Yes, it’s that time again… if you haven’t done your tax return already, it’s time to do it before the deadline on 31 January. You’ve got just a few days left to work out your figures, file the details via the online portal of Her Majesty’s Revenue and Customs (HMRC) and pay the bill.
Here’s one vital tip: Before you start getting stressed about the accounting bits, make sure you have the cash itself to hand and ready to pay to HMRC. Even if you don’t know roughly what the figure you owe will be, if all your savings are in a bank account that you can make immediate payments from, you’ll be ready once you’ve calculated your bill. There’s nothing worse than getting everything done on 30 January, thinking you’ll be on time – then realising it’ll take ages for your cash to reach HMRC, because it’s in the wrong type of bank account.
People worry a lot about tax returns, but they’re not as complicated as they sound. The stress about submitting them is mostly down to meeting a deadline – just the same as doing any piece of work. There are two main parts to a tax return – your income and your expenditure. If you have a self-employed business, you need to work out what your turnover has been. This is the total amount of earnings you attained between 6 April 2010 and 5 April 2011 (if you use the standard accounting year). Your expenditure is the total of any costs involved in running your business, either in full (things like stationery items) or as percentages (things like car and mobile phone costs).
Your expenditure is deducted from your turnover to give you a profit figure. Your tax-free allowance is removed (everyone is entitled to this) – then your tax bill is calculated based on this remaining figure. You will also need to pay National Insurance contributions and student loan repayments, if applicable.
Then you pay the bill – and you’re done for another year. Hooray.
