We’re pleased to present our article in partnership with Ember. Ember combines intuitive accounting software with on-demand support from qualified accountants in one easy-to-use app, making managing your finances simpler, smarter and cheaper. Ember's monthly plans are available to sole traders and limited companies. Malt users receive an exclusive 20% discount for 12 months on all Ember plans. Access the offer from Ember here.
For those who’ve been riding the self-employed wave for a while, filing for a Self Assessment tax return is just a natural, although time-consuming, part of their jobs. But for many other freelancers and independent consultants, it could be a daunting experience.
Thanks to our partnership with Ember, the all-in-one tax and accounting solution for freelancers and small business owners, it doesn’t have to be.
This time, we asked Ember to provide helpful nuggets about Self Assessment, such as documentation requirements, timelines and payment expectations. So, let’s start with some basics to help us paint a bigger picture.
To complement the guidance in this article, we also hosted a live session on this topic, featuring a Q&A with Steve Anderson, Head of Accounting at Ember. You can watch the replay here.
What is a Self Assessment tax return?
Simply put, a Self Assessment is HM Revenue and Customs (HMRC)’s way of collecting Income Tax and National Insurance contributions (NICs) from sole traders, limited company directors and taxpayers under exceptional circumstances (we outline what some of these are below).
The majority of employees pay their taxes through PAYE, otherwise known by its full moniker as Pay As You Earn. This system is a way for HMRC to collect Income Tax and National Insurance from employees at source, deducted from their salaries whenever their employer runs payroll.
For the taxpayers who aren’t on PAYE, they’ll need to file a tax return to HMRC, declaring their income and business expenses from the relevant tax year. From the information submitted, HMRC can then calculate how much tax they owe, and whether they’re eligible for any tax breaks or benefits.
For the 2023/24 tax year, HMRC must receive your tax return by:
- 31st October 2024 – if submitting a paper copy
- 31st January 2025 – if completing an online return
Who needs to file a Self Assessment?
If you’re a small business owner, you’ll need to file a Self Assessment if:
- Your self-employment income was more than £1,000 before claiming allowable expenses
- You’re a partner in a business partnership
- Your income from savings or investments was £10,000 or more before tax
- You earned more than £2,500 in untaxed income from tips or commission
- Your income from renting out property was more than £2,500 (you’ll need to contact HMRC if it was between £1,000 and £2,500)
- You need to pay Capital Gains Tax on profits from selling things such as shares or a second home
- You’re a company director (excluding directors of non-profit organisations, such as charities)
- You or your partner’s income was above £50,000 and you’re claiming Child Benefit
- You have income from abroad that you need to pay tax on
- You live abroad, but generate income from self-employment or rental property in the UK
- You’re a trustee of a trust or registered pension scheme
- State Pension was your only source of income and was more than your Personal Allowance
- You received a P800 from HMRC saying you didn’t pay enough last tax year
- Your taxable income was above £100,000 — even if you’re an employed individual on PAYE
- You want to make voluntary Class 2 National Insurance contributions to qualify for certain benefits, such as the State Pension)
Not sure if you need to file a Self Assessment? HMRC has a tool you can use to check whether you need to send one off.
How do I register for Self Assessment?
If you need to file a Self Assessment, you’ll first need to register for Self Assessment with HMRC. You can either do this online or by post, although we strongly recommend doing this online.
You can choose to file online or by post. However, to avoid the risk of your submission getting lost or delayed in the post, you may benefit from registering for Self Assessment online.
To register online, you’ll need to take the following steps:
- Sign into your Government Gateway account and add ‘Self Assessment’.
- After doing this, you’ll get your Unique Taxpayer Reference (UTR) number in the post within 10 days, or 21 days if you’re abroad.
- You’ll be sent an activation code in the post to access HMRC’s online services. From there, you can file and submit your Self Assessment.
Keep in mind that if you’re filing your Self Assessment for the first time, you’ll need to register by the 5th of October following the end of the tax year (ie. for the 23/24 tax year, you would need to register by 5/10/24).
What information do I need to fill out my tax return?
By the time it comes to completing your Self Assessment, you could have batches of invoices, statements and receipts stacked up. That's why it's important to keep accurate records that help speed up the time it takes to complete your return. You'll want to keep track of:
- self-employed income (invoices and expenses)
- employment income (P60 or P45, if applicable)
- dividends
- income from shares or investments
- rental income
- pension income
- partnership income
- capital gains
- gift aid
- redundancy payment
- P11D
Completing your Self Assessment
One thing to remember about completing your Self Assessment: there’s a lot of paperwork. The good news is that you don’t need to fill out all of it — just those bits that apply to you.
You can decide to submit your Self Assessment via HMRC’s website. Alternatively, some accounting solutions like Ember allow you to submit your information and have an accountant prepare and file the return to HMRC for you.
Why should I submit my Self Assessment before the January deadline?
- More time to find the funds you need - Although you may decide to submit your tax return early, you don’t need to pay the tax bill until it’s due on January 31st. That means that, by filing early you will know how much you owe months before you have to pay your tax bill, giving you more time to find the funds you need without disrupting your cashflow.
- This is particularly the case if it’s your first Self Assessment submission - it will often be the worst submission you can make from a cashflow point of view due to payments on account. Submitting early gives more time to find the funds.
- More time to get everything ready for filing - As mentioned above, you will need several documents to file your tax return, so it might take some time to get everything ready.
- Avoid costly mistakes - any mistakes can be spotted and dealt with early on, saving you from unnecessary penalties.
- Less likely to miss the deadline and face a penalty - the more time you give yourself to find the funds or correct any errors, the less likely you will be faced with the £100 fee from HMRC if you miss the 31st January deadline. Remember: this can increase further if you’re even more delayed.
- Receive a tax refund earlier - if you’re lucky enough to be owed a tax refund from HMRC, filing early will likely lead to getting repayment quicker. This could be a great relief for you ahead of the holidays.
- More tax efficiency opportunities - getting ready to file early can give you or your accountant more scope to find tax efficiency opportunities for you.
Avoid the Christmas & January stress - waiting until January comes around to file your tax return can be very tempting. In fact, most freelancers do. However, filing early will give you the peace of mind you need over the holidays.
How do I know how much tax I should expect to pay?
When you submit your Self Assessment via HMRC, they will calculate how much tax you owe and tell you the amount you need to pay.
That being said, this approach means you will be left in the dark throughout the rest of the year, with no visibility into how much you’re expected to pay until you get around to filing your tax return.
HMRC has an online calculator that can be useful if you want to get a rough indication of how much your tax bill could amount to. However, their tool assumes you have no other taxable income, and it doesn’t take into account any tax-saving opportunities for you.
How can you benefit from Ember as a Malt freelancer?
If you’re a freelancer doing all your tax and accounting by yourself or you’re tired of paying for an overpriced accountant, then Ember’s tools are designed for you.
Whether it’s showing you how your business is performing in real-time or helping you stay on top of any tax deadlines, Ember’s intuitive app and team of qualified accountants can help simplify tax and accounting for freelancers.
Thanks to our partnership, you can get access to three months of free accountant support + an accounting solution designed for freelancers.
Ember can also help by taking care of your tax return for you. Our qualified accountants will prepare and file your Self Assessment for you, so you can be assured that you’re not leaving any money on the table or making any mistakes that can cost you further down the road.