7 easy tax tips to save your sanity
If you’ve been in this game a while, you’ll be familiar with the old adage ‘tax doesn’t need to be taxing’. However, having been in this game a while, what you’ll also know is that tax never really stops being taxing, especially when it comes to those two dirty words nobody wants to hear whispered in their ears: ‘tax return’.
December is a funny old month. We’re all counting down to Christmas, mainlining Quality Street and going in hard on the office decorations. But hanging heavy on our shoulders like the Grinch who stole Christmas is the January deadline for self-assessments. In the interest of putting your mind at ease so that mulled wine tastes even sweeter without the tax return woes, here are our top tax tips for freelancers.
1 You can claim more than you think
Hands up if you’ve ever hit Google with a ‘what can I claim tax for?’ search. We’ve all been there. Truth of the matter is that you can probably claim far more than you think. If you purchased something to help run your business, it’s an expense, whether that is a course, a computer or a coffee (and/or many other things not beginning with the letter ‘c’).
2 Don’t wait until the last minute
Contrary to popular belief, they’re not a bad bunch at the HMRC (once you actually get through to them on the phone). But, and it’s a big but, they’re less than helpful when it comes to getting you out of the £100 fine that comes with missing the 31 January deadline. Save yourself the hassle and don’t miss it in the first place.
3 Don’t guesstimate your tax bill
If there’s a fast-track way to spending the first half of 2020 living on beans on toast, it’s under-estimating your tax bill. By working out your tax each week or month, rather than guesstimating and sticking a set amount away, you’ll save yourself a surprise (whether good or bad) come tax return time.
4 Don’t forget to claim for your home office
If you often work from home, the HMRC lets you claim ‘reasonable’ expenses for the privilege. If you’re unsure what reasonable means in this case, a little maths makes it easy; divide your annual electric/phone/water bill by how many rooms you have in your home. This will give you the figure involved in running one room, aka your office.
5 Paper receipts are so last year
Once upon a time, accountants around the UK would spend January buried beneath a mound of paper receipts ceiling-deep. These days, fortunately for anyone who can’t keep their receipts safe for toffee, the HMRC now accept photographs of receipts, so you can upload images straight to your account.
6 Let an app do the hard work for you
There’s an app for everything nowadays and that includes tax. The HMRC has its own app but there are tons of others that have been specially designed to take the hard work out of doing your tax return. QuickBooks is one of our favourites for tracking mileage and receipts to make doing your end of year accounts a walk in the park.
7 Don’t let payments on account terrify you
Believe it or not, the HMRC had the self-employed’s best interests at heart when they created payments on account to avoid us having a massive bill at the end of the year. Not that it feels like it when we’re sobbing into your laptop and deciding which organ you can live without. Don’t panic; call HMRC or complete the online form and they’ll happily come up with a more realistic figure based on fact, rather than prediction.