Self- Employment: Self-Assessment Tax Returns

I am so proud of myself right now; I have just been super organised and filed my 2017/18 tax returns online already! The deadline isn’t until the end of the year, but I couldn’t blog anyway because my site was being transferred to a new host, so I figured I might as well use that time effectively and submit mega early to get it out of the way! Especially after having a massive last second faff last year and finding myself needing to send a paper version in the end, only for Royal Mail to return it to me a week later as the envelope got damaged in transit! So I was then panicking about deadlines and potential late fees; it is a massive relief to know there will be none of that stress this time!

Are you self-employed? If so, you will need to keep records and fill out a tax return form each year too. In many cases that is obvious; people are generally aware that if you run a business and get a regular income from it, you must be self- employed and need to declare your income. However, some people don’t realise that even if you just earn a small irregular income, for example if you mainly blog as a hobby but occasionally get paid work, or if you sell things from home, or receive any other ad hoc income, that you still need to register as self- employed and complete an annual tax return. If that is the case, here’s what you need to do…

Register as Self- Employed

Firstly, you need to register as self- employed. The easiest way to do this is by completing the form online. You must register by 5 October in your business’s second tax year at the latest, although personally I would recommend doing it asap.You will then be sent your Unique Taxpayers Code.

Register for Online Self- Assessment

Assuming you intend to file your tax returns online, you then need to register for this service on the government website. Technically you can use either the government gateway system or Gov.UK Verify to register and submit your returns, but this is the part where it got complicated for me the first time around.

Government Gateway

I tried to use the gateway system, whereby you complete a form online then they send you an activation code in the post. However, this did not work for me and I was told to use Verify to confirm my ID instead. The gateway system is gradually being phased out and will be replaced completely by March 2019, but I am not sure whether this issue had anything to do with it or not.

Verify Gov.UK

So I tried to use the Verify system. And this is where it got really frustrating! For the vast majority of people this would probably be a really quick and easy task. For me, however, not so straightforward; quite the opposite infact!

You see, my passport – which was in my maiden name anyway – had just expired and I don’t have a valid UK driving license either. On top of that my back account is with Nationwide. This combination apparently means you can not possibly verify your identity online with any of the seven different approved companies who offer this service on behalf of the government. Hmm. I wasted so many hours trying to sort it out, it was absolutely ridiculous.

Long story short: eventually I had to renew my passport and open a new bank account with a different bank – just so I could use the government’s online services! Needless to say I was less than impressed.

Submitting Your Tax Returns

That said, once you are verified online, it is really easy to submit your tax returns online. If you have all the information you need in front of you, it isn’t too much of an onerous task; actually, it didn’t take me very long whatsoever. If you are submitting online, the deadline is 31st January. For paper versions, it is 31st October.

Record Keeping

Obviously make sure your books are accurate and kept up-to-date, so you have the correct figures to submit. Also keep evidence; receipts, invoices, account records etc… incase you should ever need them. I use a simple Excel spreadsheet to record my monthly income and expenses. I operate on a cash-in, cash-out system, as I find that easiest personally. You will need to check if your situation allows this.

Remember to include all your allowable expenses. For example, if you work from home you can include a percentage of your utility bills. To make this easier, you can use simplified expenses. This is a flat rate, depending on how many hours you work from home per month. Note this does not include phone and internet so they can be listed separately. Once you have got to grips with your record keeping you shouldn’t find it too difficult, especially if you have a straightforward business. However, some people do like to hire a book-keeper to be sure it is all correct.

It can be daunting having to complete your tax returns for the first time, but try not to worry! I hope this information is helpful. Let me know in comments if you found it useful!

*Disclosure: This is a collaborative post.