Whether you’re working as a sole trader or running a limited company, filing your tax returns can be stressful. Knowing how, what and when you need to submit to HM Revenue & Customs (HMRC) isn’t always clear. Especially when there are different types of tax return for different types of tax!
But don’t worry, we’re here to help you through the process, answer any questions you have and highlight the business benefits of getting a tax return out of the way early.
What is a Self Assessment tax return, and who needs to file one?
Self Assessment is a system used by HMRC to collect income tax. If you’re self-employed as a sole trader (with earnings over £1,000), in a business partnership, or you’re the director of a limited company, you will need to submit a Self Assessment tax return.
If you haven’t submitted a Self Assessment before, the first thing you need to do is register with HMRC.
It’s worth noting that once you’ve filled out the online form, it can take a while to receive the registration confirmation letters. So, if you’re in a hurry, be aware that this can cause unexpected delays before the registration deadline on 5th October. (That’s the October which follows the end of the tax year that you need to submit a return for).
How do I submit my Self Assessment?
If you’re running your business as a sole trader (or you earn income through other avenues such as renting out a property), you can file your Self Assessment online using the Government Gateway website.
You’ll need to file your online Self Assessment by the 31st January (the January after the end of the tax year that you need to submit a return for). But it’s always a good idea to get it submitted as early as possible (we’ll go into more about this later).
What if I can’t submit my Self Assessment online?
In certain circumstances (such as for partnership tax returns, or if you must submit for a trust or estate) you will need to submit your Self Assessment tax return by post or through HMRC-approved commercial software instead.
To submit your Self Assessment by post, you’ll need to complete an SA100 form. Depending on your form of income, you may need to send extra information with your submission, so be sure to check out the full list on the HMRC website for further details.
Your paper Self Assessment must be posted to, and received by, HMRC before midnight of the 31st October. Yep, the deadline is different for paper returns.
If you need help with your Self Assessment, or simply want to take the stress out of the process, you can always appoint an accountant to file your tax return on your behalf.
What is a company tax return and do I need to file one?
If you run a limited company, then you’ll also need to have company tax returns on your radar. A company tax return is used to work out how much Corporation Tax the company needs to pay to HMRC.
If you run your business as a limited company and receive a ‘notice to deliver a Company Tax Return’ from HMRC, you must file a company tax return (regardless of whether the company made a profit or loss).
You won’t need to submit a company tax return if you are self-employed as a sole trader though!
How do I complete a company tax return?
Before you can complete your company tax return, you’ll need to prepare your annual accounts. It’s just one of the reasons why good bookkeeping records are so important!
If you’re not sure when your financial year starts and ends, don’t worry, you can check the dates using your Government Gateway account.
To complete your company tax return, you’ll need to file a CT600 form with HMRC, and your accounts with Companies House.
When do I need to submit the company tax return?
The deadline for completing your company tax return is 12 months after the financial year it covers. If you miss the deadline, you will receive a penalty which increases the longer it remains outstanding.
The benefits of an early tax return
Wherever possible, it’s best to submit your tax return ahead of time. As well as the peace of mind it brings, early filing has a number of business benefits.
Preparing for early submission means you have another opportunity to identify any early. This gives you plenty of time to rectify any errors, and reduces the risk of getting penalties.
Filing ahead of time also gives you a chance to review your expenses with your accountant for potential missed claims, helping you to reduce your upcoming tax liabilities, and budget more effectively into the financial year.
In the event of a tax refund, you will also get your money back faster from HMRC if you submit early! Having this useful cash flow injection ahead of time allows you to effectively plan your spending and focus on the things that matter most to you or your business.