Self Assessment | Are You Ready To Submit?
If you're self-employed or earn income outside of standard PAYE employment in the UK, you’ve likely encountered the Self Assessment tax system. It can seem daunting at first, but understanding the basics can help you stay on top of your obligations and even save money by claiming allowable expenses. Here’s a comprehensive guide to navigating Self Assessment and making the most of what you can claim.
What Is Self Assessment?
Self Assessment is HM Revenue and Customs' (HMRC) system for collecting Income Tax. While most employees’ taxes are deducted automatically through PAYE, Self Assessment requires individuals and businesses with additional income streams to report their earnings and calculate how much tax they owe themselfs.
Some common reasons you might need to file a Self Assessment include:
- Being self-employed or a sole trader.
- Having income from property rentals.
- Earning significant savings or investment income.
- Receiving income from overseas.
- Earning over £100,000 per year.
- Being a company director.
How to Register for Self Assessment:
If you’re new to Self Assessment, the first step is registering with HMRC.
The process involves:
- Online Registration: Register as self-employed or for Self Assessment with HMRC.
- Getting a UTR: Once registered, you’ll receive a Unique Taxpayer Reference (UTR) number.
- Setting Up a Government Gateway Account: This account allows you to file your tax return online.
It’s important to register by the 5th October following the end of the tax year in which you became self-employed or started receiving other taxable income.
What Can You Claim on Your Self Assessment?
Understanding allowable expenses is essential for reducing your tax bill. These are costs that you’ve incurred wholly and exclusively for the purpose of running your business. Here’s a breakdown of common expenses that we see on a regular basis when completing self-assessment:
1. Office Costs
- Rent for business premises
- Equipment like computers, software, and printers
- Utilities such as electricity, water, and heating (if working from home, calculate the proportion used for business)
2. Travel Expenses
- Business mileage (calculated at 45p per mile for the first 10,000 miles, then 25p thereafter)
- Public transport costs for business-related journeys
- Parking fees, tolls, and business vehicle insurance
3. Marketing and Advertising
- Website development and hosting fees.
- Advertising costs (e.g. social media ads, print)
- Business cards and promotional materials
4. Staff Costs
- Salaries or wages for employees
- Subcontractor fees
- Employer’s National Insurance contributions
5. Professional Fees
- Accountant or solicitor fees related to business matters
- Business insurance costs, including liability insurance
6. Training and Education
- Courses or workshops directly related to your business or improving your skills
7. Other Allowable Costs
- Bank charges on business accounts
- Subscriptions to trade journals or professional memberships
- Work-related clothing or uniforms
Turpin Tips for a Smooth Self Assessment Process!
Keep Accurate Records: Maintain detailed and organized records of income and expenses. This includes receipts, invoices, and bank statements.
Use Accounting Software: Tools like QuickBooks or Xero can simplify the process and help you track deductible expenses.
Budget for Taxes: Set aside a percentage of your earnings to cover your tax bill and avoid any last-minute surprises.
Get Professional Help: If your finances are complex, consider hiring an accountant to ensure accuracy and maximise your claims.
Coming Soon - Making Tax Digital for Income Tax Self Assessment (MTD ITSA)
Starting from April 2026, the UK government’s Making Tax Digital (MTD) initiative will require most self-employed individuals and landlords with an annual income over £50,000 to keep digital records and submit quarterly updates to HMRC through compatible software.
This system aims to streamline the tax process and reduce errors.
If your income is between £30,000 and £50,000, these requirements will apply from April 2027.
To prepare for MTD ITSA, consider adopting digital accounting software now and familiarising yourself with the process of quarterly submissions. This proactive approach will help ease the transition and ensure compliance when the new rules take effect.
Filing your Self Assessment doesn’t have to be overwhelming.
By understanding what you can claim and staying organised throughout the year, you can manage your tax obligations confidently.
For more guidance, consult HMRC’s resources or seek advice from a qualified tax professional.
Take control of your finances today and make the most of the allowances available to you.
The sooner you start preparing, the smoother the process will be!
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