Self Assessment: learn from my stupid mistakes and get it right first time

01HMR14956_SA_768x566More women are becoming self-employed than ever before, which means more women will be facing their first Self Assessment tax return right now. It is a quick and easy exercise… if you are organised and alert. If you’re not, I know from bitter experience, it’s a costly hassle.

After a few stupid mistakes I’m now streamlined. So please do learn from my goofs and get it right first time!

1. Do not leave it to the last minute. While the deadline of 31st January may seem a while off, if this is your first time do not delay. Before you can submit your Self Assessment details online, you need to register online, here. Then you need to wait around 7 working days (21 days if you are setting up the account from abroad) for your ‘activation code’ to arrive in the post. You must activate your account within 28 days or the code expires and you have to start again. I confess, this happened to me. I ordered the activation code, forgot about it and when I went to submit my figures on the 31st January (deadline day) the activation code had expired. The 7 delay meant that my submission was late and I was clobbered with a fine.

The good news is that once you are activated, you stay activated for the next year.

2. Maintain a book-keeping system. I learned this one many years ago and it has served me well ever since. Keep clear records of all your business income and expenses and keep them separate from personal finances. As a freelancer, I keep both a monthly paper file and an online file of all receipts and I mark the method of payment clearly on each one. At the end of each month I do a summary using an excel spreadsheet. So when my business year end comes around, it only takes a minute to work out the total income and expenditure.

3. Make sure you claim all eligible expenses. It took me years to realise that I could claim for what are obvious business staples: attending networking and training events, the tech tools you need to do your job and, as a home-based worker, a reasonable slice of household bills. Don’t make that mistake: you can check out a very clear guide to what you can claim on the website.

4. Do it online. If you haven’t already completed your Self Assessment tax return this year, then you have no option but to complete it online. The deadline for paper returns has passed! There are added advantages to doing it online too. The form reacts to your answers and strips-out the unnecessary sections, so it seems easier. Also after the first year, you will find your basic information auto-completed. And of course, it adds up for you.

The self-employment part of your tax return is very simple. They ask for your total income from self-employment and your total costs. That’s it. You also of course submit all your income from other sources, like employment and pensions.

5. Press ‘submit’! I have a problem with forms. They can bring me out in a cold sweat, but really this is a simple one. I promise. However, there is one very sneaky obstacle, which caught me out last year. You can think you have finished and leave the site before pressing the critical ‘submit’ button. It wasn’t just me. It also happened to a friend. Hopefully they’ve tightened it up this year! Just be sure that you have pressed ‘submit’. You will know that you have if you receive a confirmation email. If you haven’t then, yes, you will be clobbered with a fine. No excuses. Take a look at the video below, which shows how much better you will feel after clicking that important ‘submit’ button.

So there you have it, five steps to Self Assessment heaven. Whether self-employment delivers the bulk of your income or just a small slice, the price of independent income is the responsibility of reporting it and making our fair contribution.

Be organised and be alert: start now!

Visit the following website for further information about your Self Assessment tax return.

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