How to File Self Employed Tax Returns

Filing self employed taxes can seem complex, but understanding the process is crucial for managing your finances effectively. If you earn income from self employment, you must file a self assessment tax return with HM Revenue and Customs (HMRC) in the UK. This ensures you pay the correct amount of tax on your earnings.

The key questions to consider are: What is a self assessment tax return? How do I know if I need to file one? And what steps do I need to take to complete it accurately? This blog will guide you through the entire process, from registration to submission, making it simple. By breaking down each step, you’ll gain the confidence to handle your self employed tax obligations and avoid potential pitfalls. Let’s get started on your journey to mastering self employment tax!

What is a self employed tax return?

A self employed tax return, also known as a self assessment tax return, is a document that individuals must file annually with HM Revenue and Customs (HMRC) if they have income from self employment or other sources that exceeds their personal allowance. This includes income from freelance work, consulting, running a business, rental properties, dividends, and savings interest.

By filing a self employed tax return, you report your total income and allowable expenses to HMRC. The tax authority then calculates the amount of tax you owe based on your taxable income. Submitting an accurate and timely tax return ensures you pay the correct amount of tax and avoid penalties.

The process involves registering for self assessment, gathering necessary documents, completing the main tax return form (SA100) and relevant supplementary pages, and making payments by the specified deadlines. Following the steps outlined in this guide can help you navigate the self employed tax return process with confidence.

Do I need to file a self assessment tax return?

The first step in understanding self employed taxes is determining whether you need to file a self assessment tax return. In the UK, you must submit a tax return if your self employment income exceeds £1,000 per year. This includes income from freelance work, consultancy, or business.

Additionally, you may need to file a tax return if you have other sources of income, such as rental property, dividends, or savings interest that exceeds your personal allowance. If you are employed and earn additional income from self employment that takes your total income above your personal allowance, you may also need to submit a tax return.

Certainly, it's best to check with HMRC or a tax professional to confirm your specific circumstances. They can advise whether you must register for self assessment and file a tax return. Remember, it's better to err on the side of caution and file a return if you need clarification, as failing to do so can result in penalties and interest charges.

How to file self employed tax returns?

Filing a self assessment tax return can be broken down into several key steps. Let's go through each one in detail:

Filling Out the Main Tax Return (SA100)

The SA100 form is the core of your tax return. It covers your personal details, income, and deductions. Here's what you need to know:

Income

1. Enter your self employment income, including any money earned from freelance work, consultancy, or running a business.

2. If you have other sources of income, such as employment, rental property, dividends, or interest, include those as well.

Deductions

1. Claim allowable business expenses to reduce your taxable income.

2. Deductions may include travel costs, equipment, software subscriptions, and a portion of your home expenses if you work from home.

3. Ensure you keep accurate records and receipts to support your claims.

Completing Supplementary Pages

Depending on your circumstances, you may need to fill out additional forms known as supplementary pages. These include:

Self employed (SA103)

1. Use this form to report your self employment income and expenses in more detail.

2. Keep thorough records of your income and expenses throughout the year to make this process easier.

UK property income (SA105)

1. Complete this form if you have rental income from property in the UK.

2. Include the rent you received and allowable expenses such as mortgage interest, repairs, and maintenance.

Capital gains (SA108)

1. Use this form to report any capital gains from the sale of assets, such as property or investments.

2. Calculate your gains and claim any available allowances or reliefs.

Submitting your tax return

1. Double-check your return for accuracy and completeness before submitting it to HMRC.

2. You can file your return online or by post. Online filing is generally faster and easier.

3. Keep a copy of your submitted return for your records.

Paying your tax bill

1. HMRC will calculate your tax liability based on your return.

2. You can pay your tax bill in full by the deadline or set up a payment plan if you need more time

3. Ensure you pay on time to avoid penalties and interest charges.

Remember, keeping accurate records throughout the year is important to make the tax return process smoother. If you're unsure about filing your return, don't hesitate to seek help from a tax professional or use HMRC's online guidance.

Filling out the main tax return (SA100)

The SA100 form is the main document for your self assessment tax return. It gathers your personal information, income details, and any deductions you wish to claim. Completing this form accurately is essential for calculating your tax liability. Following is the process of filing SA100 Form:

1. Gather information: Collect all necessary documents, including records of your income, business expenses, and any other sources of income.

2. Complete the form: Fill out the SA100 online or on paper, entering your personal details, income, and deductions. Be thorough and accurate.

3. Review your entries: Check the form for any mistakes or missing information to ensure everything is correct.

4. Submit the form: Send your completed SA100 to HMRC by the deadline, either online for quicker processing or by post.

5. Keep a copy: Retain a copy of your submitted form for your records and future reference.

Filling self employed (SA103) form

The SA103 form is used to report your income and expenses if you are self employed. It provides detailed information about your business activities, allowing HMRC to assess your tax liability accurately. Completing this form is essential for claiming allowable expenses related to your self employment. Process of filing SA103 form is as follows:

1. Gather financial records: Collect all relevant documents, including invoices, receipts, and bank statements related to your business income and expenses.

2. Fill out the form: Complete the SA103, detailing your total income, allowable business expenses, and any capital allowances.

3. Calculate profit: Subtract your total expenses from your income to determine your taxable profit.

4. Review your entries: Double-check the information for accuracy and completeness to avoid errors.

5. Submit the form: Send the completed SA103 to HMRC, either online or by post, before the submission deadline.

Filling UK property income (SA105) form

The SA105 form is used to report income from property located in the UK. It's a supplementary page that must be completed as part of your self assessment tax return if you have rental income. Follow the process given below for filling out the SA105 Form:

1. Gather information:Collect records of your rental income, such as rent received, and allowable expenses like mortgage interest, repairs, and maintenance.

2. Complete the form: Fill out the SA105 online or on paper, entering your property details, income, and expenses. Be thorough and accurate.

3. Review your entries: Check the form for any mistakes or missing information to ensure everything is correct.

4. Submit with your tax return: Attach the completed SA105 form to your main SA100 tax return before submitting it to HMRC.

5. Keep a copy: Retain a copy of your submitted form for your records and future reference.

By following these steps, you can accurately report your UK property income on the SA105 form as part of your self assessment tax return.

Paying your self assessment tax bill

Paying your self assessment tax bill is important in fulfilling your tax obligations. Here’s how to do it:

1. Know your tax bill amount: After submitting your self assessment tax return, HM Revenue and Customs (HMRC) will calculate your tax owed. You can find this amount in your online account or tax calculation summary.

2. Understand payment deadlines: Be aware of the deadlines for payment. The main payment due date is usually January 31st, following the end of the tax year. If your tax bill exceeds £1,000, you may also need to make payments on account in July.

3. Choose a payment method: HMRC offers several ways to pay your tax bill, including:

   1. Online banking or debit/credit card payments

   2. Direct debit (set up in advance)

   3. Cheque by post (ensure it’s payable to "HM Revenue and Customs")

4. Paying in instalments: If you cannot pay your tax bill in full by the deadline, contact HMRC to discuss setting up a Time to Pay arrangement, allowing you to pay in instalments.

5. Keep records:Maintain records of your payments for future reference and to ensure you have proof of payment.

Following these steps ensures your self employed tax bill is paid accurately and on time. Stay organised by keeping records, and you'll be ready when filing your tax return. With practice, this task will get easier, letting you focus on your business.

At dns accountants, we specialise in assisting individuals in the UK in transitioning into self employment seamlessly. Our services encompass online registration and meticulous submission of tax returns, ensuring compliance with HMRC regulations. By entrusting yourself to us with your self assessment of tax returns, you mitigate the risk of penalties and unforeseen tax liabilities. Let us guide you through the process, empowering you to navigate your self employment journey confidently.

dns accountants are your trusted partner for self assessment tax returns in the UK. Contact us today at 033 0088 3616 , email contact@dnsaccountants.co.uk , or book a free consultation for expert assistance tailored to your needs.