Tax deadline survival guide for freelancers who need to self-assess by January 31st

Hearing from HMRC that its online filing service is “available for you to file your tax return, at any time you wish,” sounds like reassurance that freelance sole traders could do with at this time of year, writes Amanda Swales, a director of freelancer-friendly accounting platform GoSimple Tax.

After all, 2020’s January 31^st self-assessment deadline is fast-approaching and the New Year is notoriously busy for such unincorporated self-employed traders.

Do YOU need to act before the 31st of this month?

The tax return deadline applies to you and your freelance business if you are self-employed and earned more than a £1,000 in tax year 2018/19 – that means, you earned more than £1k between April 2018 and March 2019.  

The deadline also applies if you’re a partner in a business partnership or if your income in the last tax year was more than £100,000.

Whichever of the above criteria applies to you, HMRC’s ‘always-on’ self-assessment service claim – made in December 2019 -- is reassuring. Right?

Well, sort of. The thing is freelancers; you can’t just land on the HMRC site and expect to checkout straight away without doing any prep! So the Revenue’s online self-assessing service is available -- yes, but no, not at any time you wish if you haven’t ticked-off the following first:

1. Form 64-8; has your accountant sorted it?

If you have an accountant or bookkeeper, you, the freelancer – the accountant or bookkeeper’s client - will likely want them to file your return on your behalf!

So freelancers, you need to ask the accountant or bookkeeper to sign and register HMRC’s 64-8 Form earlier rather than later. It needs to be earlier rather than later to allow your accountant or bookkeeper time to finalise your affairs and gather all the required paperwork. They will then need to complete the return and allow time for correcting any errors.

Once HMRC acknowledge receipt of the 64-8 Form, your accountant or bookkeeper will be officially recognised as your agent by HMRC, and able to act on your behalf. In other words, they can now do your tax return for you!

2. Unique Taxpayer Reference/UTR; have you sorted it?

Of course, you, the freelancer and taxpayer, have your own obligations.

A UTR, which is just one of the many pieces of information we list in the table below for you to be aware of to file in time for the 31^st, is one such obligation.

In fact, every sole trader is required by law to have one and you can’t file a SA return without a UTR. So HMRC’s service may well be always-on, but if you’re URT-less, it might as well be off!

The thing is; you won’t receive a UTR number unless you’re registered as either self-employed or a new business, via HMRC’s website. Some freelancers might prefer telephoning the Revenue to get their UTR number, which is also free of charge.

One less penalty to worry about

As an aside, but relevant if you’re unregistered with HMRC, the tax department once upon time fined people if they were found trading at month three of their new business and still hadn’t registered as self-employed! Now, you have until October 5th after the end of the tax year in which you started your business, to register it. There’s online confirmation here.

Just because there’s no three-month penalty in place, and just because you have until   October in your business’s second tax year, that doesn’t mean you can afford to become complacent. The taxman has a hefty penalty regime and isn’t afraid to use it! Generally with self-assessing, the motto to remember is ‘don’t delay, do it today.’  

What you need to have to hand for self-assessment

Here’s what else you should gather today rather than tomorrow, in advance of Jan 31^{st --} to file yourself -- or to make your accountant’s life easier!

So freelancers, have you sourced or checked all of the following, or do you still need to? Answers for each go in the right-hand columns.

As you can see, with almost 20 pieces of information potentially required before you can complete your self-assessment, it’s less about HMRC being ready, and more about you being ready!

And self-assessment applies to you too, even if you filed a return last year and didn’t have any tax to pay! Believe it or not, and to avoid a costly start to 2020, such taxpayers still need to file a 2018-2019 tax return. The only exception is for the small number of taxpayer-freelancers in receipt of a note from HMRC -- an SA exemption if you like -- stating they need not self-assess. If in doubt about your self-assessment position, speak to HMRC or a trusted tax adviser – ideally one specialising in freelance and self-employed taxation.