In the UK, self-employed people, also known as sole traders, need to complete a self-assessment tax return. It is advisable to use an Accountant to complete this process. What information should you give them? 

In this article, we will answer the following questions and problems first-time sole traders (and even more seasoned self-employed) ask. These include:

• Who is required to send a tax return?
• How to register and send a return
• What are the deadlines for self-assessment this year? 
• What information should you provide to your accountant
• Why you should find a trusted accountant to complete your assessment

Who is required to send a tax return?

The following people are legally required to send tax returns

• a partner in a partnership 
• those self-employed as sole traders earning more than £1,000 before deductions

You are not required to file if you are solely earning from wages or pension. But you would be required to send a tax return if you have any other untaxed income such as:

• income from renting out a property
• tips and commission
• earning from savings, investments and dividends
• foreign income

How to register and send a return

• You would be required to register if you have not sent a tax return last year. You can do so by visiting the Government’s website
• Once registered, the tax return can be sent online or using commercial software or paper forms.
• The next step is to pay the bill before the deadline.

What are the deadlines for self-assessment this year?

 The deadline for self-assessment covering the 2021/22 financial year is as follows:

• If you make advance payments towards your bill, there is a second payment deadline of 31 July.
• You need to submit your online return by 31 Janaury in case HMRC automatically collects the tax you owe from your wages and pension. 
• If you’re a trustee of a registered pension scheme or a non-resident company, you should submit a paper tax return by 31 January

Penalties

• The penalty for late filing of return is £100 if your tax return is up to 3 months late.
• You will be charged more if it’s later, or if you pay your tax bill late.
• Interest will be charged on late payments.

What information should you provide to your accountant?

Even if you have hired a Chartered Accountant, you still need to make sure that you have all the correct information to hand. Here is a list of all information that you need to provide to your Accountant.

Employment information

You need to provide the following information about your employment:

• Annual earnings
• Any tax already paid by you 
• A P60 or P45 showing gross salary (if you are paying yourself a salary from a limited company)
• Student loan deductions
• Evidence outlining benefits or expenses
• Employer’s P11D

Pension income

If you are receiving any occupational pension, then you need to provide your accountant with your P60 or the certificate of pension paid, how much pension you receive and your notification letter should you receive a state pension.

Self-employment and partnership income

All information about profits or losses made by the business should be provided to your accountant. This includes:

• Business records
• Partnership interest income and the tax deducted
• Any other partnership income and expenses

Capital transaction

The following information related to capital transactions needed to be provided

• Details about the disposal of the main residence if partly used for business
• Details where gains of disposal exceed £12,300
• Capital losses
• Purchase, sale or takeover of share securities
• Acquisitions and disposals of properties

Investment Income

Any investment income earned needs to be included in the self-assessment. The following table summarises the documents required for different investment types.

Find a trusted accountant to help you stay compliant

For many self-employed people, filing a tax return is a headache you can do without. It takes up time, steals your focus away from what you do best, and can be complicated for the uninitiated. 

Accountants have years of experience. They can help you pick through the thorny details, appraise your incoming and outgoings and pull some of the levers at your disposal to cut costs. 

The most important thing for self-employed people? Keeping on top of the finances of the business. Keep your invoices in shape, hold onto your expenses and just be organised. 

That means when the deadlines are looming, you can hand your details over to your accountant, and be safe in the knowledge that you’ll remain on the good side of HMRC. Because that’s where we all want to be.

Our Accountants will happily take all of your financial records off your hands. If you need a trusted Accounting firm that can take care of your books, and become a trusted strategic partner in the process, get in touch.