Self-assessment tax returns

Anyone who runs a small business or is self-employed must file a tax return by 31 January as if they do not meet the deadline they face fines by HM Revenue & Customs (HMRC). For many in this booming age of self-employment, it will be the first time they will have had to submit their return.

It is almost certainly too late to sign up for Self Assessment now, as to get a unique taxpayer reference (UTR) number and Government Gateway account can take up to 10 working days. However, most people will already have enrolled themselves on the online service.

In order to ensure they are ready to start the online process, they need to have a record to hand of all the income an expenditure associated with the business. Some people find it easier to keep digital records and there are many accounting apps and other bookkeeping software for small businesses, many of which integrate with the HMRC website to make filling in the tax return even easier.

Among the things they need to know is what they can enter as allowable expenses. These include office costs such as stationery or phone bills, travel costs such as fuel, parking, and train or bus fares, and clothing expenses such as staff uniforms.

Meanwhile, on the outgoing side, they need to have a list of anything they buy to sell on, such as stock or raw materials. In addition, they need to include financial costs, such as insurance or bank charges plus the cost of their business premises, such as heating, lighting, and business rates, and a list of supporting costs, like advertising and marketing costs.

These are then entered alongside any profits the business has made and from that equation the Self Assessment portal will work out what tax they owe or are owed. They will be sent confirmation of that amount and the time by which they have to pay.

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