Firstly, congratulations on becoming your own boss. You can now officially talk to yourself and call it as a staff meeting. On a more serious note, being Self-Employed can be a very daunting process. You’ve been used to you tax affairs being taken care of by your employer but now you have to deal with HMRC directly. The word HMRC can send shivers down your spine.
Worried you are going to get it wrong? Pay the wrong tax? Be fined for late submission?
Well don’t worry, we have put down some simple, easy to follow guidance for you.
- Registered as Self-Employed
So you’ve registered as Self-Employed with HMRC and by now you should have received a letter from HMRC with your Unique Tax Reference (UTR), if you haven’t received one yet don’t worry as this can take a few weeks. Keep the UTR number safe as you will need to reference this for any communication you have with HMRC.
If you are yet to register as Self-Employed you must do this as soon as possible and here is the link https://www.gov.uk/log-in-file-self-assessment-tax-return/register-if-youre-self-employed
- Complete a Self-Assessment
Now you are Self-Employed you will need to complete a Self-Assessment (also known as a Tax Return). This sounds more complicated than it is, in simple terms you need to inform HMRC of your income and expenses for the financial year.
The financial year runs from 5th April to the 4th April the following year.
HMRC will inform you of how much income tax you will need to pay. This is based on the profits you have made (income minus expenses). Basic rate income tax is currently charged at 20% of your profit however everyone is entitled to a tax free personal allowance. In April 2017 this was increased to £11,000. Any profits over £11,000 will then be charged at 20% basic rate or 40% higher rate.
Can I do this myself?
The simple answer is yes you can. There are many people who are Self-Employed and complete their own Self-Assessment when their tax affairs are straight forward however several factors need to be consider (too many for this blog post).
By paying an accountant you are not only paying for the Self-Assessment to be completed each year but also the important advice and guidance on different scenarios and technicalities E.g. how to treat Self-Employed losses, and what expenses to claim.
Lets face it, when you are Self-Employed your time is precious. You now need time for admin, advertising/marketing and family.
As a mother of two young boys, I get it which is why I set up Smart Online Accountants. Accounting doesn’t need to be complicated or expensive so we have made it simple and affordable at only £20 per month.
Sign up today www.smartonlineaccountants.co.uk and give yourself more time on your business, family and YOU.