It’s nearly here. You can practically see it on the horizon. Yes, the end of the financial year is nearly upon us along with the often dreaded task of completing your tax return. But, if you’re in need of a step-by-step guide to completing your tax return, you’re in the right place!
Read the self-employed hairdresser’s guide to tax returns now.
Getting started on your tax return
The task of completing your tax return may seem like a daunting one. But with the right preparation, you can make it much easier.
The key to making the process of completing your tax return as easy as possible is to ensure you have good record keeping processes in place throughout the year. This is because the amount of tax you owe at the end of the financial year will be based on your profits (which is your earnings minus your outgoings).
If you don’t have thorough records of all of your earnings and outgoings over the past year then completing your tax return will be nigh on impossible. Record, record, record should be your mantra. Keep a record of as much as you can. It’s always best to record too much rather than too little. (You’ll thank yourself at the end of the financial year!).
For more top tips on record keeping, read our Guide to Expenses and Bookkeeping for Hairdressers.
What information is required for a tax return?
Once you’ve gathered together all of your records for the past twelve months, there are a number of other pieces of information that you’ll need to get. Let’s take a look at what these are.
Self Assessment tax return
This is the form that you’ll need to complete and return to HMRC (Her Majesty’s Revenue and Customs). If you have registered as self-employed (which you should have done) you will receive your Self Assessment form automatically. If you don’t receive one, this doesn’t necessarily mean you are exempt from paying tax!
You will need to complete this form after April 5th (the end of the tax year). The deadline for returning this form is 31st October – although with over 9 million people filling out Self Assessment forms each year, we’d strongly advise that you don’t leave it to the last minute.
Other required information
You can find detailed guidance on the HMRC website, but we’ve provided a handy summary of the information you’ll need to have ready below:
- Your P60 (if you were employed during the financial year you are reporting on – for example, if you had a full-time job at a salon and then went freelance part way through that financial year).
- Stubs from your cheque book and/or paying in book.
- Accounts from your self-employed business. These should include details on your customer transactions over the past 12 months.
- Statements from your bank and/or building society.
- Any vouchers for dividends you may have.
- Information relating to any capital gains that may have been realised during the financial year.
- Information on any other sources of income you may have. These could include properties, savings, pensions or any related benefits to these.
- Further information about anything else you may wish to claim for. This could include professional expenses you’ve incurred whilst being self-employed.
Tip – if you are asked to send additional information or documentation along with your Self Assessment form then it is a good idea to photocopy the documents.
Check and double-check your form
When you receive your Self Assessment form from HMRC it should contain everything you need to make a successful return, however, depending on your circumstances you may need to complete one or more ‘additional pages’.
If you think HMRC may not have sent you all the forms you require, you can find printable versions of the omitted forms on the HMRC website. Alternatively, you can call the Self Assessment order hotline on 0300 200 3310.
Should you discover that HMRC holds incorrect details about you, you should contact them as soon as possible.
Don’t miss the deadlines!
The deadline for returning your Self Assessment form isn’t until 31st October. However, there are some important exceptions you should be aware of.
For example, if you choose to complete your Self Assessment online, you have until the 31st January of the following year to complete it. This gives you some extra time, but as we said earlier we don’t recommend leaving it until the last minute in case any unexpected problems crop up.
Here are some other important things to consider:
- If you submit your paper Self Assessment return by the 31st October deadline, HMRC will calculate your tax for you. If you miss this deadline, you will need to calculate your tax yourself.
- If you miss the 31st October deadline but manage to send your return in by 30th December, HMRC may still be able to calculate your tax for you, but they may not be able to provide you with your figure before the payment deadline of 31st January.
- If you fail to complete your Self Assessment form on time then you can be fined £100.
- If you fail to pay your tax bill by the payment deadline you will face fines and penalty charges.
Are you submitting by post?
This may sound like an obvious point, but if you choose to complete your Self Assessment on paper, then make sure you have completed absolutely everything before putting it in the post. This includes signing where required.
If you are using an accountant to complete your Self Assessment on your behalf, they will still require you to sign the document. Make sure you factor in a visit to your accountant before the deadline.
As we mentioned earlier, it’s also a good idea to take photocopies of every part of your Self Assessment, including any supporting documents, before you send it off. That way, should anything unforeseen happen, you’ll have proof that you have completed your Self Assessment.
Are you completing your Self Assessment online?
More and more people are choosing to complete their Self Assessments online. In fact, it’s estimated that over 5 million people now choose this ‘digital route’.
If you use an accountant to complete your Self Assessment on your behalf, then it’s likely they’ll be completing it online too.
If online sounds like the best option for you, there are a few things you need to know:
- To be eligible to complete your Self Assessment online, you will need to register on the HMRC website and request an activation PIN (you should do this in advance of any deadlines – it can be up to a week before you receive your account password).
- When completing the registration form you will need your postcode, National Insurance number and your Unique Taxpayer Reference (you can find this on your SA100 form from your tax return).
- Once you’ve completed your Self Assessment online you should print it off for future reference.
How to pay your taxes
Once you’ve completed your Self Assessment you will receive your tax bill.
You will have to pay your tax bill in three instalments. In general, these are the three stages for payment:
- Your first payment will be classed as ‘on account’ and will normally be due by 31st January.
- The second payment will also be classed as ‘on account’ and will need to be paid by 31st July (after the end of the relevant tax year).
- A final balancing payment will need to be made by 31st January of the year following the tax year in question. This payment will reflect the actual income that you’ve made during that tax year (with payments already made on account deducted).
In general, you will be sent a Self Assessment statement that will detail the amounts due. If you are unsure how to set up and arrange payments you should get an accountant to help you – it’s very important that you pay the correct amounts at the right time.
Disclaimer: We hope this guide helps you complete your tax return correctly and on time – but, as with all things tax-related, we strongly recommend that you seek the advice of an independent expert if you are unsure or require any further information regarding your tax return.
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