Ideally, you would have completed and filed your 2021/22 UK Self Assessment tax return long before now. You’re probably wishing you had.  But January is here and for whatever reason, you didn’t get around to it. Life’s very busy for sole traders, but don’t worry – you’re not the only one. Each year, about four million people leave filing their Self Assessment tax return until after Christmas, despite the looming online-filing deadline of midnight on 31 January.

Article written for Expat Network by GoSimpleTax

So, if you’re a sole trader with many other things to do and little time to spare, how do you get your 2021/22 Self Assessment tax return done and dusted as quickly as possible without any drama?

Are you registered for Self Assessment?

To pay Income Tax and National Insurance contributions (NICs), if you didn’t file a tax return in the previous tax year, sole traders (ie self-employed people) must register for Self Assessment. It’s quick, easy and free!

Need to know! You must register for Self Assessment by 5 October latest in your second tax year (UK tax years run from 6 April to 5 April). If you haven’t done so by now – you’ll have to pay a fine.

• After registering online, within 10 days (21 if you live overseas), you’ll receive your Unique Taxpayer Reference (UTR) number through the post, which you’ll need to file your Self Assessment return. This could mean you miss the online filing deadline, which will result in a further £100 fine.
• You’ll also need a Government Gateway user ID and password to sign into your business tax account to file your Self Assessment tax return. If you don’t have one,getting a user ID via GOV.uk is simple.

Decide how to file your Self Assessment tax return online

There are three options. You can:

1. Pay an accountant to do your Self Assessment tax return for you. However, it will probably cost a couple of hundred quid and many accountants will already be fully booked up.
2. File directly with HMRC via Government Gateway. There’s no cost, but there’s also nothing to stop you making mistakes within your tax return that later end up costing you time and money.
3. Use Self Assessment commercial software (visit GOV.uk for popular options). If you’re an individual taxpayer with straightforward tax affairs, such software can cost less than £50 for a yearly subscription. It can save you lots of time and ensure that your Self Assessment tax return is mistake-free. It usually comes with user support and some providers offer additional paid-for tax return-checking services, for added peace of mind and possible tax savings.

How long will it take to fill out your Self Assessment tax return?

• According to research from Which?, on average, it takes about two and a half hours to complete a Self Assessment tax return. And while more experienced people (about 20%) can get it done in under an hour, it takes as long as five hours for 10% of Self Assessment taxpayers. Some people do it in one session, while others do it in two or three.

The SA100 Self Assessment tax return and supplementary pages

Within the Self Assessment tax return (the “SA100”, which is eight pages long), you provide details of taxable income and any capital gains, as well as (if applicable) student loan repayments, taxable bank or building society interest, pension payments, annuities, donations to charity and tax reliefs and allowances that you wish to claim.

As a sole trader, you complete the main Self Assessment tax return (SA100) as well as a supplementary page (SA103S or SA103F), summarising your taxable self-employed income and any business costs you wish to claim.

Need to know! You use the SA103S if your annual business turnover (ie total sales) was below the VAT threshold (£85k for 2022/23) and SA103F if above. If you run various sole trader businesses, you’ll need to complete an SA103S/F for each one.

If you earn taxable income from other sources, you’ll need to complete and file other supplementary pages, for example, the SA105 if you also earn taxable income from renting out UK property and/or the SA102 if you also earn income from employment or as a company director (see GOV.uk for the full list of Self Assessment tax return supplementary pages).

Self Assessment tax return allowable expenses

Sole traders can claim for many business costs. Called “allowable expenses”, these can include: business premises heating, lighting, water; rates; stock and raw materials; travel (ie fuel, parking, train/bus/taxi fares); staff/subcontractor wages; office costs (stationery, phone and broadband); insurance or bank charges; uniforms or safety clothing; marketing/advertising; training; professional fees.

Sole traders who work from home all or some of the time can claim a proportion of their domestic costs for electricity, gas, water, Council Tax, mortgage interest or rent, broadband and telephone use, repairs and maintenance, etc.

If you use something for business and personal reasons, you can only claim allowable expenses for the business-cost proportion. You’ll need to use a reliable method to work out how much to claim. You can’t claim allowable expenses if you claim the £1,000 tax-free trading allowance, which is advised if your expenses are below £1,000 a year.

Need to know! Rather than working out your actual business expenses, HMRC allows you to claim flat-rate “simplified expenses” for running your business from home and business mileage. Visit GOV.uk to find out more about simplified expenses and general information about claiming sole trader allowable expenses.

Completing your Self Assessment tax return

Complete your Self Assessment tax return as soon as you can in January. The later you leave it, the closer the deadline will get, which could cause you to rush completing your Self Assessment tax return. This makes mistakes more likely.

Take your time when completing your Self Assessment tax return. Give yourself enough time to get it done, in as few sessions as possible. Do it in a place where there are no distractions, so you can concentrate fully on completing your Self Assessment tax return.

Top tip! Before you start to fill in your Self Assessment tax return, to help you get the job done quicker, have the following to hand:

• your ten-digit UTR
• your National Insurance number
• details of all your income from the tax year (eg income from self-employment, dividend payments, interest, rental income, etc)
• your P60 if you’ve also earned income from part-time or full-time employment (you’ll also need to report your taxed income)
• summaries of costs you wish to claim as allowable expenses
• contributions to charity or pensions that qualify for tax relief (if applicable).

Having all of your income and costs already neatly summarised in accounting software really will save you a lot of time when it comes to filling in your Self Assessment tax return. Figures from accounting software can easily be imported into Self Assessment filing software. Alternatively, manually summarise all of your sales and costs before you start to fill out your Self Assessment tax return.

Need to know! If you file online but realise that you’ve made a mistake in your Self Assessment tax return, you’ll have to wait 72 hours, but you’ll then have up to 12 months to correct any errors.

What if you still miss the online filing deadline?

If you miss the midnight 31 January online filing deadline and don’t have a reasonable excuse, you’ll be charged a £100 penalty. Your fine will increase if you still haven’t filed after three months.

About GoSimpleTax

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