cute accountants

How to file a freelance tax return

Nic EssonInformation Leave a Comment

I thought it might be quite helpful to take away some of the fear that surrounds the annual freelance tax return (I promise to try not to make this too dull).

So you have survived a whole year of self employment and (as you have already registered with HMRC and received your unique tax payer reference (UTR) (if you haven’t then I suggest you google this elsewhere because Im not going to talk you through the whole flipping process)) you have just got the email from the Tax Lords inviting you to submit your return…

There are three options available to you here:
a) spiral in to panic, start heavy drinking and losing sleep and friends
b) pop that email in a file somewhere and ignore it
c) make a pot of tea, grab your fags, shut the office door and get on with it

Personally, I like to go from a straight to c in as short a time as not really an option as they will keep writing to you and although you have eight months to submit it, it’s a good idea to get it ready whilst it’s still fresh in your mind and see what you owe in advance. A good friend of mine told me to save 25% of my earnings to prepare for this moment and it’s solid advice – which I did follow right up until last month when I had to buy a new Mac and now don’t have enough money to pay it all, so case in point for preparing it early.

The tax return itself is actually very simple if, like me, you are using the cash basis and simplified expenses option. This is available if your business is small (ie: one person) as is your turnover (under £82K) and you are under the VAT threshold (same figure). This means you need only keep basic accounting records – essentially ins & outs – and that expenses such as petrol & working from home are charged at the flat rate supplied by HMRC*. This also means that most of the sections on the return aren’t even relevant to you and can be left blank.

I find it easier to print it out, fill it in on paper and check any questions I have online as I go (they have a dummies guide on the site) before entering it properly. Save it (and save a copy to your computer for your records), print out your calculation and submit it when you have the money. It took longer to write this blog than it did to complete it, it really is that easy.

One thing of note, which didn’t happen last year, is that your payment not only includes your tax and both class 2 & 4 NI contributions, but also half of next years bill (the other half is to be paid by the end of July)! This is a nice idea to help spread the cost (no more shitting your pants in December that you don’t have the 25% in your bank account anymore) but was a bit of a surprise tbh and now means that I can’t afford to pay it yet!


*I strongly advise you sign up to their emails and sit through some of their webinars so that you can get the full details of these rates and the answers to any questions you have on expenses.



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