Like a lot of parents, I’m super busy and don’t have time to trawl the Internet researching a topic, let alone understanding it in my sleep deprived brain fug. So I’ve done the work for you, condensing topics down to the essentials you need to know plus more detail if you need it.
This post has been updated for the 19-20 tax year.
In More Detail
In part one of our guide, you will have tailored your return to show the relevant sections for you. This could include employment, employment plus self employment, or complete self employment.
Here’s what you will need to complete your return, in the order that you will need it:
In most cases, this information will be filled in for you, but it does pay to check the figures that HMRC hold. The key documents that you will need to complete this section are your latest P60 or P45, which show your income figures plus your P11D which covers employment benefits amounts (if you get a company car for example)
When you start to complete this section, you will be given a list of tick boxes. If your total turnover was less than £1,000 but you still wish to complete this section, you should tick one of the following two statements:
- My total turnover is £1,000 or less from all self-employments but I wish to voluntarily pay Class 2 NICs
- My total turnover is less than £1,000 and I have made a loss.
You will then go on to complete the following for each separate self-employed business you have:
- Business name and address
- The start date or end date of your business (if it was not operating fully within the tax year)
- Date your accounts are made up to (if you are not sure, go with the 5th April 2020)
- Whether you want to use the Cash Basis (*) – do not use the cash basis if you need to claim capital allowances for a car, or need to offset trading losses against previous years
- Turnover – the total value of sales during the tax year for that particular business
- Total Allowable Expenses – this is the total for day-to-day expenses such as buying stock
- Annual Investment Allowance (also known as Capital Allowances, this is for larger items such as laptops or printers)
You will then be asked whether you want to offset any losses for this year, against previous years. If the answer to this is yes, please seek professional advice so that it can be allocated correctly.
Your Profit or Loss figure will be calculated for you.
You will need to read through and answer / skip a number of questions, many of these won’t be relevant so don’t panic if you don’t answer many!
Class 2 NI £3.00 per week – If your profits are less than £6,535 you do not have to pay but if you want to pay voluntarily you can click this box.
UK Interest – any interest that you received on your bank accounts, split between amounts which have already been taxed and those that haven’t. Do not include interest on ISA accounts as this is tax free.
Dividends – the total amount of dividends that you received in the tax year (based on actual date received)
There are also further sections on UK Pensions annuities and other state benefits, underpaid tax and other debts, overpaid tax, not paid enough tax, adjustments to tax due and any other information, but again these will not be applicable to everyone. Any mandatory fields will be flagged to you before you can continue.
Once you have finished entering your details, you have a chance to view the calculations and the resulting amount of tax and NI due. You can go back and change figures at this stage if you need to.
Once you are happy with what you have entered, you can submit your return. You will need to make a payment for the amount due so that it lands with HMRC by the 31st January, so do not leave it til the last day!
If you are unsure of any of what you are entering, ask an accountant for help. We are a friendly bunch!
*The Cash Basis is where you total up your income and expenses based on whether you have actually received or paid out the money. This means that you are not impacted if you have income due to you at the end of the tax year but have not received the cash in yet, as you would defer that income until the following tax year’s calculation. Info on the cash basis can be found on these links.
Photo by Masarath Alkhaili on Unsplash