Guest blog by Robinsons Accountants, who will be offering free 1-on-1 finance advice to Hubbers from February 2018.
January tax returns remain a taxing (no pun intended) and daunting time for entrepreneurs, with many putting off the task until the very last minute… Robinsons Accountants are here to make tax returns as simple and pain-free as possible and help you avoid the £100 fee for missing the deadline! Here are our top tips:
- Register with HMRC early
If this is your first time sending a return, you’ll need to first register online. You will then receive a letter with a 10-digit Unique Taxpayer Reference (UTR) and be enrolled for the Self Assessment online service at the same time. Make sure you don’t leave this too late as it takes 10 working days (21 if you are living abroad) for you to receive an activation code. Should you wish to register by post, fill in this form on-screen and post it to HMRC.
- Get your records in order
If you’re self-employed, you will need to have a full record of your accounts. You will need to know and share the full amount of what you have been paid during the year (your P60 can help with this). Also, how much you may have received in dividends, any investments which might have matured over the last tax year and how much interest you may have received on your savings. If you receive any benefits or government allowances this should also be taken in to account.
It is important to keep a full record so you can fill in your tax return correctly and avoid any penalty fines – which can become costly. There are easy ways to help you gather and safely store this information such as cloud storage like Dropbox, scanning your receipts and bank statements and creating a monthly spreadsheet recording transactions. It is then easier to access should you be asked for it by an accountant or HMRC officer.
- Make note of any tax relief you’re entitled to
You can deduct some of your business’ running costs to work out your taxable profit as long as they’re allowable expenses. Things such as office supplies, travel costs, insurance/bank charges, advertising/marketing, stock and/or raw materials can all be claimed back as allowable expenses. Your Impact Hub membership counts too!
If you work from home, you may be able to claim a proportion of your costs for things such as heating, electricity, Council Tax, mortgage interest or rent, and internet and telephone use. You will have to decide a reasonable method for dividing your costs such as the amount of time you spend working from home.
- Use Simplified Expenses
Working out costs can be baffling so to avoid using complex calculations we recommend using Simplified Expenses. These are flat rates that can be used only for business costs for vehicles, working from home and if you are living in your business premises. The good news is you can work out your simplified expenses in 3 steps:
- Record your business miles (for vehicles), hours you work at home and how many people live at your premises over the year.
- Use the flat rate for vehicles, working from home, and living at your business premises to work out your expenses.
- Include these amounts in your Self Assessment tax return
To know whether simplified expenses are what suits your business, use HMRC’s simplified expenses checker to compare what you can claim using simplified expenses versus what you can claim by working out the actual costs.
- Benefit from your memberships
If you are annual member of the National Trust, English Heritage and London Zoo, you may be pleased to know that these memberships count as a donation to charity. You will be able to reclaim the tax paid on the donation even if you agreed for the donation to be classed as Gift Aid.
Likewise, if you are member of professional or trade bodies, you may be able to claim their fees against tax. Check the official list of approved professional organisations and learned societies to see whether your trade body made the list. You can only reclaim tax on memberships that are beneficial for your job.
The downer is that you can’t claim back tax on life membership subscriptions and if the fees/subscription weren’t paid by you.
- Check your pensions
If you have a private pension, the company running it will have automatically added the basic tax relief of 20%. However, if you are a higher rate taxpayer, you may be entitled to claim a 40% relief on your tax returns. There’s no need to worry if you are paying into a company-wide pension pot as your company claims tax relief on your behalf.
- Get some help
HMRC provide countless information via their Self Assessment helpline and website. However, they are in high demand during the Tax Returns period, so you could be waiting for over an hour and it can prove difficult to know which guidelines apply to you and your business.
For more personal 1-2-1 advice you’re best off reaching out to an accountant. Accounting experts can help you understand advice and recommendations and even fill in and submit your tax return, so all you have to do is pay the final sum.
With over 20 years of expertise, Robinsons Charted Certified Accountants, specialise in personal and corporate tax with a personal touch. If you have any business enquiries, please consult http://www.robinsonslondon.com/, email [email protected] or follow the respective Twitter, Facebook or LinkedIn pages.