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Filing a paper self-assessment tax return: Tips from a tax expert

27 Oct Filing a paper self-assessment tax return: Tips from a tax expert

Tax can often be considered a complicated and convoluted process for many – particularly for those who may not have the means or capital to hire an expert. For self-employed workers particularly, there are numerous costs and expenses that come into play when it comes to running a business. Amidst the current economic challenges millions of households are facing due to rising costs across the board, Brits are looking to stay financially afloat by any means necessary.

The government’s Making Tax Digital (MTD) scheme is set to make things easier for taxpayers to lodge an online claim – the deadline for this is 31 January 2023. However, there are still instances when some may be looking to file a paper return. If this is the case, the deadline is the 31 October – for those planning to do so, you must act now to avoid a £100 fine. This includes not only filing a return, but also paying your tax bill. Following the £100 penalty, you may also be liable for a fine of £10 a day – up to a maximum of £900. After six months, you’ll get an additional penalty of 5% of the tax owed or £300 (whichever is greater), which is repeated after a year.

In light of this, Tommy Mcnally, leading tax expert with over a decade of experience in the industry and CEO of tax-refund app, Tommys Tax, provides his top tips for self-employed workers to efficiently manage and lodge their returns so they can claim back all the funds that are rightfully theirs. It is also important to keep proof of all your self-employed expenses, as HMRC may ask for them.

Use the trading allowance for self-employed expenses:
You can claim a flat £1000 for self-employed expenses using the trading allowance – if you do so, you won’t need to keep your business receipts.

The alternative is that you can claim every single business expense if your expenses supersede £1000 annually. If this is the case, you will need to keep all your receipts (or bank statements can also work) – it’s important to note that you can’t do both.

Claim 100% of the tax back from the following:
There are numerous components self-employed taxpayers can claim 100% of their tax back on. This includes office rent or co-working spaces, office decorations, laptops and phones for work, antivirus and office software, professional/business insurance, professional/membership subscriptions, office stationery, printing, meals with clients/suppliers, advertising, leasing payments, interest on loans, raw goods for production, hiring workers and buying goods for resale.

Work clothing:
You can claim any item of clothing that is used for work – you can also claim up to £16 a week on washing and dry-cleaning your work clothing.

Working from home:
You can claim tax relief on having to work from home if you’re self-employed. For rent and home repairs, you can claim a percentage back based on the amount of hours that you use your home for work or use the Home Office Allowance. If you’re working 25-50 hours monthly, you can claim £10 per month. If it’s 51-100 houses, you can claim £18 per month, and if its more than 101 houses, the rate rises to £26 per month.

Similarly, you can claim tax back on home utilities such as electric and gas bills, phone bills and internet bills. The amount you can claim at present is £6 per week.

Travel expenses:
For car insurance, fuel and parking fees, you can use the percentage that you use your car for work and keep the invoice in order to work out how much you can claim back. Alternatively, you can use the flat mileage allowance – through this, the first 10,000 business miles can be claimed at a rate of 45p per mile. Over 10,000 miles, the allowable HMRC rate drops to 25p per mile – for motorcycles, it’s 24p per mile. You can also claim tax back on taxi fares, however, make sure to always keep the receipts.

The average amount that can be claimed by a self-assessment worker ranges anywhere from £2000- £3000. Tommys Tax normally caps the expenses at £4500, so unless the customer is a higher earner, the refund amount will not change.