In the run-up to the Self Assessment online submission deadline of January 31st, we’re running a series of how-to articles explaining how freelancers and contractors can complete their Self Assessment tax return with the minimum of fuss. In part two, we look at how keeping proper records can save your bacon when it comes time to complete your tax return!
Being a diligent little freelancer and keeping proper financial records can seem rather tedious a lot of the time, but it will all be worth it when you come to complete your Self Assessment.
When you come to submit your financial information through the Self Assessment Online portal, having an organised stack of paperwork (or better yet a swanky online accounting system) can save your heaps of time and stress.
Before you start, here is a small selection of the financial records you should have to hand when you go to complete your Self Assessment. Many of these will not apply depending on the complexities of your finances; and this is not an exhaustive list (just a selection of the most common items).
If you are a sole trader, this means all your invoices & business related expenses.
If you are running your own limited company and draw money from your business with a salary / dividend split, this will apply. You will need all the vouchers for dividends issued in the relevant tax year.
Details of any income your received through a Partnership.
Information on interest on things like loans and credit cards is needed, so get the relevant statements from your provider.
Own rental property? You’ll need details of all the income you’ve made through it in the previous tax year. Extra points if you receive your rental income into a separate bank account for ease of organisation.
Receiving any income from overseas? Keep the details handy.
If you pay into a pension you should keep details of all the payments you’ve made.
If you’ve done any charitable giving and claimed Gift Aid on it, these details will be needed too.
Payment on Account
This means payments towards your last year’s tax bill – these will count against your income this year.
Redundancy lump payment or Unemployment benefit
If you left a full-time job or claimed Unemployment benefit in the last tax year, HMRC needs to know about it.
P11Ds are to inform HMRC of any benefits claimed by employees. If you have one for the last tax year, you’ll need it!
If you’ve made any profits disposing of things like property or shares, have these details handy too.
If in doubt, speak to a specialist
If you have a complicated financial setup, it can be well worth the money to engage a specialist to complete your Self Assessment rather than risk screwing it up! Signs it might be time to find yourself a good accountant:
- If any of the terms listed above gave you a headache
- If you think you have some of the above, but you’re not sure
- If you’re not sure which of the above relates to income and which to expenditure
- You are unsure of the tax law on how something is treated.
So now you know how to register, and what records you’ll need. In part three we’ll look at the all-important issue of timing!
Photo by mcfarlandmo