If you need to complete a Self Assessment tax return, the job can look much worse before you start than it does once you break it into steps.

You need to know whether a return is required, gather the right information, complete the main return and any extra sections that apply to you, check the numbers and then deal with the tax bill.

That may not get the pulse racing, but a little preparation makes the process much less stressful.

About this episode

Completing a tax return is probably not high on anybody's list of favourite ways to spend an afternoon.

For many people, it brings stress, delay and the temptation to leave it until later.

But once a Self Assessment return is required, it becomes one of those jobs that is much easier when you understand what HMRC is asking for.

In this episode, we look at who may need a return, what information to gather, how the return is structured, what to think about with business expenses, the main deadlines and what to do if you cannot pay the bill.

This is also the first part of a two-episode sequence. Here we deal with the wider Self Assessment return. Our self-employed tax return guide then looks specifically at the business section for sole traders and freelancers.

Who needs to complete a Self Assessment tax return?

Not everybody needs to file one.

HMRC uses Self Assessment where tax cannot simply be dealt with through systems such as PAYE.

Common situations include:

• you are self-employed as a sole trader and your gross trading income is more than £1,000
• you are a partner in a business partnership
• you need to report certain taxable capital gains
• you need to pay the High Income Child Benefit Charge and it is not being collected through PAYE
• you have untaxed income from property, commission, savings, dividends or overseas sources
• HMRC has asked you to submit a return

There are other circumstances as well, so do not rely on an old list you remember from several years ago.

If your circumstances have changed, check whether a return is still required.

Get your information together before you start

A smoother tax return starts with preparation.

Gather the information first instead of trying to find documents while you are halfway through the return.

Depending on your circumstances, this may include:

• your Unique Taxpayer Reference, or UTR
• employment details such as P60, P45 or P11D information
• self-employed business records and accounts
• property income and expense records
• savings and investment income
• dividend information
• pension contributions
• Gift Aid donations
• information about capital gains
• details of tax already deducted

Your UTR is the ten-digit number HMRC uses to identify you within Self Assessment.

If you are filing for the first time, register early enough to get the information you need before the filing deadline arrives.

The main return and supplementary pages

A Self Assessment return is not one giant box containing every possible type of income.

There is a main return, and then additional sections may apply depending on your circumstances.

The main return deals with your core personal and tax information.

Supplementary pages can then cover areas such as:

• employment
• self-employment
• business partnerships
• UK property
• foreign income or gains
• capital gains
• non-UK residence

You only complete the sections that are relevant to you.

If you are a sole trader or freelancer, the self-employment section is where the business income and expenses come into the return. We cover that in much more detail in our Self-Employed Tax Return guide.

Use records, not guesses

The figures on your tax return should come from records you can support.

Bank statements, invoices, bookkeeping records, payslips, pension information and other documents help build the picture.

If something is missing, investigate it.

Check your bank account. Look through credit card statements. Review invoices or your diary where appropriate.

Do not simply put your finger in the air and invent a number that feels about right.

If you genuinely need to use a provisional figure because the final information is not yet available, make sure you follow HMRC's rules and correct the return when the final figure becomes known.

Business income and allowable expenses

If you are self-employed, your business profit feeds into Self Assessment.

Broadly, that means starting with your business income and deducting allowable business costs.

But not everything you spend while running a business automatically becomes a tax deduction.

The expense needs to meet the relevant business-use rules.

Take a trip to Disney because running the business has stressed you out, and you may have a very enjoyable time. That does not make the holiday a business expense.

Travel to meet a client for a genuine business purpose is a different matter.

Some costs sit in the middle.

Your mobile phone or computer may have both business and personal use. In those cases, you usually need to identify the appropriate business element rather than claiming the whole amount.

Our self-employed tax return guide goes further into income, expenses, cash basis, equipment and working from home.

Check the return before submitting it

Once the information is entered, take time to review it.

Check that all relevant income has been included.

Make sure you have not entered the same amount twice.

Look at the figures that seem unexpectedly high or low.

Review claims for expenses and reliefs.

Then ask whether the final tax calculation makes sense compared with what you expected.

Our guide to common tax return mistakes covers several areas worth checking before you press submit.

Self Assessment deadlines to remember

The exact tax year changes, but the normal Self Assessment timetable follows the same key dates.

5 October

If you need to complete a return for the previous tax year and you are filing for the first time, or need to reactivate Self Assessment after a gap, you normally need to tell HMRC by 5 October.

31 October

HMRC normally needs to receive a paper Self Assessment return by 31 October.

30 December

If you owe less than £3,000, already pay tax through PAYE and meet HMRC's other conditions, submitting your online return by 30 December may allow HMRC to collect the bill through your tax code.

31 January

The normal deadline for an online Self Assessment return is 31 January following the end of the tax year.

Tax due under Self Assessment is normally payable by the same date.

If payments on account apply, there may also be a second payment on 31 July.

For more detail, see our guide to Payments on Account.

Filing early gives you more control

The filing deadline is the last date, not a target date.

Getting the return completed earlier tells you what the tax bill looks like and gives you more time to plan how you will pay it.

It also removes one more job from the back of your mind.

Filing the return early does not normally mean you have to pay the bill immediately.

What if you cannot pay the tax?

First, do not impersonate an ostrich.

Putting your head under the duvet, ignoring letters and hoping HMRC forgets about you is not a payment strategy.

Get the tax return filed so the amount due is clear.

Then contact HMRC as early as possible.

Depending on the circumstances, you may be able to arrange a Time to Pay plan rather than paying everything in one lump sum.

The important thing is to engage with the problem before interest, penalties and collection activity make the situation worse.

How to complete a Self Assessment tax return: checklist

1. Check whether you need a return. Do not assume the rules are the same as last year.
2. Register with HMRC if necessary. Make sure your Self Assessment account is active.
3. Gather your records. Get your UTR, income details, business records and supporting documents together.
4. Identify the sections you need. Complete the main return and the relevant supplementary pages.
5. Enter all taxable income. Make sure nothing has been accidentally left out.
6. Review expenses and reliefs. Claim what you are entitled to without turning personal costs into business deductions.
7. Check the calculation. Make sure the result looks reasonable.
8. Submit by the correct deadline. Paper and online returns have different filing dates.
9. Plan the payment. Check the amount due and whether payments on account apply.
10. Deal with payment problems early. Speak to HMRC rather than ignoring the bill.

FAQs

What do I need to complete a Self Assessment tax return?

You normally need your UTR plus records covering the income, tax deductions, expenses, reliefs and other information relevant to your circumstances.

Do all company directors need to submit a tax return?

No. Being a company director on its own does not automatically mean you need to submit a Self Assessment return. What matters is whether your income and circumstances create a filing requirement or HMRC asks you to file.

What are supplementary pages?

Supplementary pages are additional sections used to report types of income or gains that are not covered fully by the main return, such as self-employment, property, employment, foreign income and capital gains.

Can I submit my Self Assessment return before January?

Yes. You can normally submit it after the relevant tax year ends on 5 April. Filing earlier gives you more time to understand and prepare for the tax bill.

Can HMRC collect my tax through PAYE?

Potentially. If you owe less than £3,000, already pay tax through PAYE and meet the other conditions, HMRC may be able to collect it through your tax code if the return is filed by the relevant deadline.

What should I do if I cannot pay my Self Assessment bill?

Submit the return and contact HMRC as soon as possible. Depending on your circumstances, a payment arrangement may be available.

Episode Timecodes

• 00:00 - What this Self Assessment episode covers
• 01:39 - Why completing the return earlier helps
• 02:17 - Income and gains covered by Self Assessment
• 02:47 - Who may need to submit a tax return
• 04:32 - How the tax calculation works
• 05:02 - Main return and supplementary pages
• 05:41 - Information to gather before starting
• 06:51 - Using records and reasonable figures
• 07:24 - Self-employed profits and allowable expenses
• 08:06 - Mixed business and personal expenses
• 09:16 - Capital costs and simplified expenses
• 12:20 - Filing and payment deadlines
• 13:42 - What to do if you cannot pay
• 14:20 - Part one and the self-employed follow-up

Related episodes and guides

• Self-Employed Tax Return: What Sole Traders Need to Report
• Self Assessment Tax Returns
• Personal Tax Return Explained
• 5 Tax Return Mistakes to Avoid in Self Assessment

Key takeaway

Completing a Self Assessment tax return is much easier when you know what information you need before you begin.

Check whether you need to file, gather the records, complete the relevant sections, review the numbers and submit the return before the deadline.

Then make sure you understand the tax bill and how you are going to pay it.

You do not need to love tax returns.

You just need a process that keeps the numbers under control and stops January turning into a crisis.

Further Support

If you need help completing your Self Assessment, checking what you need to declare or understanding your tax bill, you can contact us for an initial chat.

You can also use our free online business calculators to support your tax and business planning.

For more practical finance and tax support, visit the I Hate Numbers YouTube channel, or listen and follow on Apple Podcasts.

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Completing your tax return may not be on your agenda of the top most things you want to do in your life. However, if you're amongst the 10.2 million people who need to do one, it becomes a real necessity. In this week's episode on I Hate Numbers, I'm going to go through who needs to actually complete a tax return in the United Kingdom, some of the key information that's needed to be able to complete the return, what businesses can claim for and the key dates and paying the tax. And also what happens if you can't pay the tax that's due.

You're listening to the I Hate Numbers podcast with Mahmood Reza. The I Hate Numbers Podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

Hi folks! Welcome to another weekly episode with your host, Mahmood Reza. I'm an accountant, I'm an educator and a proud author of the book I Hate Numbers. Don't be deceived by that title. That title gives you an insight into the world of self-employment running your own business, covering things that are number based as well as dealing with clients, planning, what goes on between your ears. My mission in life has always been to help businesses grow, sustain, make more profit, and have the businesses they deserve. Let's crack on with the podcast.

Now, completing a tax return can be a wait until later, possibly stressful and possibly a very time consuming affair. The sooner you get your tax return done means that you can sit back, relax, you know exactly what you're going to have to pay. You've got that stress out of the way and you can just get on with your business and your life. Now, for myself, we've already been submitting tax returns on behalf of our clients and I've taken a break from that schedule to give you some insight into what goes on into the world of self assessment. You may be very familiar with the world of self assessment and there's no harm in actually just topping up your knowledge bank.

Now, I'm going to be focusing on the tax returns for the year 21/22, and that runs between the 6 April 2021 and the 5 April 2022. Now, the self assessment tax return covers the income for an individual as well as what's called capital gain transactions. Income typically involves business profits, salaries, benefits in kind, rental income and dividends. The first area I wish to cover is who actually needs to bother.

Now, the main situations where a tax return is required is if the following is applicable during the year 21/22, if you are self employed or what might be called a sole trader earning more than £1000 worth of fees or sales, then you've got to complete a return. If you are what's called a higher paid employee, this is where your income is approximately an excess of £50,000 and you've got untaxed income maybe you've got some dividends that you've got from investments, then that applies. If you're a company director, unless it was a not for profit organisation and you didn't receive any financial benefits, typically you've got to complete a tax return.

Now, if your only income from the company, by the way, was PAYE and it's below the higher rate tax bracket, then you don't have to complete a tax return. Now, if either you or your partner are receipt of child benefit and your income is over 50,000, you've got to complete a tax return. So you could both be on £49,000 a year. Fine. Nothing to do if one of you earns over 50,000, even if the other one doesn't earn anything, you've got to complete a tax return.

If you've got a business or property or you've made losses elsewhere in that business or property or capital transactions and you want to claim loss relief, complete a tax return. And lastly, if you've made any profits from capital transactions, for example, selling shares, investment properties, works of art, then you've got to complete a tax return. Now, before we dive in and start filling in the requisite boxes online or in paper form of the tax return, it's always worthwhile to think in terms of what the tax return is going to ask you to complete and also about where we gather the data.

So let's go back to the start. Now, income tax is worked out by adding up all the income you have. You then take off any costs that you may have tax release and allowances such as your personal out, and you work out what you initially owe our friends at HMRC. If some tax has already been taken off you, for example, from a salary, then effectively you're likely to be moving towards a smaller tax bill. And who knows, it might even creep to a tax refund. The tax return itself consists of two parts.

There's the main core part and there's the extra pages, which in official circles are called supplementary pages. Now, the core part of the return is where you provide personal details such as your UTR, abbreviated for unique tax reference, your name, your date of birth, and also providing details of your savings income, pension payments and gift aid claims. If you filed before folks, by the way, some of this information will already be stored for you. If it's your first time, then you have to complete that accordingly. Now the extra pages, the supplementary pages if you wish, are where you provide details about other income, not in the main core return.

Typically this is going to cover income from employment, self-employment, business partnerships, UK property income, foreign income or gains, capital gains. And also if you need to make a declaration about non-UK residency status before you start, gather together everything you need. It makes life much smoother, much less painful. If you know what you need at the beginning, it makes the process much smoother and you can get back on with your life. Now, you need to include your unique tax reference, your ten digit code provided to you when you registered with HMRC.

If you've lost it, or you haven't yet registered, then do so as quickly as possible for income from employment where you're being paid under PAYE. Then most of the information will be gathered from your P 60s, your P 11Ds, your P 45s. If you're self employed, the figures will come from your accounts, the accounts that are prepared that summarises your figures for turnover and the expenses of that business. Please note, folks, that what you put in your accounts may not necessarily be what the tax owner allows. More of that later on in this podcast.

Property income: use your rental accounts to give you the figures that you need to enter into the requisite boxes of your tax return. Now, it might be that you don't have the evidence, the backing documentation, the receipts to support what goes into your tax return. HMRC does allow you to make reasonable estimates, but don't put your finger in the air. Don't make a wild guess. Have some basis on which you've come up with those numbers. Check your bank statements, check your credit card statements. If you're looking at travel costs, look at your diary. Have something that supports the figures that's going on.

This next section, I'm going to focus now on the self-employed or sole traders or freelancers. All those collective terms are used to describe this next section. Now, if you're self employed, the tax you pay is based on the profits your business generates. The difference between what you charge your customers and what your tax allowable business expenses are. There is a general rule that says any cost that you claim for business purposes must be, wait for it, wholly and exclusively for the purpose of business. So, if you're feeling stressed out in your business and you go for a trip to Disney, that's perfectly understandable, perfectly a good thing. Who doesn't like Disney? But it's not a business deduction.

If you travel to see a client, any costs in relation to seeing that client are for business purposes, and that's perfectly fine, then you might get something that's in the middle. So, shared expenses, that's where you are spending money. But the purpose of that spend is both for business and for personal. Think about your mobile phone. You'll make personal calls as well as using it to talk to clients and running your business. Computers will be the same. You've got a computer, you use that for business purposes, but you also might use it for personal reasons, for gaming, for checking the internet and the like.

Now, by concession, HMRC allows the self-employed to claim a business proportion to work out how much of that spend relates to your business activities and how much relates to personal. Apologies here, folks, by the way, as a flag up, this does not apply to companies. Now, the costs of running your business may include things like capital purchases. So think about the PCs, the values that you might use to deliver goods, equipment that you buy, furniture, all of those support your business and help you do what you do. But we've got a completely different set of rules for working out what you can claim on those items compared to preparing the accounts.

You have to tap into something called the capital allowances rules. Entertaining clients and suppliers, however important they might be, however commercially sensible it is, is not allowed for tax purposes. If you have staff on the payroll and you want to entertain them, and I don't mean doing a juggling act, but perhaps the Christmas dinner, the summer barbecue, then that's fine, as long as it doesn't exceed a certain level. There is a regime HMRC have implemented called a simplified expenses regime. Let's roll back. Now, it may be your recordkeeping is not that brilliant. It may be that you can't be bothered to add up bits of paper. And what HMRC say is as long as you are below the VAT registration limit, then you have a choice of claiming certain expenses either based on the actual costs or using what's called scale rates, commonly known as simplified regime.

And this only applies to sole traders and partnerships. Limited companies, folks, unfortunately cannot use this regime. The two key areas that are likely to impact for a sole trader, a self-employed person, are transportation and for working from home. Now, if you do use a car, a van, a push bike or a motorbike for business, then you can claim a mileage rate instead of looking at the actual costs of running the vehicle and working out the business element. Now, if it’s a car or a van, it's 45 pence for each business mile travelled up to the first 10,000 and then after that it's 25 pence per mile. If it's a motorbike or motorcycle, you can claim 24 pence per business mile travelled. And if you're on a push bike you want to keep healthy and fit and use that to go and visit clients or go on behalf of your business, then it's 20 pence per mile. Make sure you've got some way of keeping the records of those mileages.

Now, as a heads up on this, folks, once you make that choice whether to claim mileage or the actual cost of running the vehicle, you can't change it on the car until you come to sell it again. So if you choose mileage one year, you can't chop and change the following year to do something else. Stick to mileage or stick to actual costs adjusted. The last one on the simplified regime is skill rates based on working from home. Now, you've got two choices. You either work it out on the basis of number of hours you're working on or in your business, and it goes from 25 to 50 hours per month.

You can claim a flat, £10 per month, no receipts necessary. If you work much longer, you would do 101 hours at home, then you can claim £26 per month. The alternative is to look at the cost of running the household, things like council tax, electricity, gas and the like. Look at how much that is consumed for the space that you occupy and that's your options on, and I'll finish and conclude with key dates and the payments of tax or not, as the case may be. Now, if you need to complete a tax return, you must register with HMRC by the 5 October in your second business tax year. Paper returns by then are still allowed. You can still use paper tax returns, but for the 21/22 year you've got to submit them by the 31 October 22.

If you have an exemption, by the way, say, on religious grounds for not dealing with the internet, not finding things electronically and digitally, HMRC will allow you to submit still by paper. The deadline, by the way, for getting your 21/22 tax return in is the 31st January 2023. Now, if you do end up owing tax and you've also perhaps got a PAYE job, then any tax you are up to £3000 can be collected via PAYE. You've got to get your return in though, by the 30 December 2022. HMRC will collect that money via your tax code. Now, it's an all or nothing. You can't have 3300 and the first 3000 will be collected. If it's below £3000, all of it can be collected if you so desire.

Now, any tax that you do owe for 21/22 plus premiums on account are going to be paid by the 31 January 2023. If you think there's a lot of information to absorb here, folks, there will be a link in the show notes. And if you can want to check out and check the rules and the details here, they'll be there for your pleasure. Now, it sometimes happens that you may not be out before the taxes due. Maybe it's come unexpectedly, maybe you haven't quite saved enough money to pay for your tax bill. So what do you do? Well, what you must not do is impersonate an ostrich. Do not put your head under the duvet. Do not stick your head in the sand. Don't delay.

Get that tax return in first of all. Once that's in there, then you've got options. There are always options to whatever you do. You can ring up HMRC. You can negotiate a time to pay. My experience suggests that you can typically quite easily go anything from six to twelve months without any major problem. HMRC will ask questions of you just to make sure there is an affordability issue. They will normally expect you to pay that by a monthly standing order commitment. You can do all this online, by the way, if you'd rather not talk to HMRC, which obviously seems quite a shame. But if you don't want to talk to them, you can do it all electronically and you can do it all online.

If you stick ahead in the sand and don't bother, you don't engage with HMRC, then watch out for warning letters as well as debt collectors on your pace. If you want to have a quick peek and have an estimate, you haven't quite got round to doing your tax return, check out the show notes, by the way. And there's a link to a free online tax calculator where you can put the numbers in by use of a slider. And hey, presto, the magic figures will appear. Now folks, this is part one of part two. In the next podcast, we're going to be talking more specifically about a self-employed tax return.

What goes in there, some of the key things are explained and just like having a face radio, talking about numbers over audio can be quite an interesting experience. I hope you've got some use out of this podcast. I'd love it if you left a comment, subscribe, tell your friends, tell your family, tell people you don't even like, there's this wonderful podcast called I Hate Numbers. If there's something you want to have covered on a future show, drop me a line, I'll have a look at it. And who knows, it could be in my content plan. But until then, folks, happy tax returning.

We hope you enjoyed this episode and appreciate you taking the time to listen to the show. We hope you got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.