Stern warning to do your taxes
IT'S THAT time of year again: time for the Freelance to issue a stern admonition, complete with finger-wagging and a frown, to self-employed freelance journalists. Do your taxes!
You have already missed the deadline to send in a tax return on paper for tax year April 2017-April 2018. Now you can only do your tax return for that year online. You have until 31 January 2019 to do this.
If you're unsure of your Government Gateway password to access your HMRC account with the tax people and start filing your tax return online, sort it out now, via the portal above. If you're unsure which is your local tax office, call the HMRC enquiry line on 0300 200 3300 - and have your National Insurance number ready.
If you became self-employed in tax year 2017-2018 and haven't yet registered with HMRC for online tax returns and got a Unique Tax Reference number, contact your local tax office now as you'll need to get a password sent to you by post for security reasons before you can start using HMRC's online portal. HMRC warn that this can take up to a few weeks, although in the Freelance's experience, the password's actually arrived sooner.
HMRC's website has been known to crash under the sheer volume of submitted tax returns in the run up to the 31 January deadline. There are automatic three-figure fines for failing to submit your tax return by the deadline. So don't say we didn't warn you to get a move on.
You may also want to take the opportunity now, before the January rush, to find out whether there are any gaps you need to fill with your "Class 2" National Insurance (NI) contributions. It emerged last year that errors by HMRC and the National Insurance Office meant that in some cases, Class 2 deductions weren't being made. There are limits on how much you can pay in as voluntary contributions and how far back in time you can backdate your voluntary payments.
If you've neglected to pay voluntary Class 2 contributions via your tax return for any period, the resulting holes in your NI contributions history will affect your state pension entitlements.
A threat to abolish the relatively inexpensive (at £2.85 a week) "Class 2s" and replace them with something much more expensive has been postponed, but the fate of Class 2s is uncertain – it could be that you may have little over a year to make good any gaps in your NI payments record before "Class 4s" take their place – 9 per cent of your profits if you make over £8164 a year.
Members who are EU nationals living in the UK - especially the self-employed - should be aware that their application for the EU Settlement Scheme (":settled status") will be based largely on HMRC and Department of Work and Pensions data. Such data will be important to "evidence your residence" - establish that you've been living continuously in the UK for five years. (See more here.) If members from this demographic have tax records that aren't up to date, they should start addressing this now and seek advice.
While you're at it, if you start sorting out your tax records for current tax year April 2018-April 2019 (now in its third quarter), you'll save yourself much hassle this time next year. Don't forget that once you go over your basic tax allowance, the money you earn in self-employment isn't really all yours. This will require some tax planning in anticipation of your next tax return.
- The Freelance is not qualified to give financial advice.