Doing your first tax return can feel daunting.
It’s easy to put it off and go hide in your mental pillow fort.
Take your chocolate, calculator and spreadsheet into your pillow fort, snuggle under your duvet and get your first tax return ticked off your Grown Up Accomplishments list.
1. Notice To Complete A Tax Return
When you register as a sole trader or as a limited company, HMRC will send you a notice in the post telling you that you are now required by law to complete a self assessment tax return.
(If you’re a director and you don’t receive a tax return demand, well done you. If HMRC don’t send you a notice and you don’t need to complete a self assessment for another reason, you don’t need to do one.)
Your notice has some key information.
- Your name as on HMRC’s records
- Your address as on HMRC’s records
- Your UTR (Unique Tax Reference)
- Your Tax Reference (National Insurance number)
- Your Employer Reference
Check your name is your legal name used on your bank records, passport, driving licence etc. Check your address is correct.
Keep a record of your UTR and keep it safe and secure as it’s a key identification. Your Tax Reference is your National Insurance number confusingly. Check it’s correct. Your Employer Reference is for your employer or HMRC give you one if you aren’t employed. Check it’s correct.
Check you have chocolate and/or cake and a cup of tea or wine. A cat is optional.
When you receive your notice, make an appointment in your diary to take a specific action about your return, e.g. get the documents you need, or if you have been procrastinating start your expenses spreadsheet and get help.
2. Your First Tax Return Deadline
You have 3 months or longer depending on your circumstances.
Normally it’s 31 January which is the deadline for submitting your return and paying all tax due. The good news is that you don’t need to pay any tax until that 31 January deadline even if you submit your return a month after the tax year finishes.
(The UK tax year starts 6th April and ends 5th April the following year).
Your first self assessment tax return is a great time to take advantage of getting a tax refund.
Most new sole traders in the first and second years have an opportunity for a tax refund which is lost once their freelancing business gets more established. Ask me for more details if you’re interested.
Put the deadlines in your diary and reminders well beforehand to prompt you to take action (this is called stress prevention).
3. How To Do Your First Tax Return
Log-in and activation code
When you registered as a sole trader you should have been sent an online self assessment log-in and activation code by post to your HMRC registered address.
If you don’t have this, call HMRC straight away and get it sorted, and likewise if you didn’t activate your activation code within the time limit. You can’t file your self assessment without them and it can take several weeks to get them as it’s done by post for security.
If you’re a director you may need to register for online self assessment, and then the same applies as for sole traders.
Filling In Your Self Assessment
Here’s a round up of previous tax return related posts:
Or make it easy. The Tax Return Toolkit takes you through step by step in one e-book.
4. Tax Return Penalties Prevention
One word. Chocolate.
Penalties are your hard earned cash going to the taxwoman for no reason other than you didn’t get your shit together.
(If you have a genuine reason (like you were seriously ill for most of the year or your records were destroyed by flood) that’s different.)
Chocolate, cake, wine, whatever works for you, you need to get this sorted. Don’t create yourself serious stress in January and throw money away.
Take action if you have emotional blocks getting in the way.
Staying in your pillow fort with an entire cake and your cat is fine as long as it gets it done without teh dramz.
Or I can help you and we can hang out in a luxury hotel having tea.
In Doing Your First Tax Return – Part 2, I talk to Natalia Shpek about her experience of her first tax return. Click here to read.