Completing your 2014/2015 Self Assessment Tax Return
Self Assessment tax returns and their completion is a yearly chore that all self-employed workers must complete. However, whether this is your first time or you are a tax return veteran, the process of collecting a year’s worth of expense receipts, invoices and bank statements can hardly be classed as plain sailing.
To help ease the stress of the UK’s self-employed workers, Easy Accountancy provides a quick turnaround, stress-free, low-cost Self Assessment tax return service. From sole traders to limited company directors to those that simply have some additional income to declare, Easy Accountancy can help you with your return.
Tax can be complicated, which is why at Easy Accountancy we assign all of our clients their own dedicated accountant, who will explain everything in plain English so that you feel in control of your finances. Your dedicated accountant will review and analyse your income and outgoings to ensure that you pay the correct amount of tax. They will review all the details of your return with you before submitting it to HM Revenue and Customs (HMRC) on your behalf.
You can rest assured that your tax return will be in safe hands as all our accountants are qualified experts in their field and complete hundreds of tax returns every year.
Our Self Assessment tax return service is provided for a fixed fee with no hidden costs. If you would like more information on how Easy Accountancy can help you with your tax return, please get in contact with one of our friendly accountants on 0500 234111/01442 275767.
Tax returns can sometimes ignite confusion amongst our clients, and so to help you understand this complex topic we have answered some of the questions that we are most commonly asked.
What is the purpose of completing a tax return?
The point of a tax return is to make HMRC aware of your income and expenditure for the financial year so that they can calculate how much tax you need to pay or if you are owed any money from overpaying tax in the past.
The information provided on your return, which includes turnover, business expenses and any other capital gains that you have made on business assets, allows you to work out your total profit for the financial year. Once your profit has been calculated the amount of tax that you are required to pay is worked out based on the profit you have made.
Do I need to complete a tax return?
Permanent employees are paid by their company through the Pay As You Earn (PAYE) system, where tax and national insurance is deducted before their salary even hits their bank account, so they are usually not required to complete an annual tax return.
Anyone who receives their income via a means other than the PAYE system is required to complete a tax return because they won’t have paid any tax on their income yet.
Additionally, parents who earn over £50,000 annually and claim child benefit are required to complete a self assessment return, as does anyone on PAYE who earns £100,000 or more annually.
How do I register as self-employed?
If you are self-employed you will need to register with HMRC to ensure that you are paying the correct amount of tax and national insurance. Registration is completed via HMRC’s website and should be done as soon as possible and before October 5th in your business’s second tax year.
When does the financial year run to?
The UK tax year goes from April 6th to April 5th the following year. So the 2014/2015 financial year is 6th April 2014 through to 5th April 2015.
How do I start my tax return?
Completing a tax return yourself can be a tricky and confusing process, especially if it is your first time, so you may want to call in a professional to help you. However, if you have a small income and minimal expenses you could go it alone.
When completing a tax return you have the choice of completing it online or on paper. If you decide to complete the paper return, this will be a printed out form that needs to be filled in and submited via post to HMRC by October 31st. If you are intending to submit a paper return, but you miss this deadline you will need to complete your return online. Online returns are completed via the HMRC website and the deadline for submission is January 31st, which is also the tax bill payment deadline.
What details do I need to include on my tax return?
If you decide to use an accountant to help you complete your return they will provide you with a complete list of all the information required to complete a return. However, to help you prepare, here is a basic breakdown of what you will need:
- Income – your company’s total turnover for the financial year. This is the total amount that you have invoiced to clients or generated in sales.
- Bank interest – details of any interest you have gained through bank accounts.
- Additional income – if you have earned any additional income during the financial year this must be declared. Additional income could be earned through working part-time in addition to running your company or if you were employed for part of the year and then left your job to become self-employed. Details of the amount that you have earned should be on your P60 or P45.
- Property income – if you earn money from rental property that you own or through any other method this must be declared on your tax return. You will also need to include details of any business expenses relating to property, for example if you work from home and claim a proportion of your utility bills as an expense.
- Business expenses – you are required to list any expenses that you have incurred throughout the year on your return. Business expenses can cause a great deal of confusion among self-employed workers as they must be deemed an allowable expense by HMRC. An expense is a business cost that was incurred wholly and exclusively for business purposes, if you are unsure if you can claim a cost visit our simple guide to expenses page, or speak to your accountant.
- Tax details - information regarding any tax that has already been paid, whether through permanent employment or by other means.
Do I need to keep copies of my tax return details?
It is definitely a good idea to keep copies of your tax return information such as expense receipts and sales invoices. If HMRC decide that they would like to investigate your case they can go back as far as six years following the financial year in question, so we recommend that you keep copies of all your accounting records whether digital or paper for this length of time.
What costs can I list as an expense on my tax return?
As a self-employed worker you will be likely to incur business costs on a daily basis, and these costs can be claimed as business expenses if they are declared on your tax return. However, the line between what is classed as a personal cost and a business cost can sometimes be blurred. A common example would be a self-employed individual who works from home, because they are able to claim a proportion of their household costs as a business expense, but not all their household bills as most of the cost will be a personal expense. Another example would be mileage, as you are only allowed to claim mileage on business trips, and if you use your vehicle for both business and personal use you will need to separate your usage to ensure you only expense mileage that was for business purposes.
How do I complete my tax return?
As mentioned earlier you can complete your tax return yourself, but you may want to enlist the help of an accountant as it can be a confusing and longwinded process, with mistakes sometimes being timely and costly to rectify.
If you do decide to complete your tax return yourself, you must first register for self assessment via the HMRC website. You will then have the choice of completing your return on paper or online, with different deadlines for both options.
What are the deadlines for completing a tax return?
As mentioned above, the deadline for your tax return will depend on whether you send a paper return or an online return. The dates that you need to remember for the financial year 2014/2015 are as follows:
- October 31st 2015 deadline for paper returns
- January 31st 2016 deadline for online returns
What is the payment deadline for my tax bill for the 2014/2015 financial year?
January 31st 2016 is not only the deadline for online tax returns, but also for payment of your tax bill. If your tax bill is not paid by this date you may be liable for further penalties.
If you started your business during the 2014/2015 financial year then your tax return will need to be completed by 31st January 2016, which is also the date that you need to pay any tax that you owe. When paying your tax bill you will need to make the first of your ‘payments on account’, these are advance payments for what you are expected to owe in tax for the following year.
For example, if you owe £5000 in tax for the financial year 2014/2015 you would need to pay the following:
31st January 2016: £5000 tax bill plus £2500 payment on account (half of your expected tax bill for 2015/2016)
= £7500 in total
31st July 2016: £2500 second payment on account.
What happens if my return is submitted late?
If you submit your return late by even a minute, you will automatically incur a £100 penalty, which remains the case for if your return is up to three months late. If your return has still not been received once three months has passed your penalty will increase, this is also the case for those whose tax payment is received late. HMRC have an online tool, which enables you to estimate the extent of your penalty for both late tax returns and tax payments, which you can access on their website.
To find out how Easy Accountancy can help you with your tax return, or for more information about our stress-free, low-cost tax return service speak to one of our friendly accountants by calling 0500 234111/01442 275767 or email firstname.lastname@example.org.