It has been pointed out to me lately that lots of new businesses and sole traders do not know how to fill out a tax return correctly. Now I am no accountant; however, I have completed my tax return before, and this is what you need to do.
Let’s cover the basics. A tax return is a form that you can fill in online or on paper that you fill in that details your taxable income, and any capital gains if appropriate. Also, you can claim tax allowances and tax reliefs through this form. HMRC (Her Majestys Revenue and Customs) may issue a tax return to you during each tax year. The tax year runs from 6th April to 5th April each year. When released a tax return it is the law that it must be filled in. This information that you provide HMRC works out your tax bill or whether you are due a tax refund.
You will need to fill in a tax return if you are a sole trader if you match any of this criteria:
Apart from filling a physical form in and one digitally, what’s the difference between the two? If you fill in your paper form in and file it before the 31st October, HMRC guarantees to calculate your tax bill, and you will know the result before the payment date of 31st January following the end of the tax year. However, if you file it after the 31st October, HMRC cannot guarantee to give you the result before the 31st January.
You can find paper tax return forms to download on the GOV.UK website.
Now, to fill in a tax return online, first, you must register on GOV.UK website. Once completed you will receive a Personal Identification Number in the post; you have 28 days to activate your account using this PIN number, failing to do so will mean you have to go through the registration process again.
Completing the tax return online will ask you a series of questions to bring forward the relevant parts of the tax return (these have been carried out during the registration process). It will complete all the calculations for you automatically while providing on screen assistance as you go along filling the document. Your tax bill will be worked out automatically, and you will receive an acknowledgement that your tax return has been safely received.
I hope this helped to make the tax return process easier.