Britain has seen a large increase in the number of people becoming self-employed recently, with many people taking advantage of the opportunity to become their own boss. The transition from employment to self-employment can be daunting, particularly when it comes to the wages aspect. There is a mountain of paperwork that comes with tax returns and trying to understand the rules surrounding self-employment can be confusing. Here are a few tips on how to keep on top of your self-employment tax affairs:
Keep financial records
Self-employed people have a tendency to late their paperwork mount up and push their tax return to the back of their mind. If your tax return is turned in late, you could incur a penalty. Keeping your receipts, statements and other data in an orderly fashion from the commencement of your self-employment will help you greatly when it comes to tax return time.
Filing an annual self-assessment is compulsory as the information is used by HMRC to assess how much tax is due from you. You must return it by October 31 if its a paper return or January 31st the following year if you choose to submit it online.
Help with your return
There are alternatives to filing your return yourself. An accountant is one option, you will need to provide them with all of your income and outgoing information and they will do your tax return for you, for a fee. You can also use a free online tax return service.
National Insurance Contributions
The responsibility falls to you to pay your own National Insurance Contributions when you become self-employed, they are mandatory payments made by anyone earning an income. The amount you contribute depends on how much you earn.
If you need any further advice about any of these aspects of the tax process, do not hesitate to call the Self Employed Helpline.