Yet to file your self assessment tax return? Don't panic!

Ideally, you would have completed and filed your 2021/22 self assessment tax by now. You're probably wishing you had.

But January is here and for whatever reason, you haven't got around to it yet. But don't worry – you're not the only one. Each year, about four million people leave their self assessment tax return until after Christmas, despite the looming online-filing deadline of midnight on 31 January.

So, if you're a sole trader with plenty of other things to do and little time to spare, how do you get your 2021/22 self assessment tax return done and dusted as quickly as possible without any drama?

Are you registered for self assessment?

If you haven't filed a self assessment tax return before, you must register for self assessment so you can pay the income tax and National Insurance contributions (NICs) you own as a sole trader self-employed person. It's quick, easy and free!

• After registering online, you'll receive your Unique Taxpayer Reference (UTR) number through the post within 10 days (21 if you live overseas), which you'll need to file your Self Assessment return. If you haven't already got, or applied for, your UTR you might miss the online filing deadline on 31 January, which will result in a further £100 fine.
• You'll also need a Government Gateway user ID and password to sign into your business tax account to file your Self Assessment tax return. If you don't have one, getting a user ID via GOV.UK is simple.

Need to know! You must register for Self Assessment by 5 October latest in your second tax year (UK tax years run from 6 April to 5 April). If you haven't done so by now – you'll have to pay a fine.

Decide how to file your self assessment tax return online

There are three options. You can:

1. Pay an accountant to do your self assessment tax return for you. However, it will probably cost a couple of hundred pounds and many accountants will already be fully booked up.
2. File directly with HMRC via Government Gateway. There's no cost, but there's also nothing to stop you from making mistakes that end up costing you time and money.
3. Use self assessment commercial software (visit GOV.UK for a list of options). If you're an individual taxpayer with straightforward tax affairs, such software can cost less than £50 for a yearly subscription. It can save you lots of time and ensure that your tax return is mistake-free. Most options come with user support and some providers offer additional paid-for tax return-checking services, for added peace of mind and possible tax savings.

How long will it take to fill out your tax return?

According to research from Which?, on average, it takes about two and a half hours to complete a self assessment tax return. And while about 20% of people can get it done in under an hour, it can take as long as five hours. Some people complete their tax return in one session, while others do it in two or three.

The SA100 Self Assessment tax return and supplementary pages

Within the eight-page self assessment tax return (the "SA100"), you provide details of taxable income and any capital gains, as well as (if applicable) student loan repayments, taxable bank or building society interest, pension payments, annuities, donations to charity and tax reliefs and allowances that you wish to claim.

As a sole trader, you need to complete the main self assessment tax return (SA100) as well as a supplementary page (SA103S or SA103F), summarising your taxable self-employed income and any business costs you wish to claim.

Need to know! You use the SA103S if your annual business turnover (ie total sales) was below the VAT threshold (£85,000) and SA103F if above. If you run multiple sole trader businesses, you'll need to complete an SA103S/F for each one.

If you earn taxable income from other sources, you'll need to complete and file other supplementary pages, for example, the SA105 if you also earn taxable income from renting out UK property and/or the SA102 if you also earn income from employment or as a company director (see GOV.UK for the full list of self assessment tax return supplementary pages).

Self Assessment tax return allowable expenses

Sole traders can claim for many business costs. Called "allowable expenses", these can include: business premises (rent, heating, lighting, water; rates); stock and raw materials; travel (ie fuel, parking, train/bus/taxi fares); staff/subcontractor wages; office costs (stationery, phone and broadband); insurance or bank charges; uniforms or safety clothing; marketing/advertising; training; professional fees.

Sole traders who work from home all or some of the time can claim a proportion of their domestic costs for electricity, gas, water, Council Tax, mortgage interest or rent, broadband and telephone use, repairs and maintenance, etc.

If you use something for business and personal reasons, you can only claim allowable expenses for the business proportion. You'll need to use a reliable method to work out how much to claim. You can't claim allowable expenses if you claim the £1,000 tax-free trading allowance, which is advised if your expenses are below £1,000 a year.

Need to know! Rather than working out your actual business expenses, HMRC allows you to claim flat-rate "simplified expenses" for running your business from home and business mileage. Visit GOV.UK to find out more about simplified expenses and general information about claiming sole trader allowable expenses.

Completing your self assessment tax return

Complete your self assessment tax return as soon as you can. The later you leave it, the closer the deadline will get, which could cause you to rush, making mistakes more likely.

Take your time when completing your tax return. Give yourself enough time to complete it in as few sessions as possible. Do it in a place where there are no distractions, so you can concentrate fully.

Need to know! If you file online but realise that you've made a mistake, you'll have to wait at least 72 hours, but you'll then have up to 12 months to correct any errors.

What if you miss the online filing deadline?

If you miss the midnight 31 January online filing deadline and don't have a reasonable excuse, you'll be charged a £100 penalty. Your fine will increase if you still haven't filed after three months.

Copyright 2023. Sponsored post by Mike Parkes of GoSimpleTax - tax return software that can help you manage your self assessment.