The FreeAgent Blog

With the 31st January deadline looming you really should be thinking about completing your 2017/18 Self Assessment tax return soon. To help you prepare and save some time, here’s a list of everything that you’ll need to have to hand before you get started.

Unique Taxpayer Reference (UTR)

When you first register for Self Assessment, or when you set up a limited company, you’ll receive a unique UTR number. It’s the 10-digit code you’ll see any letters from HMRC, such as your Notice to Complete a Tax Return.

Government Gateway ID

When you register for Self Assessment you’ll also receive a 12-digit Government Gateway ID, also called your User ID. Keep this safe! If you lose it it can take a while to receive a new one and you’ll need it to access your HMRC online account.

Activation code (for your first Self Assessment)

If this is your first Self Assessment you’ll have received an activation code in the post shortly after you set up your HMRC tax account online using your Government Gateway ID. You need to enter this code in order to complete registration for Self Assessment, get access to your tax account and to file your tax return online.

Be aware that the deadline for registration was last October so if you still need to do this, you’d better hurry! It can take a while for HMRC to send out the relevant information, especially after the registration deadline.

If you filed a tax return last year then don’t worry, HMRC will already be expecting another one from you this year (unless they’ve sent you a letter advising you they don’t want one) and your account will still be active.

National Insurance number

Your National Insurance number is used to record any tax or National Insurance Contributions (NICs) against your name. You can find it on most letters about tax, pensions or benefits and on any payslips or P60s from previous or current employers.

Invoices

If you’re a sole trader or partner in a partnership or LLP, you need to add up all your invoices to calculate your income for the year.

Unless you’re using the cash basis of accounting, remember that you pay tax when you issue an invoice, not when you receive payment. If you issued an invoice in the 2017/18 tax year that wasn’t paid until the 2018/19 tax year, you should still include this amount in your 2017/18 Self Assessment.

Income from other jobs (dig out your P60!)

If you were paid a salary by another employer in the 2017/18 tax year you need to know how much you received, how much was taxed at source and the employer’s PAYE tax reference. These figures can all be found on your P60 so make sure you have this form to hand.

If you received any benefits from your employer in addition to your salary, including expenses that were paid back to you, you also need to enter these figures. You can find this information on your P11D form.

Salary

If you’re a limited company director, you need to know how much salary was due to you from your business in the 2017/18 tax year. Bear in mind that you must pay tax on any salary that was due in the tax year, regardless of whether it was actually paid.

Dividends

For limited company directors who declared dividends between 6th April 2017 and 5th April 2018, you need to include this information on your tax return – even if the dividend wasn’t paid until after the end of the tax year.

You also need to declare dividends payments received in the tax year from companies other than your own.

If you’ve received dividends from a company outside the UK that amount to more than £300, this information needs to go in the “foreign income” section of your tax return.

Bank interest

You need to declare any interest received from bank accounts, so you’ll need to collect all of your bank interest certificates ahead of time.

Exceptions to this are interest from ISAs, which are tax-free accounts, and interest on a limited company’s business account, which will be declared on the company’s Corporation Tax return.

If your bank account is a joint account you only need to declare half of the interest received in the tax year.

Income from rental properties

If you’ve received income from renting out a property, you need to include this as part of your your tax calculation.

Income from trusts

Similarly, you need to declare income from trusts in order to pay the correct amount of tax.

Expenses

Your allowable expenses for the year can be used to reduce your tax bill if you’re a sole trader or in partnership. Find out what you can claim in our A-Z guide of expenses.

Pensions and benefits

You need to declare your overall income from the State Pension and any private pensions if you have received any payments. If you have a private pension, your pension provider will usually tax the payments before they pay them out and send you a P60 detailing the amounts that were deducted.

You also need to declare any state benefits you’ve received, such as Job Seekers Allowance (JSA) and Incapacity Benefit.

Student loan repayments

For student loans, you need to know what plan you’re on and how much of the loan you repaid in the tax year. Check this guide to paying back your student loan when you’re self employed to find out more.

Donations to charities under Gift Aid

Donations you make under Gift Aid are eligible for tax relief. You can even claim relief on donations you’ve made after the end of the tax year up to the date you send your return - but only if you submit your return by the 31st January deadline.

Time to get going!

That’s a long list of things you need to sort so you’d better get started before it’s too late! For more information on completing your 2017/18 Self Assessment tax return, download our complete Self Assessment checklist.

If you’re already using FreeAgent, a lot of the information needed to complete your tax return will be ready and waiting in your account from data you’ve entered throughout the year. When you come to file as a sole trader, up to 90% of the Self Employment form will already be filled in! If you’re a sole trader or a director of limited company you can also submit your tax return directly to HMRC from the app.

Try FreeAgent free for 30 days and save yourself from stress this Self Assessment season.

Already using FreeAgent? Refer a friend and you both get 10% off your subscription – find out more about our referral scheme.

There may be a few residual pine needles and mince pie crumbs lurking around, but 2018 is well and truly over.

Although it might feel a bit clichéd, when it comes to your small business, a bit of annual reflection can be an incredibly valuable exercise.

Here are five resolutions to help blow away those festive cobwebs and kick start a fantastic new year for your business.

1. Review your processes

You probably haven’t reviewed the vital documents and procedures that you initially set up to help your business run smoothly since those early days. Whether it’s a template for a brief, onboarding materials for new clients, or simply the productivity tools you use, January is a great time to take a closer look at your key processes. Push past ‘familiarity blindness’ and make a concerted effort to analyse and review how well these key tools are working for you. Try and talk to your peers for inspiration, as well as a pair of fresh eyes! When it comes to your bookkeeping, FreeAgent can save you time by automating everything from late payment reminders to thank you emails.

2. Take action on late payments

We’re sure we don’t need to tell you how damaging late payments can be, with more than a third of small businesses in the UK waiting over two months to get paid. In case you didn’t know, you are legally entitled to claim debt recovery costs on any late invoices. Consider adding a bit of extra gravitas to your invoices this year by putting a late payment fee clause on your invoice template. Even if your current clients are punctual payers (lucky you!), who knows when this addition might come in handy?

3. Network to get work

When you first start out as a freelancer, you might put a lot of effort into networking; forging connections that will continue to see your business well over the years. Once you find your groove, creating new professional connections might not seem as much of a priority but networking has a huge range of benefits for both you and your business, whether you’re a newbie or a pro. From industry insights and local chit-chat to friendly guidance and support - you might even get some referrals out of it too! Try investigating local MeetUp groups, or opt for a relaxed breakfast event like Creative Mornings.

4. Get active

Whether you work from home, an office, or a co-working space, the nature of working for yourself can mean that you follow quite a different schedule from your 9-5 counterparts, and you might even end up working much more than them! Think about carving out time in your diary every week to get out and be active. Even if it’s just the odd walk around the block, the time you dedicate to your physical wellbeing should have a positive impact on your mental wellbeing and your work life too.

5. Invest in yourself

When you’re managing your own finances, it can be tempting to tighten those purse strings and cut back on spending as much as possible. Investing in your own development can easily fall by the wayside but topping up your existing skills, as well as learning some new ones, can really pay off in the long run. If you’re looking for inspiration, try checking out Udemy or the Open University for flexible learning courses that will fit around you. Alternatively, there are also lots of wonderful free resources out there, like Memrise or FutureLearn.

Looking to get your bookkeeping in shape this year? Discover how FreeAgent can help you master your daily business admin.

Every year around half of the invoices sent by small businesses get paid late, meaning that some people are waiting months - or even years - to receive money they’re owed. In a survey that we conducted last year, one in ten small business owners told us that they’d had the horrible experience of a client never paying them at all*.

We’re passionate about helping our customers tackle this problem. We introduced late payment Insights into our software last year to allow our customers to identify clients who regularly settle their invoices late. Now we’re excited to unveil another big step on our mission to make late and non-payment a thing of the past.

We’ve teamed up with our friends at Nimbla, a company that helps small business owners by checking their clients’ credit reliability and offering insurance against invoices that are deemed to be at risk as a result of a client’s bankruptcy or insolvency.

If you’re a FreeAgent customer you can now link your account to Nimbla to get an instant review of the potential credit risk posed by your late-paying clients, and then decide whether to insure yourself against any outstanding invoices.

It’s a really exciting partnership for us and one that we hope will help to protect our customers from the risk of non-payment and keep their cash flow healthy. You can find out more about Nimbla and sign up for a free account here

*Survey of UK small business owners conducted in spring 2018 with 594 total respondents.

The festive period is a great time to take a break and recharge your batteries. You may be looking forward to some well-deserved downtime but if you’re keen to take advantage of a quiet period in your business and catch up on some admin, this could also be a great time to roll up your sleeves and get started on your 2017/18 Self Assessment.

Tackling your tax return over the festive season might sound like a step too far, but it’s becoming an increasingly popular option. Last year, almost 16,000 people filed their tax return with HMRC between December 24th and 26th, and that includes 2,500 people who filed on Christmas Day!

Although it might not be the best time of year for everyone, there are some great reasons why you might want to think about tackling your Self Assessment over the festive period if you get the chance.

You may have more time and fewer distractions

Many businesses face a slight slowdown during the festive season - especially on Christmas Day and Boxing Day when clients are usually having a break too - so this can be a good opportunity to get your ducks in a row for January. Whether it’s gathering your figures together in order to get your Self Assessment started, or making some headway with filling out the forms, you’re likely to get more done while your clients are taking some time off and the phone isn’t ringing off the hook!

You should be less likely to make mistakes

If you're rushing to pull everything together in the weeks or days leading up to the Self Assessment filing deadline of 31st January, you’re far more likely to enter incorrect information or accidentally forget to include something important. Getting started nice and early over the festive period means you’ll save yourself the stress and worry of trying to pull all your figures together in a hurry.

You could take time out from Christmas stress

Tired of turkey? Bored of board games? Sick of squabbling? Self Assessment may not be the most enjoyable task in the world, but when Christmas starts to feel a bit much, it’s a great reason to excuse yourself from the festivities and have some quiet time away from the hubbub - and the best part is you’ll make some progress on your tax return while you do it!

You’ll have a more productive (and peaceful) January

At the start of a new year, many freelancers and small business owners make resolutions and seek to implement long-lasting changes in their businesses. For you, that might mean reviewing your profit margins, taking on new clients or branching out into new markets - but it’s unlikely that you’ll be able to make that fresh start with the prospect of an outstanding tax return looming in the background. By completing and filing your tax return over Christmas, you’ll have all of January to concentrate on preparing for 2019 and getting your business off to the best start in the new year!