How to beat the
Lee Murphy, the founder of Pandle, talks RCI readers through how to keep on top of the self-assessment tax
return in the new year
Returning to work after the
Christmas break to find you
have just weeks to do your selfassessment
return and pay up an
initial tax payment can be sobering.
Around 11 million people are required
to complete a return by the January 31
deadline, so if you have not done it yet,
you have just a few days to get organised.
Those who do leave it until the last
minute to complete the online return
could find themselves battling with
crowds akin to the January sales. Some
4.85 million left it until January to file
last year, with 746,000 failing to submit
on time, each risking a £100 fine.
If the run up to the festive period left
you struggling to find the time to do the
sums, it’s advisable to put time aside to
pull together the paperwork you need to
get started. This will take the pressure
off in the new year when customers start
calling again and business admin gets
pushed down the ‘to-do list’.
This handy guide below will help you
survive the self-assessment blues.
For sole traders, total income is
calculated as being money earned minus
business expenses. That means it is
important to have kept records of when
and how customers paid you, whether
that’s in cash, bank transfers or cheque.
Of course, if you’ve been diligent
over the last 12 months, you have been
using bookkeeping software to keep
immaculate records with the breakdown
between labour and material costs
recorded. For the few that may have
been too busy to keep exact records, now
is the time to start digging out copies of
invoices you have issued over the last
If you’re a limited company director,
who takes a salary from your own
business, you will need your P60 as
a record of your income from your
employment, as well as any expenses
and the tax you’ve already paid in the
If, as a limited company director,
you’re paid dividends, then you will
need vouchers for those issued during
the tax year. If you’re a shareholder in
any other company that has issued a
dividend, you’ll also need the paperwork
to go with that.
Anyone completing a return will
also need to declare any other sources
of income, such as rental income and
interest earned on savings. You will also
need to declare any charitable payments,
and tell HMRC about any pension
payments you’ve made.
As you will be taxed on your profits, it’s
important to keep a record of material
costs and other business expenses.
For sole traders, claiming expenses is
fairly straightforward: simply add up all
business outgoings and put the total on
your self-assessment return. For roofers,
costs cover everything from protective
clothing and the laundering of it, to
insurance and equipment.
For limited company directors, the
process differs slightly, but expenses
should be reimbursed by the business
account, with remaining profits taxed. If
in doubt, it is always best to check.
Whether you’re a sole trader or
limited company director, it’s important
to keep all of your business expense
receipts should the HMRC require more
As someone who tends to spend a lot of
time going from job to job, your travel
expenses will be a significant slice of
your business outgoings something
you can claim relief on.
As well as claiming costs for travel,
you can also claim on vehicle running
costs, such as repairs and maintenance,
cleaning, parking and tolls, MOT, road
tax and insurance.
If, like thousands of other small business
owners, you have an office in the home,
your business can pay you up to £4 a
week towards the cost without HMRC
requiring receipts under ‘Business use
You’ll need to provide receipts for
anything above the £4 threshold. You
won’t be able to claim for fixed costs,
such rent or council tax, but if you’ve
brought new equipment for your
business, such as a laptop, it could
qualify for tax relief.
What if I missed the deadline
or I can’t aord to pay?
If you miss the deadline, contact HMRC.
If money is tight and you are unable to
pay, then you may be able to agree an
extension or to pay in instalments. Do
not ignore the problem or you will incur
fines and perhaps also attract unwanted
attention from the taxman.
Getting your finances in order now
will help you meet the deadline, and will
put you in a good position for the year
ahead. Don’t leave it for another day.
18 www.rcimag.co.uk January 2019