. So if your tax in 2011/12 being your first
year of tax was £100 then in January you would have to pay £100 plus the 1st
payment on account of £50 totalling £150.
In July, the 2nd payment on account is due and that would be
£50. January 2012/13 your tax due ends
up being £200 the Revenue would deduct your payments on account of £100 and ask
you for the balance to be paid by 31st January. So in January you would pay the balance £100
plus the 1st payment on account £100, in July the 2nd
payment on account would be due of £100.
Q6. What is overlap relief?
A tax year is from 6th April to the 5th
April, to make life easier I would try to have a yearend of 31st
March either by starting your business on the 1st April or by doing
a short period on your first tax return, I.e. October 2012 to 31st
March 2013. The following year would
then be 1st April 2013 to 31st March 2014. If you do your accounts as 1st
Oct 2012 to 30th September 2013 it will be overlapping two tax years
then you will need to work out overlap relief.
This means taking out the portion of income and expenses that goes over
the year from 6th April 2013 to 30th September 2013, this
portion will need to be added to the following year’s tax return. On your first years accounts you will pay
tax on the whole period i.e. October to September. The April to September portion of tax will
affectively be paid twice but the overpayment will be carried over year upon
year till you cease trading then the tax paid in the first year will come off
your tax bill. There are boxes on the
self-employment part of the tax return that you will need to fill in
Mrs Jewels
