There are many perks of being freelance. Working in your pyjamas. Not having to contend with office politics. Never missing the postman. However, filing your tax return is definitely not one of them. And, if you’re anything like us, you probably vowed to get going on April 1st and then left it to the last minute. However, don’t despair. Although the deadline is just around the corner, we’ve got you covered with all you need to know about filing your tax return and dealing with last minute dramas.
When do I need to file my tax return (and what happens if I’m late!)?
The latest you can file your tax return (for the year April 2017-April 2018) online is midnight on the 31st January. However, avoiding it until the day itself is not ideal. Not only will HMRC helplines be jammed for hours but those who are registering for the first time will need to allow an extra 20 days to ensure they receive their log-in details and unique tax registration number (UTR).
If it’s late (like a whopping 750,000 businesses were last year) you’ll automatically receive a £100 penalty, which increases after three months. There are some reasons that they could grant you an extension (such as serious illness or death in the family) but, barring extenuating circumstances, you’ll be expected to cough up.
What can I claim as expenses as a freelancer?
Although it is a bit of a faff, making sure you’ve claimed every expense you can is definitely worthwhile. Here’s a few things to include…
- Household Costs. Don’t want to wade through bills? You can still claim a flat fee. If you’re working between 25-100+ hours a month from home, you can claim between £10-£26 a month. “If you have a dedicated office, it may be more beneficial to claim actual costs” explains Mike Parks, technical director of Go Simple Tax, “so check both methods and claim the one that gives the highest amount” he adds. In the case of the latter, you can claim a percentage of your rent (or interest on your mortgage) and utilities (such as electricity and council tax) for each room you use. This infographic talks you through how to do it.
- A percentage of your mobile phone bills. The proportion you claim will depend on how much you rely on it for your business v personal use.
- Pre-Trading Equipment. We all know that tech can be claimed, but anything you bought up to seven years before being self-employed can also be included (providing it’s helped your business of course) as it’s ‘pre-trading’ purchases.
- Mileage. Don’t forget mileage can be claimed at 45p a mile without any petrol receipts. So keep a journal of every trip you make to meet potential clients or when working away from home. Apps like MileIQ can help you automatically track this via your IPhone.
I can’t find any receipts! Help!
If your previous ‘filing system’ consisted of shoving receipts in your coat pocket, don’t panic: although you don’t need to send proof with your return, you do need a paper trail should you be audited.
Luckily, HMRC accepts ‘reasonable proof’ so bank statements are fine (especially for monthly payments). Also, check your phone: your email is a treasure trove of electronic receipts and some apps (for example the Trainline app) automatically store invoices on them. There’s also likely to be some leeway on the types of items you wouldn’t typically receive a receipt: such as street food abroad or second-hand items. “For cash expenses abroad, you claim expenses with HMRC worldwide subsistence rates” adds Mike.
I’ve lost my P60! What should I do?
Those of us who also work part-time, or had tax paid at the source, will need a record of previous earnings. You can find this on your P60 but don’t worry if you can’t locate it: a quick call to HMRC to ask for a statement of earnings will do the trick.
I’ve forgotten all my login details!
You can reset these online. If you are locked out after too many login attempts, you’ll need to wait two hours until you can access them again.
We hope this guide has helped you feel a bit more confident about filing your taxes this year. And just in case you’ve forgotten it, here’s the HMRC services log-in page so you can get started right away!