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22 Apr 2020

Six tips for filing your tax return to qualify for the self-employed income support scheme

If you missed the January deadline you must file your late 2018-19 tax return by 23 April to qualify

If you're self-employed and are yet to file your 2018-19 self-assessment tax return, you have until midnight on 23 April to submit or you'll miss out on government support worth up to £7,500.

Last month the government announced it will give anyone who was self-employed prior to 6 April 2019 and missed the 31 January self-assessment deadline, four weeks from 26 March to file their 2018-19 return in order to access the new self-employed income support scheme (SEISS), which should start paying out in June.

The scheme covers up to 80% of self-employed workers' average taxable monthly profits over the past three years (or averages of what self-assessment data is available) up to £2,500. The payment is taxable, but doesn't have to be paid back and will be paid in a lump sum worth up to £7,500.

Here, Which? gives you top tips to help you file your online tax return in time so you can benefit from the scheme.

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1. Ensure you have all your paperwork

Gathering all of your paperwork can be really time-consuming. Filing your tax return will be a lot easier if you have everything at hand so you don't have to scramble around for it at the last minute and risk missing the deadline.

Broadly, taxable profits are your yearly takings, minus allowable business expenses, annual investment allowance, capital allowances and losses.

When you're putting your return together it's wise to cross-reference your numbers. Check your bank statement to make sure that the payments you've actually received match the invoices you've issued, and check that payments going out of your account match the receipts you've saved.

2. Don't delay filing, even if you have missing paperwork

If you're still waiting for paperwork to confirm any figures, you're better off making an estimate than missing the deadline; HMRC has confirmed that anyone who submits a 2018-19 tax return after 23 April will not be accepted into the SEISS.

However, as it's been more than two months since the official deadline of 31 January, it's likely you'll have some late fines to pay.

HMRC has not confirmed how many 2018-19 tax returns are still outstanding, although it has said penalties still apply. The longer you leave it, the more you'll have to pay.

Penalties for late tax returns are calculated as follows:

  • £10 for each additional day (capped at 90 days), plus the initial £100 fine - maximum of £1,000 if you're up to three months late;
  • Either £300 or 5% of the tax due (whichever is higher), on top of the penalties above if you're up to six months late;
  • An additional £300 fine, or 5% of the tax due, plus the above penalties if you're up to 12 months late. In the most serious cases, you may be fined 100% of the tax due.

There may also be additional fees if you're late paying your tax bill; this payment was also due on 31 January.

When you get the right figures you can submit an amendment via the HMRC portal or your tax software. But beware that HMRC can fine you if it thinks you've provided the wrong information or if the figures you've given are deliberately misleading.

Your estimates should be as reasonable as possible, or the best guess.

3. Don't panic over lost receipts

It's worth having all of your receipts in one safe place before you do your return to make the process easier and quicker.

But if you can't find some of them don't panic too much.

Some places may offer to send you a new receipt if you ask, or you might be able to claim with other evidence such as bank or credit card statements, or the physical item and a record of where you bought it.

Some things can also be claimed at a flat rate - such as mileage costs, working from home or living at your business premises - so you won't need receipts for every transaction in this case.

4. Brush up on key tax rule knowledge

Doing your tax return is a lot easier when you're familiar with key terms and know the thresholds, reliefs and allowances that apply to you.

These usually change every new tax year, so make sure you're up to date with the figures for 2018-19.

You can use our range of guides for help with this:

Find out more: four changes to self-employed tax coming in the 2020-21 tax year

5. Decide how to pay your bill

It's not just your tax return that's due on 23 April to receive the government support; you'll also need to settle your tax bill for 2018-19 and pay any late tax return fees.

Only those who are paid a salary or pension, submit their return before 31 December and have a tax bill of less than £3,000 will have the option to pay tax via PAYE throughout the following tax year.

So if you're late filing the option to spread payments out through PAYE won't be an option available to you.

For those who are self-employed and pay tax by payment on account, you'll have already paid the estimated tax for the 2018-19 tax year. In this case, you may have to make a settling payment (if your bill was higher than anticipated), and then pay the first half of your estimated bill for 2019-20.

You can't pay your tax bill with a credit card anymore. A quick, straightforward way of paying is via online bank transfer, but make sure you use your 'unique tax reference' as the payment reference so that the payment is credited to your account.

For those who will struggle to pay the tax bill, HMRC has set up a Time to Pay arrangement and has a coronavirus helpline.

It's also worth mentioning if you've overpaid and the error is down to HMRC you can generally claim a full rebate, but you'll need to do this within four years of the end of the tax year you're claiming for.

6. Use an online tool for extra help

It's worth using HMRC's online tool to submit, as well as some online tax calculators.

The advantage of using a tax calculator is that you'll be given helpful jargon-free tips along the way and told what information to enter and how it could affect your total bill.

TheWhich? tax calculator allows you to calculate your 2018-19 return and submit directly to HMRC for a small fee. While you're there you can also use it to complete your 2019-20 return.

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