How to File Your Tax Return: A Simple Guide

Filing your tax return might seem like a daunting task, but with a bit of preparation and knowledge, you can handle it efficiently and avoid unnecessary stress. Whether you’re a freelancer, small business owner, or someone with other sources of income, it’s essential to know the ins and outs of self-assessment tax returns in the UK. In this guide, we’ll break down the steps to filing your tax return and provide some helpful tips to make the process easier.

Who Needs to File a Tax Return?

In the UK, most people pay their income tax automatically through Pay As You Earn (PAYE) if they are employed. However, some individuals need to file a self-assessment tax return to report their income and pay any tax owed. You are required to file a tax return if:

• You are self-employed or a freelancer.
• You earned over £1,000 from self-employment.
• You receive rental income from property.
• You have income from savings, investments, or dividends.
• You earn foreign income.
• You are a higher-rate taxpayer with untaxed income (e.g., income not taxed through PAYE).

The self-assessment tax return must be filed online or by paper, but the deadlines differ for each method (more on that below).

Step-by-Step Guide to Filing Your Tax Return

1. Register for Self-Assessment

If you’re filing a tax return for the first time, the first step is to register for self-assessment with HMRC. You must do this by 5 October following the end of the tax year in which you earned the income.

• Visit the HMRC self-assessment registration page to register.
• Once registered, you’ll receive a Unique Taxpayer Reference (UTR) number and be able to create an online account.

2. Gather Your Financial Information

Before you start filing your tax return, make sure you have all the necessary financial documents and information ready. This will include:

• Payslips and P60/P45 forms (if you have employment income).
• Invoices and details of business income if you’re self-employed.
• Bank statements or records of dividends, interest, and other investments.
• Rental income details if you receive money from letting property.
• Expense records: Keep track of all business expenses and other deductible costs like office supplies, utilities, and travel.

Ensure you keep accurate records of your income and expenses, as HMRC may ask for proof in case of an audit.

3. Choose the Right Tax Return Form

You’ll need to fill out different sections of the tax return depending on your circumstances:

• SA100: The main tax return form.
• SA103: For self-employed income.
• SA105: For income from property.
• SA102: For employment income.

If you file online, the system will guide you through the relevant forms based on the answers you provide.

4. Claim Tax Deductions and Reliefs

Make sure to claim any allowable expenses and tax reliefs that apply to you. These can significantly reduce the amount of tax you owe. Common tax-deductible expenses for freelancers and self-employed individuals include:

• Office supplies and equipment.
• Travel and subsistence costs.
• Business insurance.
• Marketing and advertising.

Additionally, you can claim personal allowances, such as:

• Personal Allowance: Up to £12,570 of income can be tax-free (for the 2023/2024 tax year).
• Marriage Allowance: Transfer part of your allowance to your spouse if they earn less.

5. File Your Tax Return Online

Filing your tax return online through the HMRC website is quicker and more efficient. You’ll receive instant confirmation when your return is submitted, and any tax due will be calculated automatically.

Deadlines for filing:

• Paper filing: 31 October after the end of the tax year.
• Online filing: 31 January after the end of the tax year.

For example, for the 2023/2024 tax year, the deadline for paper filing is 31 October 2024, and the deadline for online filing is 31 January 2025.

6. Pay Your Tax Bill

Once you’ve submitted your return, HMRC will calculate how much tax you owe (or how much is due to be refunded). You’ll need to pay any tax owed by 31 January following the tax year you’re reporting on. HMRC may also require payments on account for the next tax year, which is typically 50% of your estimated tax liability.

Payment methods include:

• Direct debit.
• Bank transfer.
• Credit or debit card.

Tips to Make Filing Your Tax Return Easier

• Start Early: Don’t leave your tax return until the last minute. Start gathering your financial records well before the deadline.
• Use Accounting Software: Software like QuickBooks, Xero, or FreeAgent can simplify the process by automating your expense tracking, invoicing, and financial reporting.
• Claim All Deductions: Ensure you claim all the allowances and deductions you’re entitled to, as this can significantly reduce your tax liability.
• Keep Your Records Organised: Keeping clear and organised records throughout the year will make tax season much easier.
• Consult a Tax Advisor: If your tax affairs are complex, or if you’re unsure about any aspects of tax filing, consult a professional accountant or tax advisor.

Common Mistakes to Avoid When Filing Your Tax Return

1. Missing the Deadline: Failing to meet the deadline can result in penalties and interest charges, so always aim to file ahead of time.
2. Failing to Report All Income: Make sure all your income is reported, even if it’s from different sources.
3. Not Claiming Allowable Expenses: Many freelancers forget to claim allowable expenses that could lower their tax bill.
4. Ignoring Payments on Account: If your tax bill is large, you may need to make payments on account for the following tax year.

Conclusion

Filing your tax return doesn’t need to be overwhelming. By following these steps and staying organised throughout the year, you can manage your taxes effectively and avoid unnecessary penalties. Using accounting software or seeking help from a tax professional can also simplify the process and ensure that your tax return is accurate and on time.

Stay ahead of tax deadlines, keep your records up to date, and make sure you understand your tax obligations to run your business smoothly and successfully.

This post is designed to simplify the tax filing process for UK freelancers and small business owners, providing essential tips and steps for successful tax returns.