How to Prepare Your Self-Assessment Tax Return

Clever Accounts

With the deadline for submitting your Self-Assessment Tax Return just around the corner, it’s a good idea to start getting your finances in order so that you don’t have a last-minute panic.
According to ‘Which?’, last year 28% of people struggled with their tax return while almost one in 10 reported the task taking more than five hours. It really doesn’t need to be this difficult, particularly if you keep your finances up-to-date throughout the year.
Our team supports thousands of freelancers and small business owners to manage their accountancy online, including their Self-Assessment Tax Return. Here we explain more about what’s involved.

Who needs to complete a Self-Assessment?

You’ll need to complete a self-assessment if you’re a director of a limited company or self-employed. We can register you for self-assessment and prepare and submit your tax return on your behalf. This ensures everything is done correctly and makes life easier for you. With a dedicated accountant by your side, all you have to do is pay your tax bill using the verification HMRC sends when they confirm receipt of your tax return.

What to include in a tax return?

To complete your tax return, it is necessary to document all your income sources over the year. If you are a company director and your only income is a salary from your business, that’s what should be recorded on the tax return.
If you’ve received dividend payments or income from other investments and shares, or an asset such as a rental property, this will need to be detailed too, as will any pension contributions, state benefits and capital gains (such as a property you’ve inherited) and lump sums such as redundancy payments.

How is tax calculated?

The amount of income tax you must pay is based on earnings above the personal allowance which is £11,850 for the year ended on April 5th 2019 (rising to £12,5000 for the tax year ended on April 5th 2020). Your income is then taxed according to which ‘Band’ your income relates to, as follows:

Tax Rate (Band) Taxable Income Tax Rate
Personal Allowance Up to £11,850 0%
Basic Rate £11,851 to £46,3500 20%
Higher Rate £46,351 to £150,000 40%
Additional Rate Over £150,000 45%

Deadlines and penalties

Below are the deadlines for submitting your Self-Assessment Tax Return for the year ended on April 5th 2019. If you’re late, HMRC will impose an automatic late filing penalty of £100, plus other charges.

Self-Assessment Deadline
Register for Self-Assessment 5 October 2019
Paper Tax Returns Midnight 31st October 2019
Online Tax Returns Midnight 31st January 2020
Pay the Tax you Owe Midnight 31st January 2020

Last year, more than 2000 people submitted their tax return on Christmas Day with more than 8,000 doing so on Boxing Day. We’re sure you’ll agree that it’s much better to be organised in advance so that you can forget about taxes over the festive period and spend the time celebrating instead!

For more information on any aspect of limited company accountancy or help with preparing your tax return, please get in touch.

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