Did you start your business between 6th April 2011 and 5th April 2012?
If the answer’s yes, then you must file your first Self-Assessment tax return by 31st January 2013.
You must be registered with HMRC in order to file your tax return online.
Registration process: Sole trader
If you’ve already registered your business with HMRC, but you still need to register to file your tax returns online, start here. However, if you haven’t already registered your business with HMRC at all, then you can do that and register to file your returns online all in one process. To do that, start here.
Registration process: Partnership or LLP
If you’ve already registered your partnership with HMRC, but you still need to register to file your tax returns online, start here. If HMRC don’t yet know that the partnership exists, then one partner (the “nominated partner” as HMRC calls them) must register the partnership with HMRC, and the other partner(s) must register separately with HMRC.
If you’re a partner in an LLP, then when you register the LLP with Companies House, they will notify HMRC, so you don’t need to register the LLP with HMRC. Each partner though, must still register with HMRC.
Registration process: Limited company director
Unless your company’s dormant, or the company is a non-profit organisation such as a charity and isn’t paying you any money, you have to file a tax return each year for yourself as a company director. As a company director you can’t tell HMRC online that you need to file a tax return. You need to download, complete, print and post them a form.
Once you’ve done that, HMRC will send you a letter that contains your 10-digit Unique Tax Reference, or UTR – and when you have that, you can register via the HMRC website to file your tax returns online.
Registration process: Everybody
HMRC will give you a 12-digit user ID as part of the registration process. Keep this safe, because it is part of what gives you access to their online portal, and you’ll need it when you come to file your tax return. You will choose your own login password, and you need to keep this safe too. You may also want to use a tool like 1Password to keep a note of your user ID and password.
Receive PIN and activate
At the end of the registration process, HMRC will send you an activation PIN. This PIN arrives in the post and can take up to 7 working days to reach you, which is why it’s a good idea to register as soon as possible. When it arrives, go back to the HMRC site, log in using your user ID and password, and click the red “Activate service” link. Enter the PIN that HMRC have sent you, then destroy the letter with the PIN, because you won’t need it again.
Collect your information
Whether this is the first time you’re filling in your tax return or not, you then need to collect all your information together to include income on your tax return. As a basic rule, any money you’ve received, or earned, from pretty much anywhere, must go on your tax return. That includes wages from a job, interest from your bank account, income from a trust, profits from a sole trade or a partnership, and so forth.
So where can you find that information?
If you have a job and you’re paid wages – which includes if you’re a director of your own limited company – your employer should have given you a form P60 showing your salary and tax for the year to 5th April 2012. You need that form, and if your employer gave you a form P11D showing any expenses or benefits you received, you need that too.
If you have a bank account that pays you interest, you need to know how much interest you received in the tax year to 5th April 2012 and how much tax was taken off that. Don’t include any ISAs you may have, and unfortunately you can’t claim tax relief on bank interest you had to pay on a non-business bank account. If you’re the director of a limited company, don’t put interest on the company’s bank account into your own tax return – that goes on the company’s tax return. If you’re in business as a sole trader or partner, you need to know your business’s income and expenses.
You might also have received dividends on shares you own, whether these are in your own company or another. You’ll need to include the dividend income on your tax return. Next year, why not make life easier for yourself by setting up a “tax return information” box file and collecting this paperwork together as it arrives?
Fill in your return
Once you’ve collected all your information, you’re ready to start filling in your tax return. You can do this by using HMRC’s own website, which you can log into using the user ID and password you created at step 1 (or in a previous year). Or alternatively you could use specialist software such as TaxCalc, which is good because it has two alternative layouts for entry screens – “HMRC forms” if you know exactly what to put where, or “SimpleStep” if you need a step-by-step guide with plain English explanations.
Here are a few tips for when you’re entering your figures.
- If you’re an employee, the only figures you need from your P60 are your salary and tax for the year. These boxes will be marked with asterisks. You don’t need to put the National Insurance figures on your tax return because HMRC deals with employees’ National Insurance separately.
- If you have more than one job, you need to put in the figures from each P60 separately.
- Do you have a bank account that’s jointly held with your spouse or partner? Put in only your share – usually half – of the interest and tax.
- If you receive dividends, put in the amount you’ve actually received, excluding the tax credit on the dividend.
Submit to HMRC
Remember that it’s not enough to work out your business’s figures or to fill in your return in TaxCalc. You still need to submit it to HMRC. 31st October is long passed, you will have to do that online. That’s not hard though, so don’t worry. Have your online filing user ID and password handy from step 1 and 2 (or from last year if this isn’t the first tax return you’ve filed online).
You can put these into TaxCalc, which also lets you do a test filing process to check to make sure there are no obvious howlers in your figures. It doesn’t check for everything though. Don’t wait till the last minute, because lots of people do file on 30th and 31st January and HMRC’s systems do have a tendency to become overloaded on those days and crash. Remember your return must be in before midnight on 31st January 2013 otherwise HMRC will issue an automatic fine of £100 – that applies if you’re even a day late, don’t forget to PAY your tax too!
Completing a tax return can seem like a daunting process but don’t let it overwhelm you. Make use of the available tools and useful information, and if you get too stuck, don’t forget that you can always ask a friendly accountant for help.
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