Self-Assessment Tax Return 2016: The Need-To-Knows

Get Everything In For 31st January

The deadline for submitting online self-assessment tax returns to the HMRC is Sunday 31st January 2016.

The paper self-assessment deadline is at the end of October every year and as that has passed, any income that was not automatically taken from your employer - in other words, PAYE - for the tax accrued between 6th April 2014 - 5th April 2014 must be collected by HMRC at the end of January via an online self-assessment.

Date the Diary

Highlight, circle or do whatever it takes to remember this date. It’s one you do not want to miss. Late returns to the HMRC can result in a fine of £100, along with a further £10 per day for every day that it’s late.

Does it apply?

You need to fill out a self-assessment online if you fall into any of the below categories:

• You are self-employed and are a sole trader

• You are self-employed and are a partner in a business

• You are a director within a company. However, you are exempt if you hold this position in a non-profit organisation or a charity

• You are an employee and pay PAYE and earn income through additional self-employment work

• You are a higher rate taxpayer. You need to submit a self-assessment return to ensure you can claim back tax relief on your pension contributions.

• If you or your partner earn over £50,000 and you claim child benefits

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Save Time

Let’s face it, doing our accounts take precious time out of our day, which could be spent trying to secure more work, yet we know it’s necessary, so how can we ensure that we comply with the law and protect our business, while saving time so we can get back to increasing profits?

Before you sit down to complete your form, make sure you have everything you’ll need to hand. This will include bank statements (you can print these off online), invoices, household bills and any cash receipts.

Cutting costs, not corners  

For small business owners, it is important to remember exactly how you can save mounting tax costs and what counts as legitimate expenses to enable you to do this.  Even businesses that are sole traders do not have to pay VAT on expenses that are necessary for the running of the business on a day-to-day basis.

Therefore,  if you work at home, any household bills such as electricity, heating and rent itself can be considered to help lower your tax bill, along with mileage and any stationary used. Providing the expense relates to the direct conduct of the business, it is allowed.

If you are unsure of any element of maintaining, updating and completing accounts or have a significantly large bill, it is advisable to employ an accountant to help and manage this on your behalf.  

Allowances

In the tax year 2014/2015, the tax allowance for an individual was £10,000 for those born after 5th April 1948.  This allowance means any person can earn up to this amount before they are eligible to pay income tax.

ISAs are a great way to save and although they must be included in your self-assessment tax return online, individuals can save up to £11,880 over the tax year with a maximum of £5,940 of that in a cash ISA.

For those saving into a pension, the maximum amount that can be placed into an ISA and is exempt from tax relief is £40,000.

If you’d like more information on personal tax services and planning, get in contact today.