With another tax year just ending last week, it had me thinking about the number of times over the last year that Her Majesty’s Revenue and Customs have featured badly in the news.
They have been roundly criticised for the poor publicity around the introduction of Making Tax Digital, a cross-party group of MPs last week branded HMRC “out of control” over the new loan charge; and after HMRC fined a homeless man £1,600 for missing a tax return deadline the judge dealing with the self-employed electrician’s appeal called HMRC’s actions “ridiculous” and “a scandal”.
Believe it or not some people have already submitted returns for the 2018/19 tax year which ended on the 5th April 2019, and whilst I am keen to submit my own fairly quickly to get my expected tax refund, I have not been that quick off the mark.
It is however a useful time to remind those who are self-employed what they need to do.
The newly self-employed must register their business with HMRC and will be required to submit an annual self-assessment tax return (by 31st January for the previous tax year if filing on-line, or 31st October if submitting a paper version). As the tax year runs to the 5th April it is easier to have business accounts that run from 1st April to 31st March as well.
It’s important to remember that in the first year of self-employment any payment due for income tax and national insurance is payable by the deadline of 31st January, which is over nine months after the tax year end; it is therefore important to set aside enough money to be able to make the payment on the due date. After your first full year of business you may be required to pay tax for the current year in two instalments, called “payments on account”. By completing your accounts early you should have more time to make sure they are accurate, and that you have claimed all the allowable expenses to minimise your tax payable.
HMRC to their credit publish a really good guide to help you and they have a great website full of information and examples Here at Business Northumberland, we also have useful information on our website to help you. You can claim mileage allowances for business use of your own vehicle, you may be able to claim expenses for the use of your home for business, and there are other costs you can claim.
For more information go to: https://www.gov.uk/expenses-if-youre-self-employed
It will be the 31st January before you know it!