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Tips on Filing Your Small Business Taxes for the First Time in the UK

Andre Spiteri
HMRC tax return form 2017

Filing your small business taxes for the first time can feel like landing in a foreign country. The language is unfamiliar. And you may not be entirely sure how to navigate from point A to point B.

But the truth is that filing your taxes isn't that difficult. All that is needed is a little pre-planning and getting that first one under your belt. Here's how to go about this.

How do I file my taxes for the first time?

In the UK, you can file your taxes online or by post (this is called a paper form). But before you can do this, you'll need to register with HMRC.

Registering with HMRC is quick, easy and free. You can do it on HMRC's website, by phone on 0300 200 3500 or by filling in a form and returning it by post. In all three cases, you'll need your National Insurance number, your personal information and details about your business.

Once you complete your registration, you'll receive a Unique Taxpayer Reference number or UTR. You'll need this number to submit your self-assessment tax return.

When should I register with HMRC?

The simple answer is: as soon as possible after you start your business. However, you have up to the 5 October of your second tax year to register. So, if you started working for yourself on the 7 April 2018, you have up to the 5 October 2019 to register.

When is my first small business tax return due?

The UK tax year runs from 6 April to 5 April. And the deadlines for filing a tax return are 31 October for a paper form and 31 January for an online return. So, the date your tax documents are due depends on when you started your business.

If you started your business between 6 April 2017 and 5 April 2018, your first tax return is due:

  • On the 31 October 2018 if you're filing a paper return
  • On 31 January 2019 if you file online

In contrast, if you started your business on 6 April 2018 or later, your first tax return will be due on 31 October 2019 or 31 January 2020.

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How do I submit my self assessment tax return?

To complete your tax return, you'll need:

  • Your Unique Taxpayer Reference Number, or UTR, your National Insurance number and your personal information.
  • The exact amount of income you've made during the tax year. You should tot up everything you earned from your business as well as other income, for example, your salary from part-time or full-time employment.
  • The exact amount of your expenses. HMRC lets you deduct expenses if you've made them ‘wholly and exclusively' for business purposes. These include your home office, business mileage and other expenses such as business insurance and marketing. It's important to keep a record of everything, including any receipts and a mileage log.
  • Any contributions you made to your pension or charity.

How do I Calculate my Taxes?

If you submit your self-assessment tax return online, the system will tell you exactly how much tax you owe. However, you can also work it out yourself by applying HMRC's income tax rates to your total profit (that's your income less allowable expenses).

You'll also need to pay National Insurance at the following rates:

  • £2.95 per week Class 2 National Insurance
  • 9% Class 4 National Insurance on profits between £8,424 and £46,350
  • 2% Class 4 National Insurance on profits over £46,350

How do I pay my self assessment tax bill?

You can pay your taxes in one of the following ways:

  • Bank transfer, using HMRC's bank details
  • Direct debit
  • With your debit card or credit card (do note that there's a fee if you pay by credit card)
  • By sending a cheque through the post

Now that wasn't as hard as you thought it would be. Right?

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