Your records should contain enough information about each transaction, including the date, amount and description of the income or expense and, where relevant, details of the customer or supplier. This helps show where the figures in your accounts come from and how your tax liability was calculated. Photos or scans of receipts can be useful…
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For self-employed individuals in the UK, having a separate business bank account is generally not a legal requirement. However, keeping business transactions separate from personal spending can make bookkeeping much easier. It allows you to track your income and expenses more clearly and makes preparing your tax return simpler. A separate account can also give…
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If your income has fallen significantly, you do not necessarily have to keep paying the same payments on account as last year. Payments on account are normally based on your previous Self Assessment tax bill. If you expect your tax bill for the current year to be lower, you can ask HMRC to reduce your…
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Starting your self-employed business halfway through the tax year does not mean you only have to deal with HMRC for half a year. The UK tax year runs from 6 April to 5 April, and your Self Assessment covers the income and expenses from the period you were actually trading. For example, if you start…
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If you are new to Self Assessment, your first tax bill may be higher than expected because you may need to pay your tax bill plus the first payment on account for the next tax year. Payments on account are advance payments towards your next Self Assessment tax bill. Each payment is normally 50% of…
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If a rental property is jointly owned by two people, each owner is responsible for their own share of the property income for tax purposes. For example, if two people own a property 50:50 and it generates £20,000 of rental profit, each person would normally have £10,000 included in their own property income. Under Making…
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Under Making Tax Digital (MTD), keeping digital records means more than simply taking photos of your receipts. Your records should contain enough information to clearly show your business income and expenses, including the date, amount, category and nature of each transaction. You should also keep details of your sales, purchases and other relevant financial transactions.…
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Not every expense you pay while running a business is automatically tax-deductible. The key question is whether the expense was incurred wholly and exclusively for business purposes. Common mistakes include claiming personal meals, everyday clothing, private travel or household purchases as business expenses. Some costs can have both business and personal use, such as a…
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Under Making Tax Digital (MTD) for Income Tax, you must keep digital records of expenses that are incurred wholly and exclusively for your business. This can include office costs, business travel, professional fees, insurance, advertising, software, equipment and other day-to-day business expenses. Not every payment needs to be recorded as a business expense. Personal spending…
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If you have registered for Self Assessment but haven’t received your Unique Taxpayer Reference (UTR), don’t submit a new application straight away. HMRC normally sends your UTR by post after registration, but processing can sometimes take longer. Your UTR may also already be available through your HMRC online account or app. First, check your online…
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