The first self assessment is rarely difficult. It is unfamiliar, which is a different problem, and it comes with one genuine trap that catches almost everybody exactly once.
KKB Accounting provides self assessment support starting with the relevant tax year, the income and expense types involved, and the filing date ahead. This is what a first return looks like from the beginning, including the part that surprises people in year two.
The dates that structure the whole thing
The UK tax year runs from 6 April to 5 April. Everything else hangs off that. The online filing deadline for a tax year is the following 31 January, which is also the date any balancing tax payment is due. Paper returns have an earlier deadline of 31 October.
You also need to be registered for self assessment before you can file, and that registration is not instant. Leaving it until January means racing a process that involves waiting for a reference to arrive by post.
The gap between the end of the tax year and the filing deadline is nearly ten months. Almost nobody uses it, and the people who do get two genuine advantages: they know their tax bill far in advance, and they are dealing with an accountant in a quiet month rather than in January.
- Tax year: 6 April to 5 April.
- Register for self assessment as soon as you know you need to file.
- Online filing and balancing payment: 31 January after the tax year ends.
- Filing early tells you the bill early; the payment date does not move.
Records: what to keep and how
The rule of thumb is that you should be able to explain every business transaction to somebody who was not there. That means the record needs to show what it was, who it was with and why it was a business cost.
A separate bank account for the business is the foundation. Without it, every year end includes an archaeology exercise separating a food shop from a client lunch, and that work is both tedious and expensive to have somebody else do.
Capture receipts as they occur. A photograph at the point of purchase takes four seconds and survives the fading till roll in a coat pocket. KKB Accounting works as a paperless practice, so digital capture fits the way the records will be used rather than being an extra step.
Allowable expenses, without the folklore
Allowable expenses are costs incurred wholly and exclusively for the business. That phrase does most of the work, and it is the reason the answers to expense questions are less generous than pub conversation suggests.
Where a cost has both business and private use, only the business proportion is allowable, and the proportion needs to be reasonable and explicable. Working from home, vehicle use and mobile phones are the three that come up constantly, and each has a sensible method for splitting the cost.
Two traps are worth naming. First, entertaining clients is generally not allowable, however business-like the conversation. Second, buying equipment is treated differently from ordinary running costs, so a laptop is not simply an expense in the way stationery is.
When in doubt, record the cost with a note of what it was for and ask before the return is prepared. Getting a category right in advance is far easier than defending a guess afterwards.
- Wholly and exclusively for the business is the test that decides most questions.
- Mixed-use costs are split on a reasonable, explicable basis.
- Client entertaining is generally not allowable.
- Equipment is treated differently from day-to-day running costs.
The second-year surprise: payments on account
This is the one that catches people. If your tax bill is above a modest threshold and most of your tax is not collected at source, you will usually be asked to make payments on account towards the following year, due on 31 January and 31 July.
In practice that means the first January after a profitable first year can require the balancing payment for the year just finished plus the first payment on account for the year in progress. Compared with the bill you had mentally budgeted for, that can feel close to double, and it arrives in the most expensive month of the year.
There is nothing unfair about it once you know: it is bringing you into line with people whose tax is deducted as they earn. But knowing it in June, when you can put money aside, is an entirely different experience from discovering it in January.
This is the single strongest argument for preparing the return early. The filing date and the payment date are separate, and using the gap between them turns a shock into a plan.
Related pages
Questions customers ask
When do I need to register for self assessment?
As soon as you know you have income that needs reporting. Registration takes time and produces a reference you need before you can file, so leaving it until close to the deadline creates avoidable pressure.
What are payments on account?
Advance payments towards the following year's tax bill, usually due on 31 January and 31 July, required where most of your tax is not collected at source and the bill is above a modest threshold. They are why the first January after a profitable year is often much larger than expected.
If I file early, do I have to pay early?
No. Filing and payment are separate. Filing early simply tells you the amount sooner, which is exactly the point: it gives you months to set the money aside rather than days.
Register early, keep the business money separate, photograph receipts as they happen, and prepare the return long before January. Do those four things and the only remaining surprise is one you will have seen coming.
KKB Accounting provides self assessment support built around your tax year, your income and expense types and the filing date ahead. The contact page is the place to start.
