Some timely advice has been given to those contractors planning to complete a self-assessment tax return before the deadline of 31 January.
Never an easy task, Emily Coltman of accounting software specialists FreeAgent has highlighted three key areas not to forget to those still to submit their assessment.
The first area is paperwork, with Coltman advising that having four things to hand is crucial: your P60 form, interest from your bank account, business’s income and expenses, and the value of any dividends you’ve received on shares that you own.
The second key thing to know according to Coltman is what you have earned this tax year.
“If you’re a sole trader and you’re preparing your business’s accounts to match the tax year end, the next step is to add up all your income from 6th April 2015 to 5th April 2016,” she writes. “This includes any sales that you completed the work for between these dates (even if you hadn’t invoiced the customer or been paid for the work before 5th April 2016). If you’re using the cash basis of accounting (meaning that you work out your business’s profit based on when money comes in and is paid out, rather than on when income is earned and costs are incurred) you should calculate your income by adding up the payments that you received from customers during the tax year.”
Coltman’s final point is around expenses and receipts, as submitters need to identify any cost associated with their business. This includes contractors running PSCs, and the costs thereby associated.
“Even when you’re done with your receipts, don’t chuck them!” she says. “Hard or soft copies of your receipts need to be kept until 31 January 2022. And yes, HMRC will accept the scanned receipt as proof of the expense! Just make sure you take a picture of both sides if there’s any information on the back of the receipt.”
Any contractor who does not submit their tax return by 31 January will face a fine of £100.