ENTREPRENEURSHIP / OCT. 03, 2014
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How to Prepare Your Taxes When Filing for the First Time in the UK

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Filing taxes as an individual in the UK is something that can turn January into a living nightmare. Anyone who has to file a self-assessment tax return must do so by the 31 of January. Last year, about 10 million people were required to do this.

There are no easy ways around this. It’s a combination of organisation and good scheduling. In this article, we’re going to go through how you should go about preparing to file your taxes for the first time in the UK.

Do You Need to File a Tax Return at All?

First of all, you need to determine whether you need to file a tax return in the first place. In short, this form of tax return is for people who have multiple income streams, are company directors, or work as a self-employed contractor. The easiest way to figure out if you need to file a tax return is to figure out whether your income is taxed at source. If your income is pre-taxed, you don’t need to file any form of tax return.

Registering with HMRC

For first timers, you need to register with HMRC. You should aim to do this as soon as you possibly can. You need to make sure you register by the 5 of October following the year you’re registering for. For example, let’s say that you’re self-employed in May 2014. The current tax year would end in April 2015. This means you would have to register by the 5 of October 2015, and actually file your return by January 2016.

You can register by phone, post, or online. The HMRC website has a complete guide on how you should go about doing this.

Claiming Your Unique Identity - The UTR

Your Unique Taxpayer Reference (UTR) is the number you need to use when you pay your tax. Without it, HMRC can’t identify you. You’ll receive this number soon after registering with HMRC. After you get your UTR, register for HMRC Online Services. This is the online filing system everyone has to use.

You’ll also receive a PIN in the post, which allows you access. It’s an extra layer of security that can take up to a week to deal with. This is why you shouldn’t wait too long to think about self-assessment.

Getting Your Numbers Together

To give yourself an idea of what you’ll need to transpose onto your tax return, view the return through the online portal though. This will show you all the numbers and sums you’ll need to take into account. If you don’t have accurate records of all the numbers you need, this can take hours to complete.

Those who have had the foresight to write everything down will find filing tax takes no longer than an hour. Once you’ve sent it off, that’s the end of it. You don’t have to worry about it until next year.

Hiring an Accountant

If all this is too much for you, feel free to pay to hire an accountant. A lot of people advise this for people who have never filed tax before to reduce the chances of something going wrong. If you’re running out of time, we would always recommend hiring someone to take over. On the other hand, if you have plenty of time to register and file your taxes, do it yourself.

It’s good to save money by learning the skills yourself. Of course, if you have a rather complex return, it’s always worth looking for professional help. They could even reduce your overall tax bill!

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