If the thought of completing a tax return feels scary and overwhelming right now. If, just hearing the word “tax” sends your heart racing. Let me start by saying that you’re not alone. It’s entirely normal to feel like you should be coping with everything that running a small business entails. I know I do!
What’s often needed is some support at the sidelines and so, to ease you into that zone of inner calm I’ve pulled together this 2 part guide (if you missed part 1 you can catch up here) to help you collate information to complete your self-assessment tax return. Whether you’re using an accountant or doing your own tax return, being organised about the paperwork will save both your sanity and a lot of time.
This checklist isn’t an exhaustive list but it does cover the paperwork requirements for the majority of individuals or small business owners.
You will need to collect and file the following documentation:
The Tax Return Checklist
1 – Employment
Employment includes full-time, part-time and casual employment. If you’re really not sure what your status is you can check using this very helpful employment status indicator.
If you were employed during the tax year 2014-15, then keep a copy of your P60 (a year end summary of tax and gross income). If you’ve had several employments then you will need a P60 for each employment
- If you’ve left employment retain a copy of your P45
- If your tax code has changed then file your PAYE notice of coding which will outline any under or over payments of tax
- There may be certain expenses that you are able to deduct from your employment income. Have a chat to your accountant who can advise you on your eligibility to claiming these expenses
2 – Self-Employment
If you ran your own sole trade business for any period in the tax year 2014-15, even if you started in March 2015 you will need to have kept records for all the business expenses and income as well as purchases or sales of capital items and detailed records of mileage.
If you’re new to starting a business and totally confused by what or how to record these details you might be interested in this workshop.
If you are running more than one sole trade business, keep your records very separate as you will be required to complete a separate page summarising your income and expenditure for each sole trade business.
Try and become familiar with the two ways of reporting your income and expenses (cash or accruals basis). If you’re using the accruals basis you need to give your accountant records of income and expenses prior to 6th April and after 5th April. Here’s a reminder of the two reporting bases.
3 -Other Income
Think about any “other income” that you have received during the tax year 2014-15. If you have been selling on eBay or carrying out a “hobby” business, check whether you satisfy the “badges of trade“. Your activities may be viewed as trading.
Keep records for any of the following that may be applicable:
- Pensions received (state and private)
- Child benefit received – you will need to include details of the amount received during the tax year 2014-15 if your income is over £50,000 and you or your partner are the higher earner
- Casual earnings, commission or freelance income
- Receipts from a business you have previously closed
- Grants received for your business
- Income from a trust, settlement or estate of a deceased relative
4 – Interest received
You need to retain statements of interest received and tax deducted from your bank, building society and other savings accounts. This includes interest received on both your business and personal bank accounts.
Take note of the following:
- record whether these amounts are received NET or GROSS of tax
- you should record even the smallest amounts of interest credited to your bank account
- Make a note of whether the interest is from your own or your joint account. If you are recording interest from your joint account, then you only need register a half share of this amount
- If you have made gifts to your children (under 18) and these have produced more than £100 in net interest then you will need to make a record of these amounts to include in your tax return
5 -Owning a rental property
If you let a second property (or multiple) or part of your own home (rent a room) – you will need to have records of all the income and expenditure incurred in running your rental business.
Ensure you have very detailed records for any repairs, replacements and improvement expenses. If you own a property abroad, you will also need to keep records
6 -Dividends
Collect any dividend vouchers giving details of dividends received on either your own or joint shareholdings.
7 -Foreign Income
You will need to keep records of any income received from overseas such as dividends (dividend vouchers), pensions (pension statements) and bank interest (bank statements).
8 -Chargeable gains
A chargeable gain is an increase in an asset’s value between the time it is purchased and the time it is sold. It’s this gain which becomes subject to capital gains tax.
The type of assets you may be selling include shares, your business or a rental property. Don’t confuse these assets with the capital items such as laptops or photography equipment purchased for use in your business.
If selling any of these assets make sure you have details of purchase prices and disposal proceeds.
Chargeable gains can be a tricky area and if you are confused, I would recommend that you speak to an accountant. I’m here.
9- Personal Pensions
Include any statements from your pension company of contributions paid during the tax year 2014-15.
Don’t include details of contributions paid by your employer or contributions taken from your pay before it was taxed.
10- Student Loans
You will need to retain records to evidence any liability to make student loan repayments and make sure you keep any details of any repayments of student loans.
11- Gift Aid
Hopefully you’ve kept a record of any charitable contributions that you’ve made under gift aid. Obtaining tax relief for charitable donations under gift aid is frequently overlooked. I have written more about this here.
Phew! So, that’s all the paperwork done and dusted. But, don’t disappear yet!
You will also need to know
What do you do with all the paperwork?
- File away all your paperwork for the tax year 2014-15 using the dividers and plastic inserts
- None of the information needs to be sent with your tax return but you do have a legal obligation to hang on to it and if you are ever subject to an enquiry you will need to send or show an HMRC inspector this information.
How long do you have to keep the documentation for?
If you’re self employed, you need to keep records for at least 5 years from the filing date for the tax return on which your profits for that year are included.
For other tax return data you need to keep your records at least until 12 months from the date you file your tax return. If you file your tax return late, or you are subject to a tax enquiry, you will need to keep the records longer.
It’s a good idea to keep your records for longer than 12 months as HMRC may ask for information from earlier years – it could be 6 years if you have not taken reasonable care when preparing a return.
If you’re self-employed and wondering why HMRC are so interested in the figures from all your sources of income-here’s the reason
HMRC need to see a full picture of all your income from every source (not just your self-employed business) in order to assess how much tax you should be paying. Failure to declare it all could mean you end up with a big fat tax bill for money you don’t actually owe
Over to you
Feeling confident? Acquired the momentum to crack on with doing your tax return? Fabulous! Just make sure you submit (and pay your tax) by 31st January 2016.
Feeling wobbly? In a bit of a pickle? Anxious and totally overwhelmed by the whole “tax thing”? That’s ok. And I’m here to help. If you want to read how others, just like you felt about their tax, take a peep at their comments. Interested in having a chat? Drop me a line.
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