Did you earn more than £1,000 from self-employment in the year to 5 April 2022? If so you need to make sure you’re registered with HMRC, the UK tax authority.

The registration deadline is 5 October 2022. Along with registering your self-employment business, you will have a number called a unique taxpayer reference (UTR), and will need to do your first tax return by 31 January 2023.

If you have started being self-employed more recently and have earned more than £1,000 then you should also be getting registered. Even though the deadline is a while off, it gets it out of the way and means you’ll get updates on things you need to run your business well.

And once you’re registered, you stay registered and don’t need to set yourself up each year.

136,543 people filed their tax return for 2020/21 using a service called Verify, which was run by several banks as well as by the Post Office and a trusted identify platform called Digidentity.

If you were among them, then you will need to file in a new way this year because the service has been withdrawn by HMRC.

One of the main reasons for using this service was that it was useful for people who were not able to get a Government Gateway account – which includes many who don’t have UK issued driving licences or passports.

If you want to continue to prepare your return yourself, you have two main options - set up a Government Gateway account, or use the Express Submit service from our partners at untied (see more below). You could also do it all by hand and send it in on paper – but why would you do that?!

We've assembled untied's top tips to make your tax filing journey plain sailing.

1. Don’t be afraid of tax

There’s lots of support out there and you will know most of what is needed already. If you are unsure about anything, it’s important to seek advice when completing your return to clarify any areas of doubt and to ensure that your submitted return is complete and correct.

2. Get organised

This will help you relax by filing your tax return early without any deadline stress. If you’re already using untied, this is not going to be a problem for you. However, if you’re going to be filing online, you’ll need a whole host of information and paperwork, including:

• Details of your income and any COVID payments
• Your Unique Taxpayer Reference (UTR) and National Insurance numbers.
• Records of relevant business expenses
• Plus (if relevant) your P60 from your employer, P45 if you have left employment in the last year and/ or P11D or P9D which shows any benefits and expenses.
  

3. Know how you earn

Write a simple list of where your money comes from - this could be money you earn through an employer, through self-employment, rental income, bank or building society interest or any recent dividend payments.

4. Work through each source

You’ll find that you’ve got more information than you realise. If you’re self-employed or renting out property, your bank records – especially if connected through a product such as untied – will have a lot of the information. 

5. Claim relevant expenses

HMRC allows you to deduct the costs of certain purchases that are necessary to run your business. This includes mileage if you’re self-employed or renting out property (don’t double claim fuel/car costs) and a working from home share. These costs can be deducted from your profit, and by doing so, will reduce the amount of tax you'll owe. In general, unless something you buy for your business is a capital asset – like a car (which you claim for under different rules) - you can deduct its full cost when working out your taxable profits.

6. Think what’s different this year

This is likely to be COVID. If you’re an employee or self-employed you can get a tax reduction for costs of working from home that aren’t fully reimbursed. You may also have got COVID grants – these will generally be taxable and entered in a special section on your tax return if you’re self-employed. If you're an employee these payments should be included on your P60. untied has a section on how to treat them here and other information can be found online.

7. Keep evidence

It’s good to use the principle of “what will help explain this transaction?” This can be a mix of paper and electronic. You don’t need to send this to HMRC, but need to have it to hand in case there are any queries.
8. File

If you think you’re ready, get your tax return filed. Obviously, you can do your tax return as early as 6 April but if you are not one of those keen beans, we urge you not to wait until 31 January to file your return. The sooner you do it the better! 
9. Set aside money to pay your tax

You can file now and pay later. Once you’ve submitted your return, HMRC will tell you what to pay. You can manage any surprises with your tax bill by budgeting in advance for what you anticipate your tax bill will be and getting ahead if you need to make any payments on account. Set aside a portion of your income every month for paying tax and National Insurance contributions. The payment deadline is also January. 

10. To do all this quicker and easier, use untied 😊

Are you earning through PAYE and have additional tax to pay under £3,000? Then you might be able to pay your tax bill through an adjustment to your tax code, as long as you file your tax return by 30 December.

Nearly 12 million people need to file a tax return. About half of them will be paying PAYE - - ie are employed or receive a company pension. There's a simple way to pay if you file your return by 30 December, which comes a month before the overall 31 January self-assessment filing deadline. 

If you’re employed and have extra income, being able to pay tax due through your tax code is a really efficient and effective way to pay tax, spreading it across the year. It’s also automatic for those people who qualify.

We’d love to see it extended, but for now it’s only available to those people who will already have filed by the end of December, including the 186,000 we expect to be filing during Christmas week.

You can file by filling in forms at HMRC, using an accountant, or quickly and easily with untied. However you file, it’s a good reason to get it done by 30 December.

1. What is self-assessment?

Most people don't need to tell HMRC what they earn. It's dealt with automatically thanks to reporting by employers and other ways of earning money. But some people do need to report what they earn.

The method for doing this is called self-assessment, mainly handled online – either via gov.uk or, more recently, by the likes of untied via an app.

2. Do I need to file a self -assessment tax return?

There are around 12 million people in the UK who need to file a tax return. These include:

• Self-employed people earning over £1,000
• Property landlords earning over £1,000
• Those on higher salaries above £100,000 a year

You can check if you need to send a self-assessment tax return at the HMRC website address: https://www.gov.uk/check-if-you-need-tax-return

3. What do I need before I can do my tax return?

Firstly, you need to make sure that you are registered as self employed. 

 untied helps you register for self-assessment as part of our five-star service.

Then, if you’re using untied, all you need is:

• Your Unique Taxpayer Reference (UTR) – this is a unique 10-digit number that identifies you to HMRC. Everyone using self-assessment should have one as you’ll need it to complete your tax return or if you are contacting HMRC for any reason.
• Your Government Gateway ID – this is your 12-character user ID for accessing HMRC Online Services (this is where you access your tax account). If you don’t have this, you could use untied express submit where we act as a third party and submit your tax return for you.

 If you’re not using untied, you will need to gather the relevant paperwork and documents to fill out your self-assessment form. This may include:

• A P60 from your employer (if you have one) showing your income and the tax you have already paid
• A P45 if you have left a job in the current tax year
• A P11D or P9D which shows any benefits and expenses
• Documents detailing your self-employment income, including receipts, bank statements and accounts
• A summary of any rental income and expenses
• Savings and investment statements showing how much you have earned in interest and other income like dividends

4. How do I do my tax return?

If you’re using untied, all you need to do is tag your income and business expenses and then hit the button to file with HMRC.

If you're not using untied, you’ll need to go to https://www.gov.uk/log-in-file-self-assessment-tax-return and fill in all the relevant sections on all the right forms.

5. What are the tax return deadlines?

The most important deadline is midnight on 31 January. You need to submit your online tax return AND pay your bill for the previous tax year (which includes any first payment on account) by this date.

Other deadlines to be aware of include:

• Register by: 5 October in the second tax year of your business
• Paper tax returns: Due by midnight 31 October
• 2nd payment on account bill: Due by midnight 31 July

6. When do I need to pay my tax if I’m self-employed?

You need to pay the balance of what you owe by 31 January after the tax year that ended on the previous 5 April.

Some people also make advance payments towards their tax bill (which includes national insurance if you're self-employed) in two instalments – the first due 31 January and the second due 31 July. However, you’d only be expected to make advance payments if your previous tax bill was more than £1,000.

7. How do I pay my tax bill?

You can pay any tax owed, safely and securely by bank transfer from within the untied app. It's quick and easy. untied makes sure it has the correct reference and it gets sent to the right HMRC account.

If you’re not using untied, you will need to go to HMRC’s website and select a way to pay including by debit or corporate credit card. Note that corporate credit cards incur a fee. Personal credit cards are no longer accepted. You will need your UTR.

If you want to spread your payments over time, you can contact HMRC to agree a payment plan.

8. Penalties

Leave things too late and you’ll get a penalty if you miss the deadline for submitting your tax return, or if you are late paying your tax bill.

The immediate late filing penalty is £100. You’ll have to pay more if you pay your tax bill late, or if your tax return is more than 3 months late. You’ll also be charged interest on late payments.

So don’t delay! Take care of your taxes today, the easy way, via untied. Go to untied.io for more information!

Step 1 - Get prepared! 
- Know your deadline and plan to be well ahead of it
- Know your details - National Insurance (NI) Number, UTR and HMRC login 

Step 2 - Decide how to file
- Direct with HMRC
- Use an accountant
- Use untied lite 
- Use untied Pro 

Step 3 - File
- Ask any questions, untied users get five star support at support@untied.io
- As soon as you feel ready, file
- Pay your tax 
- And after completing this, sit back and relax!

Here you can find the complete checklist created by the untied team!

untied's pulled together the top reasons why people miss the self-assessment tax filing deadline and what you can do to make sure you hit it with ease.

1. Not knowing the deadline or the requirement to file
Be in the know with untied’s self-employed self-assessment tax hub and read this blog post on the extended deadlines 

2. Not knowing where to start
Take control of your filing with untied’s famous tax checklist

3. Lost UTR – Unique Taxpayer Reference
Check the format with untied and get help to request a reminder

4. No HMRC login
Use untied express submit to file without an HMRC login

5. Worrying about what’s due
untied tells you ahead of time, or see our ready reckoner - you can also make arrangements to pay once you've filed

6. Not having all the information
Use untied to file, and you’re able to submit an amendment if you get new information

The annual deadline for submitting your online 2021/22 self assessment tax return and paying any tax owed is midnight on 31 January each year.

If you then miss the effective deadline, you will be charged an automatic £100 penalty. Around about three quarters of a million people receive this each year.

Our advice to late filers

If you ever find yourself in this situation, this is our advice to late filers:

• Taxes often feel overwhelming but the sooner you start, the better.
• Try your hardest to get your tax return filed and the payments made as soon as you can, to keep the penalties as low as possible
• If you don’t have all information to hand, include provisional numbers and file an amendment later
• If you have a good reason for the delay, you may be able to appeal against the penalty

If you're struggling to pay your tax bill 

If you’re struggling to pay your tax bill, don’t ignore it - contact HMRC as soon as you can, to see if you can set up a payment plan to spread the cost of your latest self-assessment bill. Last year 123,000 people took advantage of the ‘Time to Pay’ scheme. Be aware HMRC will normally expect your tax returns to be up to date before setting you up and the following will normally apply:

• you owe £30,000 or less
• you do not have any other payment plans or debts with HMRC
• it’s less than 60 days after the payment deadline.

Take control of your taxes to ensure you can file on time next year 

If you missed this year’s deadline, make sure you don't make the same mistake next year. untied can help you take control of your taxes throughout the year and shows how much you owe so you’ll never have to miss a tax return deadline again.

Up to 30 million people can reduce their taxes by taking simple steps before the tax year end on 5 April 2023.

It’s nearly the end of the 2022/2023 tax year and there are five things you should make sure you’ve done before it concludes. This will ensure that you don't miss payment dates and any deadlines to claim important allowances and reliefs.

They are:

1. Pay your 21/22 tax bill
2. Reduce your tax bill
3. Make any back claims you may have missed
4. Make sure you’ve submitted your 20/21 tax return
5. Get ready to submit your 22/23 tax return

Learn more here.

You can reduce your tax bill, help others by giving to charity, and build your own financial future with tax-wise ISA and pension investments. For some people, tax savings could more than double what you put in.

Up to 30 million people can reduce their taxes by taking these simple steps before the tax year ends on 5 April 2023.

Five things to do now to reduce your tax bill:

• Donate to charity
• Use your ISA allowance
• Pay into your pension
• Make any back claims you may have missed
• If you’re making big capital gains, think how you can use your allowance

Two other things to think about:

• Make arrangements to pay any tax for 2021/22
• Withdraw money from your Lifetime ISA if you need the cash

Learn more here. 

What is a payment on account?

Payments on account are advance payments made by self-employed, self assessment workers toward their future tax bills.

These payments are paid to HMRC twice a year – on 31 January and 31 July – and are designed to help spread the cost of your tax bill.

They are calculated based on your previous year's tax bill (including national insurance if you’re self-employed) and each payment is about half of that previous year's bill.

But, for anyone newly self employed who has just submitted their first tax return, your first tax bill can be much higher than expected, because you have to pay both the previous year's tax bill, as well as half of next year's tax bill by 31 January. This would be your first payment on account, and after that initial bill, you'll be spreading the payments every six months, so it helps with budgeting for tax.  

Do I have to pay HMRC any payment on account?

Not everybody needs to make payments on account. Some people just need to pay what they owe by 31 January after the tax year ends.

HMRC will only ask you to make payments on account if: 

1. Your last self-assessment tax bill was more than £1,000; and,
2. You haven’t already paid more than 80% of the tax you owe at source (for example if you've paid this through PAYE).

If you need to make payments on account, HMRC will tell you this on your self assessment statement.

When do I need to make a payment on account?

If you need to make payments on account, you need to do this twice a year before midnight on:

• 31 January
• 31 July

How do I make a payment on account? 

We make payments on account super easy for you.

Log in to the untied app to make a secure payment to HMRC, and read more about paying with untied here.

If you're not already an untied user, you can signup here

You can also make a payment via the HMRC website.

Can I reduce my payment on account? 

Because ‘payments on account’ are based on your previous year’s tax bill, HMRC is predicting that your current income will be at least equal to your past income. However, if your income has reduced you can apply to have your payments on account reduced too. Many people may be in this situation if their business profits have been hit by COVID-19 but it’s important to remember that coronavirus support payments need to be factored in as taxable income.

Typical reasons for asking HMRC to reduce your payments on account include: 

• Your business profits are down
• Your other income has gone down
• Your tax allowances and reliefs have gone up
• The tax you have deducted from income at source is more than it was in the previous tax year, for example, if you've moved to doing more full time employment. 

You can ask HMRC to reduce your payments online or by post.

HMRC will ask you to confirm the reduced amount you want to pay. This should be equal to half the tax and class 4 national insurance you expect to have to pay for the year.

How can untied help?

untied gives you the tools, information, and support to help you make the tax choices that are best for your circumstances. We’re on a mission to make taxes fast, fair, and simple. You can sign up for a free untied account by clicking here.

Starting out as self-employed in the UK is relatively straightforward. Many people begin as a sole-trader (another term for running your own business as an individual and being self-employed) whilst they are also working for someone else. This means you can test the water and see whether it suits you before jumping in with both feet.

It’s an exciting time – being your own boss provides you with endless possibilities and a lot of freedom.

untied — the UK’s personal tax app, helps the self-employed stay compliant with their taxes, but here are five key points that you should think about as soon as you can, to make sure things go as smoothly as possible.

Is going self-employed right for you?

Obviously, the decision to become self-employed is yours and yours alone. It can involve taking on risks that need to be weighed up against the potential rewards. Some people love being their own boss, whilst for others, it doesn’t suit them at all.

There are a lot of advantages to self-employment, with potential pros like choosing when and where you want to work; what you do and who you work with; higher earning potential and creative freedom – all of which can result in an improved quality of life.

Decide what business structure is the best for you 

Once you’ve decided that you want to become self-employed, the next thing to consider is how your business will be structured. Options include being a sole trader, becoming a partner in a business partnership or setting up your own limited company.

How you choose to structure your business will affect how much you pay in tax, the level of risk or liability to your personal assets (e.g. your house, personal savings), and also your ability to raise capital from different sources. This makes choosing the right structure a high priority when starting your business.

Read more about the differences between being a sole trader and a limited company.

Register as self-employed with HMRC so you can pay your taxes and National Insurance

If your annual income is more than £1,000 as a sole trader (or from renting out property), then you need to register with HMRC and file a tax return. The deadline to do so is 5 October following the year when you started earning as self-employed. If you've missed the deadline, don't worry, just get your form in as soon as you can.

The quickest way is to register via untied but you can also fill in forms at HMRC.

Work out if you need to pay VAT

Value Added Tax (VAT) is a common item on many bills and receipts. The standard rate is 20%. But is VAT something that every business needs to charge?

Businesses in the UK need to register for VAT only if their annual taxable turnover in the last 12 months or the next 30 days is greater than the VAT threshold. This figure is set and reviewed by the government and is currently £85,000.

Most people start their business as self-employed without the additional admin burden of registering for VAT. You can always choose to register for VAT later as your business and revenue grows, and you get closer to the VAT threshold. 

Keep accurate and up-to-date financial records

If you are starting a new business, it is essential that your financial records – particularly those involving tax - are accurate and up to date. Not only does it make budgeting so much easier, but it is also vital for tax purposes and helps you apply for a mortgage.

untied can help you see all of your finances in one place, so you can take control of your taxes. You can see how much tax you owe in the untied mobile app or in your browser, so you can file your tax return before the deadlines, without any stress. It’s best to keep accurate records of income and what you've claimed as business expenses throughout the tax year so that everything is in order. Do all this and more in the untied app.

If you’re looking to reduce your tax bill, check out what expenses you can claim, and when you’re ready to do your taxes, untied's tax return checklist makes it even easier to ensure you don’t miss anything.

Learn more here. 

 

When does a hobby become a business? You may start off making items for friends and family, then someone suggests that you take a stall at the local craft fair. From this, you get a few commissions, and then go onto Etsy or Not on the High Street.

From a tax point of view, there is no need to register with HMRC so long as your total annual sales are below £1,000. Nothing needs to be reported, and no tax needs to be paid.

Once you hit sales of £1,000, you need to register with HMRC. untied can help you with this or you can do it directly with HMRC.

You have until 5 October after the end of the tax year to register and you'll get something called a Unique Taxpayer Reference (UTR) from them.

This does not mean you'll necessarily have to pay tax on what you earn - if you earn under the personal allowance of £12,500. 

Let's see how this works in practice.

Sally started knitting during lockdown and sold £1,500 online between August 2021 and March 2022. Sally spent £600 on wool and packaging. She knows that this covers the 2021/22 tax year between 6 April 2021 to 5 April 2022. Sally has until 5 October 2022 to register as self-employed and until 31 January 2023 to complete her first tax return. 

Sally has made a profit of £900 (£1,500 of sales less £600 of costs) - but still needs to register as her sales were above £1,000.

Although she has to tell HMRC, and they might instruct her to complete a tax return, there will be no tax due as she has earned under the personal allowance of £12,570, and also falls under the national insurance threshold.

As Sally grows, untied will be here to help. And if you have questions about your hobby to business journey, just drop untied a line!

Anyone who has tried to call the self-assessment phone line will have found that there are still long waits to get through to an adviser.

Callers are currently having to wait , on average, almost 12.5 minutes for their call to be answered, a minute and a half longer than the same time 12 months ago.

To help our users, we did some research into the best times of day to call. We discovered that it was easier and quicker to talk to an HMRC agent towards the end of the week, particularly on a Thursday morning as soon as the phone lines open at 8am, when the wait time is around four minutes. This compares with over 22 minutes at 4pm on a Monday. Some callers were even having to wait for over an hour some afternoons.

We therefore suggest if you are calling HMRC, do it first thing in the morning, on a Thursday or Friday. Otherwise, you may be on hold for a long time before you can talk to someone. At peak times, we also found that callers were being cut off as the lines were too busy. Phone lines are naturally busier, and wait times are longer on the run up to the tax deadline.

The beginning of the year will always be a busy time for the HMRC phone lines because of the tax deadline, so next year, the earlier you can get your taxes in (and get any queries answered by HMRC), the better!

HMRC’s telephone numbers for self-assessment are:

• Telephone:  0300 200 3310
• From outside UK: +44 161 931 9070

There are also other ways to contact HMRC shown on the HMRC website.

Also, before contacting HMRC, do check the phone opening times as they seem to be shorter than previous years.

How can untied help?

untied does research like this so you don’t have to – letting you make the best use of your time! untied also gives you the tools and information to help you make the tax choices that are best for your circumstances. You can sign up for an untied account on this page.

Starting in April 2024, Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) changes will require taxpayers with business or property income over £10,000 to:

• keep digital records;
• report their taxes quarterly to HMRC (instead of only once a year);
• file a final end of year submission

If you’re an accountant or bookkeeper, it will no longer be possible for you (or the taxpayer) to file self assessment returns directly to HMRC via the gov.uk website. HMRC will not be providing this software to accountants. You’ll need to use software that is recognised by HMRC for Making Tax Digital for Income Tax Self Assessment.

Read everything you need to know about MTD in our guide for accountants here.

How do I choose the best software for Making Tax Digital? 

This next phase of MTD will impact more taxpayers than any of the previous MTD phases, so the key here is to think about software that works for you, and to get ready well ahead of time.

Software for you 

We recognise that many practices already use software, from providers such as IRIS, LexisNexis, Wolters Kluwer and Thomson Reuters.

If you like the platform, then as part of onboarding your practice with untied, we will discuss the options to integrate with your existing platform using our powerful APIs (application programming interfaces) that can ‘speak’ to these other systems.

But if you’re looking for something better, untied has an easy-to-use interface for you to manage your personal tax clients. It includes the ability for you to work on their accounts, and to communicate with them about any queries. Documents can also be embedded.

If you use an accountant, they will also need to use software, like untied, to do their client's accounts. 

How does untied stand out? 

untied is built first and foremost to be a next-generation personal tax platform for end users and their advisers. We worked closely with both accountants and their clients to design untied and we are constantly making improvements based on their suggestions. Everything is built around their needs.

We were also the first end-to-end app recognised by HMRC for Making Tax Digital for Income Tax.

Multiple data source 

untied integrates into multiple data sources – including pulling data from HMRC about your clients. Using secure and trusted Open Banking technology, bank account data can be the simplest way to gather the data needed.

However, if you have prepared information outside of untied, it can easily be added as a manual transaction or uploaded via a comma separated value (CSV) file. Don’t worry, we make it as easy as possible for both you and your clients.

Does the software support multiple income streams and other forms in the self assessment? 

It's important to ensure that you can use the same software for everything on the self assessment. untied supports multiple income sources, and other requirements including:

• Employment income
• Property income (including FHL furnished holiday lets)
• Self-employment (trading) income
• Pension income
• Investment income
• Capital gains
• Residency forms including for non-resident landlords

Conclusion

As we said at the start, the best software for MTD ITSA is one that works for you.

We know this is a big decision, and this (maybe slightly biased) article probably isn't enough on its own to convince you.

The next step would be to arrange a live demo to talk to one of our friendly team. Click here to set up a time to chat with us.

Whether you're a full-time freelancer or just doing it to make some extra money on the side, your freelance income is taxable in the UK. You're in the right place to find out all you need to know about taxes, and the specific tax reliefs you may be able to claim.

untied — the UK's personal tax app — helps many freelancers and self-employed consultants take care of their taxes, making filing tax returns simple and easy for hosts just like you!

Do I have to declare my freelance income?

If you’re just dipping your toe in the water or this is a hobby, the good news is that HMRC doesn’t expect you to declare freelance or other income if the total for the year is less than £1,000.

 However, if you earn more than this, the short answer is “yes”, HMRC does want to hear about it! However, that doesn’t necessarily mean you’ll pay tax on it...

Do freelancers have to pay tax?

Everyone is entitled to tax-free allowances, irrespective of what the income source is, whether it’s from employment, dividends, or income from a freelance project. And you’re also able to claim certain expenses. Nonetheless, this must all be declared on the annual self-assessment tax return.

What king of expenses can I claim if I am a freelancer? 

Your profit is the amount left over once you’ve added together your income and taken away the expenses or allowances that you can claim. If you’re a freelancer , the kind of expenses you can deduct if you pay for them yourself is quite extensive and could include:

• office costs, for example stationery or phone bills
• travel costs, for example fuel, parking, train or bus fares
• clothing expenses, for example uniforms
• things you buy to sell on, for example stock
• financial costs, for example insurance or bank charges
• advertising or marketing, for example website costs
• training courses related to your business, for example refresher courses
• A proportion of your costs for things like heating, electricity, internet and telephone use (or you could just use simplified expenses for this)

untied makes it very quick and easy to run through payments you’ve made from your bank accounts, and then tag and list those items that you want to claim as expenses.

Your taxes - untied

The rules do change from time to time. But the good news is with untied you don’t need to be a tax expert.

 The app makes it easy to stay on top of your freelance income and expenses, prompting you to pay exactly what you owe and claim any tax relief you might be entitled to. It’s quick to use, automating repetitive tasks, freeing up your time to spend on your business, rather than on your taxes. You can save even more time by using the app to submit your end of year self-assessment to HMRC directly from your mobile phone. Handy as the 31 January submission deadline is fast approaching!

Sign up for a free trial now – www.untied.io