I submitted my first self employed tax return for Handmade by Holly last week, and after sharing a little celebration snap about it on Instagram (wahoooo I'm so bloody relieved it's done!!) I asked if anyone would like me to write a blog post about it - which lots of people said yes to. This makes me think that I'm not the only one who finds the idea of a tax return super scary and daunting (hopefully it's not just me?!) When I realised I needed to complete one I found it hard to find any 'accessible' information/advice about it, so I really hope this post is helpful (even if just for one person I'll be happy!) I've tried to include as much information as I can, but if there is anything you think I've missed or you want to ask me any questions please do pop me a message (my email is holly--hamilton@hotmail.com) Obviously this is just my personal experience and I only submitted it last week so fingers crossed I've done everything right hehe!


KEY POINTS 

Why did I submit a self employed tax return
People seem to have different opinions on whether you need to do a tax return if your self employed income is below a certain amount. I just want to stress that I don't want to scare any one by sharing this blog post, but all of the advice I've found online (and from people that I've spoken to in 'real' life) is that if you are receiving any form of earnings, whether they're through ebay/etsy/paypal/bank transfer/cash in hand etc, you are legally required to declare this income, no matter how much it is. You are also meant to submit a tax return if your business made a loss, or you only had your business for part of the tax year.
It's also really important if, like me, your business is what you do full time, so that you are actually registered as employed; I honestly don't think I've ever felt worse than when I've been in situations where people have made comments about me not working or living off of my husband for money which is 100% not true (I had to leave my part time job for health reasons last October, you can read more about that and Handmade by Holly in my about me section if you're interested)

Which tax year & deadlines
The tax return I have completed was for the tax year April 2016 - April 2017.
In order to complete a tax return you have to register for 'self assessment' and for this tax year the deadline to register as self employed was 5th October 2017.
I completed my tax return online (which I will definitely do again as it was a fairly easy process) and the deadline for this is 31st January 2018.
If you're wanting to submit a paper tax return the deadline was quite a bit earlier (for this tax year it was 31st October 2017) but I wasn't given the option to do a paper tax return, which I think was because I registered for self assessment fairly late (I registered on 12th September 2017)

Declaring my small business earnings alongside my part time job earnings
For this tax year I was in part time employment until October 2016, so that made my tax return a little more complicated this time. I needed my P45 (which thankfully I had kept in my important documents folder!) as that had all of the information I needed about my part time employment earnings/tax & national insurance.
On my tax return there was a section about my part time job, and a section about my self employed business. When I registered to complete the tax return (self assessment) I had to enter when my business started and whether this was my only income or if I had another job or another business alongside this (I think I've remembered this correctly but it was a while ago I registered!) You have to enter your national insurance number so HMRC already know certain things, for example some details that I wouldn't have known about my university student finance were already entered on my tax return for me.


Step by step of the tax return process

1. Registered for self assessment - As I mentioned above I did this on 12th September 2017 and I hadn't planned to write this blog post back then so I didn't keep a record of what this process was like. I started by googling something like 'self employed tax returns' and I ended up on this website https://www.gov.uk/log-in-file-self-assessment-tax-return You pretty much just need to follow the steps and I found that google is a girls best friend in this process hehe. You receive an acknowledgement once you have registered (I think this was sent via email but I printed it off as I like to have paper records of important documents).

2. Self Assessment Activation Code -  I was then sent a document in the post (this was dated 20th September 2017 so I didn't have to wait too long for it) with an activation code for completing my tax return online. There was a step by step on the letter of how to do this and it had to be done within 28 days.

3. Unique Taxpayer Reference - Towards the end of September I also received a letter with my unique taxpayer reference, which is also needed for completing your tax return online. At this point I did get a bit confused as I was able to log into everything online, but it didn't give me the option to access my tax return - this was just because I was trying to do it too soon after setting everything up though and I needed to wait for the next letter:

4. Notice to complete a tax return letter - I then received a letter (which was dated 28th September 2017, so I really didn't have to wait long; I was just getting myself in a panic!) telling me that I needed to complete my tax return. This letter contained the link for completing my tax return online and it reminded me of the deadlines.

5. Completing the tax return - If you have all of your figures from your income/expenses already calculated (see below for more information on how I do this) then this really doesn't take too long; I'd say about half an hour.
The tax return is split into different sections so you have the option to fill out just one section at a time, save it and then come back to it at a later date. You can also check back over everything you've filled in and make any necessary changes.
Once you've submitted the tax return you still have the option to make amendments (this is something I was really surprised about; I must have checked, double checked, triple checked it a hundred times as I was so worried about making a mistake!)
I filled mine out by myself (I had terrible nightmares about having to spend hundreds on an accountant to help me, so for all of the people who've told me how worried they are about it please, please don't worry - if I can do it I promise you can do <3) you just follow the form and each section has a little '?' help box which gives you more information. Again google is a girls best friend for anything you don't understand and there are lots of help videos on youtube too.

6. Once you've completed your tax return - Once I'd filled mine out it gave me the option to both print and save my tax return, which they recommend you do so you have a record of the file.
I asked my husband to check through it for me before I submitted it, as I always think a fresh pair of eyes are better at noticing any mistakes (thankfully he didn't find any!)
Once you submit the return you receive an email as a receipt of successful submission and this also has a reference number for you. It advises you to wait 72 hours and then you can check what tax you need to pay (or in my case I've actually ended up 25p in credit, wahoo haha!) you can see that your tax return has definitely been submitted, you can still amend the return, you're able to view your 'SA302 tax calculation' which basically summarises your income and tax, and you can also view your tax year overview.


Income and Expenses for my business

Keep spreadsheets!! - I cannot stress how important it is to keep a good record of both your income and expenses for a small business. I did keep a record from when I started Handmade by Holly in May 2016, but I went with the 'old fashioned' way of doing it all in a notebook, and honestly it's caused me so many hours of stress and piles and piles of paperwork over the past couple of months! So if you only take one piece of advice away from this blog post, it's to keep a computer spreadsheet from the moment you start receiving a self employed income (even if it's really low/your expenses are more than your income etc - it's so much better to have it all on file just in case you ever do need it!)

How I keep a record - The system that I now use is to have an 'income' spreadsheet for each month where I enter each payment I receive (I also like to keep a record of the fees I pay to paypal on here) and I add this into a total at the end of each month.
I have an 'expenses' spreadsheet for each month where I enter each item that counts as an expense (see next point) which I also add into a total at the end of each month.
I then also have a spreadsheet for the tax year where I enter my total income for each month, my total expenses for each month and then I subtract the expenses from the income to work out my profit for each month. 
At the end of the tax year I can then find a figure for my total yearly expenses/income/profit and these figures are all you actually need for your tax return (so this is your most important spreadsheet!)
Recording everything like this means that when you come to submit your tax return it won't take you too much time/stress as you've already calculated all of the figures you need :)

Expenses - When you fill out your tax return it gives you a '?' help box on expenses where it advises you of what can count as expenses. 
For my expenses I've included things like the cost of posting my items to my customers (this is obviously my biggest expense), my postage supplies (i.e. postage bags, cellophane, tissue paper etc) and then my supplies for making my items (i.e. teddy bear stuffing, fabric, sewing thread etc) 
I have also heard that if you work from home you can include a percentage of some of your bills for expenses, but I don't know much about this as it's not something I worried about doing as my income is quite low.

My laptop and my folders - I use my laptop for my spreadsheets and I have a lever arch folder for each tax year which contains two polly pockets for each month; one for my income where I print out my Paypal invoices and my monthly income spreadsheet, and the other is for my expenses, where I keep all of my receipts (both from online purchases and shop purchases) and my monthly expenses spreadsheet.

Expenses evidence - So this is maybe the most important point for me - I don't know if I'm going to sound like a total idiot, but if only I'd known this before submitting my tax return, I could have avoided many hours of stress, worry and sleepless nights!
I always imagined that you would have to send HMRC evidence of both your income and expenses. I couldn't work out how this would work with submitting a tax return online; I had visions of having to upload hundreds of files and scan through all my receipts (I know this probably sounds completely ridiculous given the level of tax returns they must receive!) but I'm a very conscientious person and I always think things have to be done 100% precisely (I couldn't work out why the tax return was rounding up/rounding down my figures until James told me to take a chill pill and they just do it to the nearest pound rather than worrying about pennies haha) 
Obviously it's really important to still keep a record and evidence of all of your income and expenses as HMRC could ask to see them (which is something the tax return also reminds you of) but when you're submitting your return you don't actually have to provide any evidence. 


It's safe to say I needed a bar of chocolate once mine was finished haha, but now that I have a better understanding of how they work I know it won't be anywhere near as stressful when I have to do my 2017/2018 tax return :) I really hope this has been helpful <3

Love Holly x

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