lifestyle

What to do if you’re stressing about your freelance tax return


Filling in your tax return for HMRC can be a very daunting task (Picture: Getty)

The deadline to submit your self-assessment tax return is fast approaching, and for self-employed people and freelancers, it can be very daunting.

Submitting a self-assessment tax return first requires you to be registered as self-employed on the gov.uk website, and then fill out the online form detailing what income you’ve received – either through pay as you earn (PAYE) or through freelancing.

It also asks for pension contributions, capital gains, and a variety of other big-sounding words that can cause a lot of stress when you’re looking for a P45 and bank statements from eight months ago.

It will then give you the amount of tax you are required to pay, and it will tell you whether you need to pay it before January 31 (the same day that the self-assessment is due) or by July 31.

To seasoned freelancers or those who have accountants, this may not seem like a big deal.

But, if you’re recently self-employed and doing your assessment for the first time, there’s a lot to work out and not a lot of time to do it in.

Make sure you’re registered as self-employed with HMRC (Picture: Shutterstock / Tana888)

So, we spoke to seasoned tax experts and accountants to work out what exactly you need to know about doing your tax return.

Andy Smith, Director of Abbeygate Accountancy in Suffolk and an established FMAAT accountant, gave these key pieces of key advice:

Ensure you inform HMRC as soon as possible that you need to complete a tax return

You have to register as being self-employed with the HMRC, after which they will provide with a Unique Tax Reference number (UTR).

It is necessary to have a UTR to file your tax return, and Smith says that in the run-up to the deadline, HMRC are very busy so getting a UTR is taking longer than usual.

Filing your tax return can take a while, especially if there’s information you need to include that is not easily accessible to you.

Smith says: ‘The last thing you want is to have to make a request and then wait for information that either means you miss the filing deadline (and face a penalty), file an incorrect tax return, or overpay your taxes.’

Working on your tax return as soon as possible is the best way to get it done correctly.
(Picture: Getty Images)

We are all susceptible to procrastination however, and it’s can be easy to leave your tax return to the last minute – even doing it in mid-January is cutting it a bit close.

Alicia Navarro, founder of work platform FLOWN which are hosting virtual work sessions to complete tax returns, said of this: ‘You can’t simply tell a procrastinator to ‘just do it’ – you might as well say to someone with a fear of heights to ‘just jump out of a plane.’

‘So many of us leave it to the last minute. So it massively helps if we put the systems and steps in place to take negative emotion and temptation of distraction out of the equation.’

‘An effective system is to make yourself feel like you’re being held accountable. Tackling the tax return feels lonely and strangely personal – it’s not a pain you like to share with others.’

So, Navarro suggests working on the return together with others, either virtually or in-person so everyone is in he same boat.

She says: ‘The time is blocked off in your calendar, you can see a screenful of people doing the same thing as you, and you’re suddenly compelled to focus – it’s an instinctive response. It sounds weird, but it’s an approach rooted in neuroscience and is incredibly effective.’

Get all your information in one place

Matt Stambach, personal tax manager at Alexander & Co Chartered Accountants, says: ‘Consider all the information that is required carefully and have all this to hand. We often find that when tax returns are rushed, this is when errors are more likely to occur.’

Have all your pension documents, P45s and P60s, bank statements, and whatever else in front of you so it’s easier to fill out the tax return.

Engage with an accountant that is suited to you

If you’re struggling with your tax return, there is no shame in hiring an accountant or an online accountant service to help you.

‘If all of your records are digital and you are happy to deal with people remotely, then one of the new “modern” breeds of accountant would be more suited,’ says Smith.

‘But, if it is a shoebox of receipts and bank statements, then maybe look to a local, more traditional accountant to assist you with preparing you tax return and ensuring you are not only compliant but have claimed everything that you can claim.’

Common issues

Engaging the services of an accountant, especially at this late stage, can be a good idea if you’re worried (Picture: Towfiqu Barbhuiya/Unsplash)

Smith says there are a number of common issues that often crop up on tax returns, including missing student loan payments, forgetting to disclose the child benefit charge for people earning over £50,000, and not claiming all allowances available to you.

You should also include schemes and grants, including local authority grants and the Self-Employment Income Support Scheme (SEISS) as well.

For the first two, Smith says he has definitely seen HMRC issue penalties for the oversight so make sure you have included absolutely everything.

For claiming expenses, be aware that you can claim additional tax relief on money paid into private pensions, gift aid charity payments, woking from home tax relief, and choosing the correct mileage rate.

He says: ‘You can claim up to 45p per mile. We always advise our clients to keep a log of every mile they do.’

But, if you do miss claiming for certain reliefs, there is good news: ‘If you have missed claiming these reliefs in previous years, then you are able to make backdated claims, but there is a time limit.’

When filing your tax return, you don’t have to worry about every decimal point being perfect.

‘HMRC do estimated figures, but if the tax return is challenged, they would expect there to be a good reason as to why the correct figures were not included in the first place as well as how the estimated figure was calculated and derived at,’ Smith explains.

Don’t panic

Keep accurate records throughout the year can save you stress (Picture: Shutterstock / shurkin_son)

The main thing to remember is that there are plenty of online resources that can advise you on what to do with your tax return, and thousands of affordable accountants out there than can help you with it.

Smith says: ‘We advise to check and check again when carrying out your self-assessment – maybe even speak to a trusted friend or family member in a similar position to get another look over the document.’

‘Alternatively, read out to a trusted accountancy service, who can carry out the process on your behalf stress free and also offer a tax investigation service if something goes wrong.’

Stambach agrees, saying that the best advice is to take your time and not rush through it.

Preparing for next year

Since the deadline is in three weeks, there’s not much you can do at this point. Hiring an accountant or using a service like Mazume or TaxScouts can help relieve all those stressful feelings for this year’s tax return.

But, assuming you don’t want to feel this panic again next year, there are ways to prepare now.

Stambach says: ‘The advice is always to allow plenty of time in completing a tax return. Many people file tax returns at the last minute, leading to errors that can sometimes translate into expensive penalties or fines if they have underdeclared their tax or filed too late.’

Smith makes the same argument: ‘Get those important tax dates in your digital calendars well in advance of the deadlines. Look to set aside some time during the end of spring (the earlier you complete your tax return the earlier you can plan for the payment.’

‘If you are still dragging your heels, maybe look at the festive period, when the intensity of work tends to ramp down for many, to collate all of your documentation and avoid the faff and stress of an incredibly busy January,’ he explains.

He adds that it is recommended to ‘go digital’ with all your records because it saves a lot of time and stress.

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Get in touch by emailing MetroLifestyleTeam@Metro.co.uk.


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