It’s that time of year again. From November to the end of January, accountants all over the UK are pulling their hair out trying to get information from their clients to complete the self-assessment tax return 2023/24. Here’s everything you need to know to make this work as smoothly as possible.
Who needs to file a self-assessment tax return?
If you are a UK-based self-employed individual earning over £1000 in income from a business, you are required to file a self-assessment tax return. If you are in a partnership or are a limited company director, you will also need to file a self-assessment tax return.
When is the deadline for filing your self-assessment tax return 2023/24?
You need to submit your self-assessment tax return 2023/24 by 11.59pm on 31 January 2025. If you are even one minute late, you’ll incur a fine of £100 from HMRC. In addition, you need to make payment of any tax owed by this deadline too and late payment will incur interest charges at base rate plus 2.5%.
When can I file my self-assessment tax return?
The new tax year starts on 6th April, so if you file your self-assessment tax return 2023/24 online you can do it as soon as HMRC open their online portal the new tax year. Most accountants won’t start submitting new tax returns until their professional software updates to the new tax year which tends to happen from May or June. For your self-assessment tax return 2023/24, there’s no time to waste – call us today to ensure you don’t miss the deadline.
What happens if I fail to make my tax payment on time?
If you don’t pay the right amount of tax owed by 31 January, HMRC will issue a late submission penalty of £100 if your tax return is up to 3 months late. If your return is more than 90 days late, there is an additional penalty. If you aren’t sure how much penalty you have incurred, you can use the HMRC penalty estimator.
What is a ‘reasonable excuse’ HMRC will accept for late filing?
There are no hard and fast rules about what will be accepted as a reasonable excuse but if you’ve experienced a close family bereavement, were in hospital, had a serious life-threatening condition or your computer software failed while you were submitting your tax return you may be able to avoid a penalty. HMRC gives more information online on possible reasonable excuses that may be accepted and ones which will not.
How long do I have to dispute a tax penalty?
You must file your tax penalty dispute within 30 days of the penalty notice. You can find more information on how to do this on the HMRC website.
What if I can’t pay the tax I owe?
If you are unable to pay your self-assessment tax for 2023/24, you may be able to apply for a Time to Pay arrangement. There are strict criteria which can be found on the HMRC website.
What income should be reported on the self-assessment tax return 2023/24?
If you earned income over £1,000 in tax year 2023/24 from any business activities irrespective of how it is earned, you will need to report your income to HMRC. Examples include:
• Business income and self-employment
• Freelance work and side gigs
• Royalties and licensing fees
What expenses can I claim against my income as a creative business owner?
Anything you use while running your business that is wholly and necessarily for business purposes can be claimed as an expense against your income to reduce your taxable profits on your self-assessment tax return 2023/24. Example expenses for creative businesses include, but aren’t limited to:
• Studio or workspace costs
• Equipment and materials
• Marketing and promotional expenses
You can find a more comprehensive list on our blog titled, ‘Which business expenses are tax-deductible for UK creative businesses?’
How can I make it easier to keep my business records for tax returns?
If you are registered for VAT, you will already have heard of Making Tax Digital. This is the HMRC’s project to get people to report their taxes online. Using cloud accounting software like Xero, FreeAgent and QuickBooks makes tax reporting simpler. Making Tax Digital will be extended to cover income tax self-assessment returns from 2026, so all small businesses including sole traders and property landlords making more than £10,000 must prepare for this change.
If you aren’t already using accounting software to manage your business finances, now is a great time to get started as this will give you some time to get used to using the software. Many banking apps and accounting software programs allow you to capture receipts directly when paying from your business bank account. This reduces the paperwork you need to store and solves the problem of lost invoices and receipts at tax year end.
What else should I be aware of relating to my self-assessment tax return 2023/24?
One of the biggest problems our clients face is underestimating their tax liability. It can be complicated to work this out, so an easy rule of thumb for basic rate taxpayers is to save 20% of each invoice into a separate bank account to cover your tax bill. If you are a 40% taxpayer, you’ll need to increase this and it’s probably a good idea to speak to your accountant about whether it’s advantageous to switch to limited company status if you are a sole trader paying high rate tax.
Another common issue is mixing personal and business expenses in one bank account. This makes business decision-making, particularly around cash flow more challenging and it can add additional cost when your accountant has to sift through all the transactions to work out which ones apply to your business and which are personal and can’t be claimed.
Finally, if you aren’t claiming all your allowable expenses or creative industry tax reliefs, you are paying too much tax. Ask your accountant to review your finances to ensure you are minimising your tax liability.
Getting help with your self-assessment tax return 2023/24
It’s not too late to get expert help on your self-assessment tax return 2023/24, even if you feel that your business finances aren’t very organised right now. Green & Peter works with many creative businesses to help you submit your return on time and minimise the tax you owe. Chat with us by calling 0208 446 8100 or complete our online form to book a short discovery meeting.
Don’t stress over your self-assessment tax return 2023/24! With our help, it will be done in no time at all.
