This post is here to give some insight into the world of self-assessment, plus tips I’ve learnt from a few years of doing my own tax returns.
This post is split into two parts:
Part 1 talked about registering as self-employed, important dates and types of accounting.
Part 2 (where you are now!) will cover what you need to complete your tax return, plus hints on allowable expenses.
Please note that this post should not be taken as “advice” and is written simply from my own experience. If you have any concerns about filling out your own tax return you should always use official sources such as the UK government website, or look to work with an accountant.
What You Need To Complete Your Return
When the time comes around to filling out your self-assessment, it can be quite a stressful experience. If you’re not organised then you can spend ages looking for the information you need to complete your return. But, if you get ahead of yourself and keep organised, the tax return process is actually fairly straightforward.
In order to complete your tax return you will need the following documentation and records:
- P45 or P60 – if you’ve left employed work part-way through the tax year, you will need your P45, which shows your pay and tax to the date you left. Otherwise, if you’re employed on the 5th April, you will need your P60, which shows your pay and tax for the year.
- P11D – any expenses and benefits you receive from your employed work will be shown on the form P11D.
- Income records – invoices, or a cash book style record of any income you’ve made from your self-employed business (blogging!).
- Expense records – receipts for any expenses you have incurred.
If you claim other benefits, like tips, tax award schemes, meal vouchers, etc. as part of your employed work then you must also keep a record of these, as well as VAT records if you’re registered for VAT through your self-employed business.
Everyone will have their own preference as to how to keep income records. You can keep them electronically in a spreadsheet, or in a traditional cash book – whatever works for you. Personally, I prefer to have paper for everything, so I have a cash book for my income, and keep paper receipts in a 12 pocket file (one for each month). Try one method, and if it doesn’t work for you then you can always change it.
The word “expenses” has come up a few times already in this post, but what exactly counts as an expense? Essentially, expenses are reasonable costs to your business that allow you to do the work you need to do. No you can’t claim those pretty high heels you bought, or your fancy camera that you’ve had since before you started blogging… but you can claim a lot of things that perhaps might not spring to mind right away. Here are some perhaps less obvious business expenses you might be able to claim:
- Equipment – stationery, postage, printing, etc. can all be claimed as allowable expenses. Bought a new laptop specifically for blogging? Or a camera just for use at events and for product reviews? Yes, you can also claim these. Even if they’re not entirely for business use, you can still part-claim. E.g. if you bought a new laptop that you use half of the time for blogging, and half of the time for looking up pictures of cats, you can claim 50% expenses for it. The same also applies to your mobile phone package and data usage.
- Travel and meals – heading into London for events every week can get expensive, and luckily this can also be offset against your blogging income. So keep hold of all those parking and train tickets, and record your mileage for anywhere you drive for business purposes (you can either claim the business proportions of all your vehicle costs, or you can claim “simplified expenses” for this, i.e. a flat rate). You can also claim costs for hotel rooms and meals out if you’re staying overnight for business.
- Facilities – blog from home? Did you know you can claim a proportion of your electricity, broadband, telephone and heating, and even Council Tax and mortgage interest or rent? Work out how many hours per month you use those things for blogging and divide that by the number of hours in a month and you have a percentage that you can multiply by your bills to give you a tax-deductible amount. Or you can claim “simplified expenses” (a flat rate) if you work from home 25 hours or more per month. Handy eh?
- Marketing and Subscriptions – you can claim costs for advertising, giving free samples, website costs, subscriptions to trade or professional journals, and membership to trade bodies or professional organisations. For example, cost of membership to the Health Bloggers Community is tax-deductible!
End of Part 2
That’s all for this two-part post. This should give you everything you need to be able to log on and complete your first tax return. Go through the return step-by-step and with all the above records already taken care of it should be a doddle.
Thanks so much for reading – I hope it’s been useful to you. Remember, if you have any doubts about completing your tax return, you can check the Taxes for Bloggers workshops in the Profit Wizardry course.