Key tips for clients filing their self-assessment tax returns

1 Do you need to do one?

First check whether they need to submit a self-assessment (SA) tax return. Just because HMRC has not asked them to submit one, does not mean that they don’t have to. They’re responsible for telling HMRC if they think they need to complete a return and for paying any tax due that year.

Your client must submit a tax return if they are or have been self-employed (sole trader and working for themself), are a partner in a business, or a company director that has income not taxed under PAYE. They must also submit a tax return to claim certain types of tax relief, eg. higher-r ate taxpayers claiming back additional tax relief on their pension contributions. 

2 Get an online account 

The deadline for filing a paper self-assessment tax return has gone, so they will have to submit a self-assessment tax return online. If they are a fi rst-timer they will need to register with HMRC using their Unique Taxpayer Reference (UTR).

HMRC will send an activation code in the post within 10 working days (21 days if they’re abroad).

3 Get records to hand

If self-employed they’ll need to keep a record of all income and expenses, investments and savings including business invoices, receipts, bank/building society interest statements, dividends and other untaxed income, such as rental, as well as contributions made to pension schemes and charitable gift aid donations.

This should be recorded on Excel or opt for suitable software. If self-employed and employed, they’ll also need details of employment income from the P60 or P45 (if they’ve changed jobs during the tax year) and details of benefits and expenses during employment which can be found on their P11D.

To get ahead, they can sign up for Making Tax Digital for Income Tax at the gov.uk website and use software to keep business records digitally and send income tax updates to HMRC instead of filing an online self-assessment tax return, before it becomes mandatory in 2021.  

4 Claim allowable expenses and tax relief

If self-employed, they can reduce their tax bill by deducting allowable business expenses such as office costs, travel, clothing expenses, staff  costs, financial costs and marketing. They can reasonably apportion expenses, which have both business and personal use, such as utility bills if working from home.

They should remember to claim tax relief, eg. tax relief for higher rate taxpayers on pension contributions, tax reliefs on certain types of investments and gift aid charitable donations. 

5 Don’t leave it to the last minute to ask for help

Late filing comes with a £100 penalty and last year 735,258 taxpayers fi led their returns on 31 January (the final day) and 731,186 taxpayers missed the deadline completely.