Your Tax Return Help Page
If you’re ready to do your tax return then here is our How To Do Your Tax Return screenshot step-by-step guide. But if you need a little help getting your head around everything first, then here’s some key info to get you on your A game!
Understanding the ‘Tax Year’
When we think of our year beginning and ending, we think of January to December. But being self-employed we have to think in ‘tax years’ which runs from 6th April to 5th April the next year.
For example, the 2019/20 tax year finished on 5th April 2020. So now we’re in the 2020/21 tax year which started on 6th April 2020 and will finish on 5th April 2021.
Doing your tax return
For every tax year that you are self-employed, you need to complete a tax return. If you start working as self-employed part-way through a tax year (like most of us do when we graduate theatre school in summer), your first tax return will include your income and expenses information from when you start work as self-employed up until the end of that tax year (5th April).
- You can (and it’s definitely a good idea to) complete each tax return as soon as the tax year in question has finished whilst it’s all still fresh in your mind!
- You have from April 6th (the start of the next tax year) up until the following January 31st to do each tax return (that’s 10 months!).
- You can complete your tax returns either online or in paper form.
- The fine for late completion is £100 and then after 3 months it’s £10/day for the following 3 months. It goes up from there! See our YQA on this.
Most people complete their tax return online - you can do this in the comfort of your own home, but it is WAY more fun at one of our tax return parties! To complete your tax return you need:
- Employed income – from each employer you worked for during the tax year, you need either a P45 (if you leave the employment during the tax year) or P60 (if you were still employed at the end of the tax year). Every employer has a legal obligation to send you one of these documents depending on your employment status. You should get a P45 as soon as you leave employment, but if you are still employed at the end of the tax year, then your employer has until 31st May (8 weeks after the end of the tax year) to give you your P60. You should also be able to get this information om the HMRC website as well, assuming your employer is reporting properly - for the 2018/19 tax year, this will be here: https://www.tax.service.gov.uk/check-income-tax/historic-paye/2019. More on income here.
- Total self-employed income – Just one total figure. Every time you do a self-employed job, record it immediately and invoice for it (unless your agent is doing the invoicing for you of course). More on invoicing here.
- Total allowable business expenses – Just one total figure. You need to keep a record of any time you spend money on your self-employed business and keep a copy of the receipt. Here’s a big list of typical business expenses in our expenses post.
- HMRC Log in details – These are your government gateway ID and password. You got these when you registered as self-employed. If you’ve lost them you can get new ones through the post but allow up to two weeks for this.
What To Expect
The self-assessment form is used by EVERY self-employed person in the UK, so a lot of the form is NOT relevant to us in the creative arts. Therefore, expect a lot of statements and questions that don't mean anything to you with the phrase 'optional' in brackets next to them and even more scrolling down and clicking 'Save and continue'. A good rule of thumb is if it's not pricking your ears up as something you recognise, it probably doesn't apply to you. 'Structural and Building Allowance' for example, ring any bells? I'm thinking not! So scroll on, click 'Save and continue', and be reassured by the fact you can always go back and amend your tax return even after you've submitted it.
FYI - you don't have to fill in your tax return in one go, you can do the tax return 'hokey cokey' style if you like, logging in, out and back in again as many times as you want filling it in at your own pace.
Recording your expenses
I take a photo of each expense receipt in the SD Web App, where they’re stored digitally for me so I don’t have to hoard paper receipts. Find whatever works for you but bear in mind:
- When it comes to your tax return, you just need one total figure ie. all of your allowable business expenses added up together.
- You don’t need to submit your evidence/receipts when you do your tax return, but you do need to keep this evidence for 5 years after each tax return submission (hence why a digital storage option is handy).
- You do not need to categorise your receipts (but if you want to do that, you do you!), they just need to be available if HMRC were to request your evidence. SD App users – just go to ‘Details for my tax return’ and your expenses report for each tax year is downloadable from there.
- HMRC have the right to request to see the evidence of your allowable business expenses to ensure that your expenses are genuine.
The trick is
- Don’t bury your head in the sand. Your tax return and self-employed responsibilities aren’t going anywhere and you’re more than capable of making it stress-free and easy for yourself. So get on it early! If you encounter a problem in April/May (when you still have 9/10 months to complete your tax return) it’s easy, breezy, but if you leave it until January and have an issue (when you have a deadline and fine to worry about), it’s unnecessary stress and pressure. We’re here to help!
- Do find a system that works for you – this absolutely doesn’t need to be time consuming or expensive. Maybe it’s our Web App that’s only £2.50/month (yes I’m plugging it!)? Or maybe you’re great with Excel? Whatever works!
- Don’t feel like you can’t ask for help or that your question is ‘stupid’. If you’re thinking it, so is someone else – that’ why we run our Your Questions Answered initiative along side our free contact form. Don’t feel silly or embarrassed, we’re all in it together.
- Do make sure that you’ve enrolled for self-assessment. If you used our step-by-step guide on Registering as self-employed, then you will already have done this because we cover it so you can relax! If you didn’t use our guide then it’s worth checking to ensure you have enrolled your business for self-assessment too. You only have to do this once. If you’re not sure how, have a look on our post on it or ask us.
- Do be a tax boss! It’s strangely satisfying knowing that you’re on top of it all! We’ve had so many messages from people saying how much enjoyment they’re getting from doing their tax return in 30 minutes or uploading photos of receipts in our app (yes, that’s another plug!) and we’re here to help every step of the way!