Self-assessment is the process of filing your tax return with HM Revenue and Customs (HMRC). It’s a legal requirement for anyone who is self-employed or has income from sources other than employment. While it’s possible to do it on your own without the help of an accountant, it’s important to understand the process and the potential pitfalls.
Understanding Self-Assessment Requirements
The first step in doing your own self-assessment is to understand what information you need to provide and how it should be presented. HMRC requires you to report all income from any source, including employment, investments, rental income, and any other sources of taxable income. You must also declare any allowable expenses that can be deducted from your taxable income.
You must also keep accurate records of all income and expenditure throughout the year so that you can accurately calculate your tax liability when it comes time to submit your return. This includes keeping receipts for any purchases made for business purposes as well as invoices for any services provided by you or received by you.
Calculating Your Tax Liability
Once you have gathered all of the necessary information, you can begin calculating your tax liability. This involves adding up all of your taxable income and deducting any allowable expenses. The total figure will be used to calculate how much tax you owe HMRC for the year.
It’s important to note that there are different rates of tax depending on how much money you earn in a year and whether or not you are eligible for certain allowances or reliefs, such as the marriage allowance or the blind person’s allowance. If you are unsure about which rate applies to you, then it may be worth seeking professional advice from an accountant or financial advisor before submitting your return.
Submitting Your Return
Once you have calculated your tax liability, the next step is to submit your return online via HMRC’s website or through their app if it is available in your area. You will need to provide details such as bank account details so that HMRC can collect payment if applicable, as well as other personal information such as your National Insurance number and address details. It’s important that all information provided is accurate; otherwise, there could be delays in processing your return or even penalties imposed by HMRC if mistakes are made on the form.
Avoiding Common Mistakes
Finally, it’s important to remember that self-assessment can be a complex process, and mistakes can easily be made if not done correctly. To avoid this, make sure that all paperwork is kept up-to-date throughout the year so that when it comes time to submit your return, everything is ready and correct. Additionally, double check all figures before submitting them, as even small errors could lead to significant penalties from HMRC if they go unnoticed until after the submission has been made.
In conclusion, while it is possible to do a self assessment tax return without an accountant, there are some risks involved with doing so that should not be underestimated. If in doubt about anything related to filing, seeking professional advice from an accountant may be beneficial.