Self Assessment: Common FAQs answered
Navigating the process of Self Assessment can often feel daunting for many individuals, especially when faced with the complexities of filing their tax returns. It’s common for taxpayers to encounter a range of questions and uncertainties along the way. In this blog, we will address some of the most frequently asked questions about Self Assessment, providing clarity and guidance to help you better understand the process. By addressing these shared concerns, we hope to ease the burden of tax season and empower you to approach your filing confidently.
Do I need to file a tax return if my business starts after April 6, 2024?
If you are not filing tax returns for other reasons, such as earning rental income, your first tax return will not be due until after April 5, 2025. This gives you some breathing room to prepare. Additionally, if your business income is less than £1,000 in the year, you aren’t required to submit a tax return, although you might choose to do so to utilise any business losses for tax relief. It’s advisable to consult with an accountant for tailored advice in this situation.
To ease future filing, maintaining accurate and organised financial records is essential. Begin tracking your income and expenses now, and ensure regular bookkeeping practices to keep your figures precise.
Should I include my salary on my tax return if HMRC is already aware of it?
Yes, you must include all taxable income on your tax return, even if HMRC has received information about it from your employer. Your tax return serves as a comprehensive report of your taxable income. When filing, ensure you utilise your P60 (which shows your salary and tax deducted) and P11D (which details any non-cash benefits, such as private medical insurance) for the relevant tax year.
As a sole trader, can I claim travel expenses for client visits?
This aspect can be complex, so discussing your situation with an accountant is highly recommended. You can only claim travel costs if the journey is “wholly and exclusively” for your business. For example, visiting a client qualifies, but you may face difficulties claiming those expenses if your trip also includes personal errands.
Additionally, HMRC tends to scrutinise travel costs that are “regular and predictable,” such as weekly client visits. Again, consulting your accountant for guidance on this matter will provide you with the clarity you need.
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If I move abroad, do I still need to complete a Self Assessment tax return?
This requirement depends on the timing of your move and whether you continue to receive any income from the UK. It’s advisable to reach out to HMRC or consult with your accountant for specific advice tailored to your circumstances.
As a director of a company, am I required to file a Self Assessment every time, or is it only necessary if my income exceeds £100k?
As a company director, it is essential to comprehend your obligations concerning Self Assessment tax returns. It is generally necessary to file a Self Assessment tax return if you receive a salary and/or dividends from your company. Moreover, should HMRC request that you complete and submit a tax return, it is imperative to comply, as failure to do so may result in penalties for late or non-filing.
Is there a standard allowance for away-from-home expenses established by HMRC, akin to the home office allowance?
Concerning allowances for expenses incurred while working away from home, HMRC does not establish a standard allowance for food and drink expenses for sole traders. Instead, sole traders are tasked with determining whether their subsistence costs are allowable and must submit claims reflecting actual expenditures.
Typically, expenses for food and drink while engaged in business travel may only be claimed under the following circumstances:
– The business activities are inherently itinerant,
– Overnight stays away from home for business purposes are required, or
– The journey deviates from the customary patterns of the business.
What expenses should I account for when using my home for business purposes?
Regarding the inclusion of costs for business usage of one’s home, it is essential to note that regulations vary between sole traders and directors of limited companies. Sole traders benefit from more flexible provisions. They are permitted to utilise a ‘fair and reasonable method’ to calculate a percentage of various home running costs, which may include lighting, heating, rent or mortgage interest, council tax, insurance, and cleaning services (if the entire home is subject to cleaning).
However, the cost of water is generally non-claimable unless it is extensively utilised for business purposes, such as in certain industries like dog grooming. Sole traders may also opt to claim a flat rate allowance for home working, with the allowance varying based on the number of hours worked each month.
In contrast, the regulations for directors and employees of limited companies are more stringent. Claims for working from home expenses are permissible only if the work in question directly generates income for the company; general administrative tasks do not qualify for reimbursement.
Additionally, one must be working from home due to specific circumstances, such as the absence of adequate office facilities provided by the employer or geographic distance from the workplace. If one is authorised to claim expenses related to home working, the only reimbursable costs typically pertain to increased utility bills resulting from dedicated home office activities.
Conclusion
The intricacies of Self Assessment can often feel overwhelming for many individuals, but working with an accountant can significantly simplify the process. A qualified accountant provides valuable expertise to help you navigate the complexities of tax regulations, ensuring that you meet all your tax obligations while maximising your eligible tax deductions. At Affinity Associates, we can assist in keeping your financial records organised, offering tailored advice specific to your circumstances, and guiding you through the intricacies of allowable expenses. By partnering with us, you can confidently approach your Self Assessment, reduce the stress of tax season, and ultimately make informed decisions that benefit your financial health.
By partnering with us, you can confidently approach your Self Assessment, reduce the stress of tax season, and ultimately make informed decisions that benefit your financial health.
