Tax Services: What You Need to Know About Filing Your Taxes
If you are self-employed, earn income from an additional revenue stream, or claim some benefits then you may need to file your taxes. Read on to understand when the tax season is, how to prepare your taxes and how long it could take to complete them.
The thought of filing your tax return may fill you with dread but there is lots of help available to make the process easier.
Of course, not everyone has to file a tax return. For the majority of people who work through a pay-as-you-earn, or PAYE system, taxes are taken off before you receive your wages.
However, if you are self-employed, earn an extra income - such as renting out a home you own - or you need to apply for benefits such as maternity or paternity pay, you may need to fill in a self-assessment tax return.
There are lots of tax services that can help you do this, well within the time frame to avoid paying a penalty for filing or paying your taxes late.
What is the tax season?
If you need to file a self assessment tax return, this means you must tell HM Revenue & Customs (HMRC) how much you have earned in the previous year, and how much tax you now need to pay.
Unlike the calendar year, tax years run from 6 April to 5 April the following year. This is the period you need to tell the taxman about and you then need to pay tax, and National Insurance contributions, on anything you earn during this time.
What are the key tax dates?
There are a few key dates within the tax season you need to be aware of, including the following:
- 5 October: this is the deadline for registering for self assessment online.
- 31 October: if you file a paper tax return, it needs to be sent by this date.
- 31 January: if you file an online tax return, you’ll need to do it by this date, and pay any tax and National Insurance contributions due.
- 31 July: in some cases, you may need to make two payments during the year and this is the second date, after the January payment.
Who has to prepare a tax return?
If you are self-employed you’ll need to register for self assessment. You need to do this if you’ve not registered before, or if you didn’t last year.
You need to register before you can submit a tax return. During this process HMRC will send you a code by post, which you’ll need to use to activate your online account. The registration process can take a few weeks so make sure you leave yourself enough time.
Self assessment is not just for the self-employed either, there are lots of other reasons why you may have to register. These include:
- Anyone with rental income from a second property.
- If you have income from savings, pensions, investments, and dividends.
- Those applying for certain benefits including child benefit in some cases.
- Anyone earning more than £1,000 making money from their property (for example, by renting it out as a holiday let).
- Those earning more than £1,000 selling items, such as on eBay.
- Any foreign income you earn.
When should I start preparing my taxes?
In the UK around 11.7 million people filed a self assessment tax return last year and 958,296 of those filed the return late resulting in an immediate £100 fine. Therefore, it’s worth starting early.
When you file a tax return you file it for the previous year. This means when a tax year ends in April, any money you earned in the previous 12 months will need to go into your tax return the following October (if you file a paper return) or January (if it’s online). For this year, for example, if you are filing an online return in January 2022, this will relate to your income from 6 April 2020 to 5 April 2021.
How long does it take?
This really depends on your circumstances and how simple, or complicated your taxes are. The best way to cut down the length of time it takes is to start early and not leave a giant pile of receipts until the last minute to sort through.
Filing invoices, receipts and any other financial documents in a safe place when you receive them is a good start.
How can I organise my tax documents and what do I need?
You will need the following documents for your return, but depending on your income and profession, you may need more:
- Your 10-digit Unique Taxpayer Reference (UTR) – you’ll be sent this when you register as self-employed.
- Your National Insurance number – you can find this on any pay slips or documents from HMRC.
- Details of any business expenses you have occurred.
- The details of your income from the tax year, which you have earned without paying tax.
- Income from anything else, including dividends or savings.
What tax services are available to use?
There’s lots of help on the government website, ranging from the very basic tools for filing your return to specific help for different professions. There are also handy videos on its YouTube feed and virtual seminars you can sign up to for free.
You can call the government tax line on 0300 200 3310 with general enquiries about filing.
What’s the best way to prepare your own taxes?
Starting early and being as organised as possible can help you prepare your own taxes. This means keeping a record throughout the year and not waiting until the last minute.
There are a number of tools and apps designed specifically for freelance workers which can help here such as QuickBooks and Evernote.
How much does it cost for someone else to prepare my taxes?
There’s nothing to stop you paying for an accountant to help you prepare your tax return. They can file your return for you, for a fee. The cost will vary depending on the accountant and the amount of work involved but typically it can be between £150 and £200, according to unbiased.co.uk.
Do I need to complete a UK tax return if I am a non-resident?
Even if you aren’t a UK resident, you may still need to file a UK tax return. This includes if you have income from a UK pension, interest from a UK savings account, or if you’re paid through the UK. There’s a full list on the government website.
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Rebecca Goodman is a freelance journalist who has spent the past 10 years working across personal finance publications. Regularly writing for The Guardian, The Sun, The Telegraph, and The Independent. Read more