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Coconut is a simple accounting and tax app that makes it easy for sole traders to stay on top of their bookkeeping all year round, and easily share their records and receipts with their accountant through the Coconut Portal.
Coconut software is built specifically for the needs of your smallest clients, simple enough for them to engage with but smart enough to streamline and optimize your practice’s workflows.
Your clients can connect Coconut to 30+ current account and credit card providers so that they can keep all their business records organised. You can run your practice using Coconut for all your self-employed and unincorporated landlord clients, no matter who they choose to bank with.
Coconut provides banking, bookkeeping, invoicing and receipt capture to your clients in one simple tool. We categorise transactions ready for year-end accounts and tax filings in real-time, freeing you up to do the work your clients value most.
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According to some estimates it’s 30% or 40%, while others say the figure is closer to 50%. Whatever the actual percentage, there’s no doubting that many people now in the UK are running their own “side hustle” businesses to earn a few extra bob while holding down their day jobs.
You must register for Self Assessment if you have gross trading income (ie before any expenses have been deducted) of more than £1,000 in the previous tax year or other income worth more than £2,500. If you have other gross income of between £1,000 and £2,500, you need to contact HMRC.
If you are a “side-hustler”, you can pay your Self Assessment tax bill through your PAYE tax code as long as:
● you owe less than £3,000 in tax (you can’t make a part payment to be below this threshold)
● you already pay tax through PAYE, because you’re also an employee or you receive a company pension.
Need To know! To be able to pay your Self Assessment tax bill via PAYE, you must file your Self Assessment tax return online before midnight on 30 December. PAYE stands for “pay as you earn”, which is how HMRC collects Income Tax and National Insurance from an employee’s salary.
Paying Self Assessment tax through PAYE
If you satisfy the above three criteria, HMRC will automatically deduct the tax that you owe through your tax code, unless you tell them not to do so on your tax return. And even if you do want HMRC to collect the tax you owe via PAYE, that obviously won’t be possible if you do not earn enough PAYE income from your paid employment. Moreover, you cannot pay your Self assessment tax bill through PAYE if you’d pay more than half of your PAYE income in tax or it would mean you’re paying more than twice as much tax as you normally would.
How are deductions made?
The tax you owe to pay your Self Assessment tax bill will be deducted from your salary or pension in equal instalments over 12 months, in addition to your usual tax deductions. This means you pay your tax bill in 12 instalments rather than one lump
sum, which can be better for your personal cash flow. It can enable you to better budget to pay your living costs and it’s done automatically, so that gives you one less thing to think about, although, as stated, if you earn taxable income from trading, you will still need to complete and file a Self Assessment tax return. And, crucially, if you choose to file online, you must file your completed Self Assessment tax return before midnight on 30 December, which is one month earlier than for everyone else.
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The weeks leading up to Christmas bring a welcome sales boost to many British businesses, including a large proportion of the UK’s 3.1m sole traders. And although business owners will get a lot of extra festive cheer from selling more and increasing their annual sales revenue, it can bring additional tax-reporting responsibilities, which some sole traders need to be aware of.
If additional Christmas sales do push your annual side-hustle sales income over the trading allowance threshold, what does it actually mean for you?
What is the trading allowance?
The trading allowance is a tax exemption that enables people to earn up to £1,000 a year in trading income from self-employment (eg selling products or services online or offline), casual work (eg gardening, babysitting, decorating, dog walking, etc) or hiring out personal equipment (eg power tools).
If your annual gross income (ie the total amount of money you earn before taxes and deductions) from self-employment, casual work or hiring things out is £1,000 or less, you don’t need to tell HMRC.
That may have been the case for you so far, but if strong sales in the run-up to Christmas pushes your trading income over the £1,000 trading allowance threshold, you need to let UK tax authority HMRC know, which means having to register for Self Assessment.
Registering for Self Assessment
Self Assessment is the system that HMRC uses to collect Income Tax from sole traders, freelancers, members of business partnerships, small private landlords, etc.
If you’ve registered for Self Assessment before, you don’t need to register again, you simply need to reactivate your Self Assessment account by signing in via government website GOV.UK to access HMRC’s online services. You’ll need your Government Gateway user ID and password (GOV.UK explains what to do if you've lost your Government Gateway user ID and password).
Need to know! You must register for Self Assessment before 5 October following the end of the tax year during which you earned taxable income. The UK tax year is 6 April until the following 5 April. Register as soon as possible, because then you’ll have plenty of time to complete and file your Self Assessment tax return before the online-filing deadline (midnight on the 31 January). There’s an immediate automatic £100 fine for missing the online-filing deadline.
When you register as a sole trader, you’ll be registered for both Self Assessment and National Insurance contributions (NICs). Class 4 NICs are payable once your total profits reach £12,570 a year. For the 2024/25 tax year, Class 4 NICs are 6% on profits between £12,570 and £50,270, then 2% thereafter.
What happens after you register for Self Assessment?
After you register, you’ll get your Unique Taxpayer Reference (UTR) through the post within 15 working days (21 days if you live outside of the UK). You’ll get your UTR sooner if you use the HMRC app. Your UTR is a unique ten-digit code that enables HMRC to identify you as a taxpayer.
As stated previously, once registered, each year you must submit a Self Assessment tax return, summarising your taxable income from all sources, as well as any tax expenses, reliefs and allowance you want to claim.
Need to know! As a registered sole trader, by law you must maintain accurate, up-to-date financial records, detailing your sole trader sales and expenses. Most people use bookkeeping software. These records enable you to accurately complete your Self Assessment tax return.
How much tax will you pay?
You don’t pay tax on your first £12,570 of your total income, because this is your tax-free Personal Allowance.
Thereafter, Income Tax can be payable on your sole trader “net profits”, which is your total sole trader sales minus any tax expenses that you wish to claim. HMRC must deem these “allowable” (here are 45 expenses that HMRC does allow). You may also be able to claim other tax allowances that further reduce your tax bill.
Your sole trader tax bill will be determined by the Income Tax band into which your total taxable net income falls. This is net income from all taxable sources, not just your sole trader profits. Your total taxable net income can include income from a full-time or part-time job (although you will have already paid tax on this), share dividend payments, savings interest, pension payments, renting out property or land, etc.
● You’ll pay the basic rate of Income Tax (20%) if your total taxable income is between £12,571 and £50,270.
● You’ll pay the higher rate of Income Tax (40%) if your total taxable income is between £50,271and £125,140.
● You’ll pay the additional rate of Income Tax (45%) if your total taxable income is more than £125,140.
*2024/25 for all figures, England, Wales and Northern Ireland. Income Tax bands and rates are different in Scotland.
Tax returns made quicker and simpler
Even if you have to register for Self Assessment following a bumper Christmas season, if you’re selling on a relatively small scale, your tax bill may be relatively small. If your net taxable income is below the Personal Allowance, you’ll pay nothing. To minimise your tax bill, be sure to claim all of your tax expenses. Recording them all as and when you pay them can be the best way to ensure that you don’t forget to claim any.
Having to complete a Self Assessment tax return every year could well be a new additional faff that you would rather do without, but using good Self Assessment tax return-filing software can make this much simpler, quicker and far less painful. It can cost as little as a fiver a month, which usually proves to be money well spent.
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The nights are drawing in and the weather’s getting colder and wetter. Mid to late autumn is the time of year when we naturally begin to think about winter and take steps to prepare for it.
Not everyone does, of course, which can prove to be a huge mistake. And if you’re one of the UK’s 2.82m private landlords, failing to get your property ready for winter can have disastrous consequences. The winter weather potentially poses a serious risk, even if yours is a well-kept property.
If you’re a UK private landlord and you haven’t already prepared your rental property for winter, you’re fast running out of time. So, what key tasks should be on your property maintenance and repair to-do list?
Speak to your tenants
Your tenancy agreement may allow you to carry out a winter property inspection. If not, introduce one into your tenancy agreements. If your current agreement doesn’t entitle you to access, explaining to tenants that you want to carry out maintenance to better winter-proof their home will hopefully do the trick. Obviously, it’s in their interests, too.
Making such a visit, with due notice given, also enables you to give a friendly reminder to your tenants about their responsibilities (as should be clearly set out in your tenancy agreement). This could be to ensure that leaves are not allowed to clog up drains or that bathroom windows must be opened momentarily to let out steam following shower or bath use to help prevent damp and mould (which won’t be good news for either of you).
Ventilation and insulation
So what should you do during your actual visit to your property? Check that any kitchen or bathroom ventilation fans are working properly and that all vents are clear. Look for mould or damp, which will need some attention if evident.
Also check that pipes are properly insulated, especially those in colder areas, such as lofts and garages, as well as external pipes. This can prevent them from freezing and bursting during very cold weather. Also consider whether the loft could do with better insulation, which can obviously reduce heat loss and heating bills. To save money, check to see whether you can get financial support from the Great British Insulation Scheme.
Heating systems, boilers and radiators
Property heating systems need to work harder in winter, which can cause problems. You should have your boiler serviced each year by an engineer who is experienced, qualified and registered. This should ensure that the boiler is in good working condition and running efficiently throughout the year. Your gas safety certificate must be renewed each year, of course.
Radiators throughout will also need to be checked to make sure they’re working properly. You might need to bleed them to remove trapped air that prevents hot water from circulating properly. If the property is going to be empty, perhaps over Christmas and New Year, tenants should make sure that the heating still comes on for 30 minutes or so every day. Also check that the stopcock in your property is working properly, and that your tenant knows where it is should they need to shut it off during an emergency.
Windows, doors and locks
Make sure that windows and doors open as they should and that they’re well sealed, with draft excluders fitted on doors and windows. Repair and replace where necessary, because broken doors or windows can potentially pose a significant security risk. Crucially, check that all window and door locks are sound.
Roof and guttering
Also inspect the roof of the property for damage or missing roof tiles. High winds during winter can cause damage, which can lead to leaks that get much worse during winter. A pair of binoculars might help you to spot obvious issues from ground level, but also get up into the loft to look for any evidence of water getting in. Inspect ceilings, too. Having to fix a roof can prove expensive, because you may have to also pay for scaffolding to be put up.
Guttering also needs to be in good working order. Over time, leaks can develop in the guttering joints, which can damage nearby walls and create issues with damp or more serious structural issues over time. It’s essential to wait until it rains when checking guttering, because problems will be more evident. Obviously, you also need to ensure that autumn leaves are fully removed from gutters and external drains (window cleaners will sometimes take care of this for a few extra quid).
Smoke, CO2 and security alarms
Check that all smoke and CO2 alarms are fitted and in reliable working order. If there’s a burglar alarm, test it fully. Obviously, do the same if the property has external security lights or security cameras.
Allowable expenses for landlords
To save money, you might do some or most of the maintenance or repair work yourself. If not, and you have to get people in, thankfully, property maintenance and repairs can be claimed as an allowable expense. However, when it comes to replacing doors, windows, etc, you can only replace on a like-for-like basis, you can’t fit more valuable windows or doors.
Installing a new security alarm system can only be claimed as an allowable expense if you’re replacing the previous security alarm system “like for like”. If that would have cost £800 but you spend £1,000 on a superior alarm system, you can only claim £800 as an allowable expense.
You claim allowable expenses by summarising your property repair and maintenance costs within the SA105 supplementary pages of your SA100 Self Assessment tax return. You don’t have to submit invoices and receipts for maintenance and repair costs with your tax return, but keep them safe, because HMRC can ask to see them as proof. Be sure to read 21 expenses you can claim as a private residential landlord.
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There are about 365,000 ordinary (alternatively called general) business partnerships in the UK, which is roughly 7% of the business population. Partners share personal responsibility for the partnership’s debts, while each year they pay tax on their share of the income they receive from the partnership.
In addition, there are also almost 60,000 limited partnerships, where partner liability is restricted to how much partners invest in the business. And then there are about 53,000 limited liability partnerships (LLPs), where partners enjoy protection from business debts should the partnership go bust.
Whatever the partnership type, each partner must report their share of the partnership's income via their own personal tax return, while a return must also be filed for the partnership itself.
What is an “SA800”?
SA800 is the name of the UK business partnership tax return. One of the business partners is nominated to ensure that the partnership’s SA800 tax return is completed accurately and filed before the deadline (midnight on 31 January for online filing). If the SA800 is not submitted before the deadline, each partner must pay an automatic £100 penalty (unless they have a justifiable reason).
The SA800 reports a partnership’s income and details how income was shared among the partners, whether distributed equally or otherwise. As regards an ordinary or general business partnership, the partnership itself isn’t taxed. However, the partners are taxed, based on their share of the business and how much other taxable income they report.
● Partners use the short version of the SA104 supplementary pages (ie SA104S) when filing their SA100 Self Assessment tax return if they’re only reporting partnership trading income and “interest or alternative finance receipts received after tax was deducted from banks or building societies”.
● Partners who cannot use the short version must use the SA104F, which covers all payable possible types of partnership income.
● If someone is a member of more than one ordinary business partnership, an SA104 and Partnership Tax Return SA800 for each must be completed and filed.
Need to know! Your first SA800 will be due when the tax year during which income was earned ended on 5 April. You’ll also need to register for Self Assessment if you’re not already registered. Most people file their completed SA800 Partnership Tax Return and any supplementary pages online. You need commercial tax return filing software to do this, you cannot do it online via HMRC’s digital services.
What information must be included in an SA800?
As well as completing the main SA800 tax return, depending on which taxable sources the partnership earns income from, it may be necessary to complete and file supplementary pages. HMRC does not tell you which supplementary pages you need to complete, the nominated partner will need to do that themselves.
● On page 2 of the SA800, the nominated partner must state whether the partnership made any taxable income from UK property, foreign income and/or disposing of chargeable assets, and state whether any of the partners is not resident in the UK or is a company (partners don’t have to be people).
● Income and expenses for the accounting period must also be summarised, as well as any capital allowances (ie a type of tax relief for businesses).
● The partnership’s turnover, allowable expenses and net profit must also be stated, with a breakdown of costs, as well as any tax adjustments to net profit or loss for the accounting period. If the partnership has made any income through interest, this too must be detailed.
● Individual partner details (name, address, date appointed, UTR and NI numbers, etc) and their share of the profits, losses, income and tax credits must also be detailed.
● The nominated partner must then make a signed and dated declaration on the final page of the SA800 to confirm that the information they’ve given is correct and complete to the best of their knowledge and belief.
● Visit government website GOV.UK to view a blank SA800 Partnership Tax Return.
How do partners report their income?
Each partner must also complete a Self Assessment tax return (an eight-page form called an SA100) with supplementary page SA104 to report their share of the partnership income. Depending on whether they earn income from other taxable sources, other supplementary pages may need to be completed, for example, SA105 (UK rental income), SA108 (capital gains), etc.
HMRC will then assess the SA100, SA104 and any other supplementary pages to work out overall taxable income and tax due. Deadline for paying any tax owed is 31 January, one year after the online filing deadline. If you want any tax you owe to be automatically taken from your PAYE wage or a pension, you must submit your tax return online by 30 December. Partners may have to pay interest and a late-payment penalty on any tax they pay late.
● Completing and filing your SA800, SA100 and any supplementary pages is much easier, quicker and cheaper with GoSimpleTax. Sign up now for a FREE trial to find out why so many other business partnerships and partners in the UK save time, effort and money with GoSimpleTax.
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Many sole traders aren’t really that interested in accounting and tax, certainly not the technical stuff. Life’s busy enough when you’re running your own business, you’ve a long list of things to do and most of them are more interesting and enjoyable than tax.
But there are times when you need to understand the jargon and new rule changes, because they impact you. “Basis period reform” is an example of this. If you’re a sole trader, business partner or plan to start your own sole trader business, basis period changes introduced in April 2024 may well affect you. If yours in a relatively new business, you might even lose out on tax relief.
What is the basis period reform?
● The “basis period” is the 12-month accounting period you’re taxed on, based on the figures you report to HMRC via your Self Assessment tax return.
● From the 2024/25 tax year, the basis period reform means all sole traders and business partners must use the UK tax year – 6 April to 5 April – as their basis period.
● Special transitional rules will apply in the 2023/24 tax year. As a result, some taxpayers will report profits on their 2023/24 tax return for more than a 12-month period, which could result in additional tax to pay over five tax years (2023/24 to 2027/28).
Why was the basis period reform introduced?
● Sole trader businesses can choose their own accounting periods and often it’s the same as their basis period. So, a basis period could be from, say, 1 July to 30 June or 1 October until 30 September.
● HMRC says it has introduced the basis period reform “to create simpler, fairer and more transparent rules for allocating trading income to tax years”. Previously, two very similar businesses could have very different tax bills simply because their accounting dates are different. HMRC says it wants to end this by making things fairer for sole traders and business partners.
Will the basis period reform affect you?
If your business accounting period doesn’t end between 31 March and 5 April, the basis period reform will affect how you report your business profits to HMRC via your Self Assessment tax return.
● You’ll need to use the UK tax year (6 April to 5 April) as your basis period. You’ll include and pay tax on income and cost figures from between these dates, regardless of your business’s accounting period.
Can you claim Overlap Relief to reduce your tax bill?
If your accounting period ends between 31 March and 5 April, the basis period reform won’t affect you – unless you have unused “Overlap Relief”.
● Overlap Relief can reduce your tax bill. It’s based on “Overlap Profits”, which can arise if your business’s accounting period hasn’t always ended between 31 March and 5 April. This can happen in the first couple of years of a business starting or in any year when the sole trader, partner or their accountant changes the accounting period.
● If you have Overlap Profits, you must use all of your Overlap Relief in the 2023/24 transition period, otherwise you’ll lose it. If you’re not sure, find out if you’re due any overlap relief.
● HMRC has published guidance on when and how to include “Overlap Relief” in your 2023-24 Self Assessment tax return and how to find out your Overlap Relief figure. You’ll then be able to work out your transition profit (HMRC has created an online transition profit calculator for sole traders).
● You should do this long before you need to complete your Self Assessment tax return ahead of the online filing deadline of 31 January. In fact, you can complete and file your 2023/24 Self Assessment tax return now.
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At Coconut, we’ve designed our platform specifically to simplify bookkeeping and tax filing for accountants and their sole trader and landlord clients. From automatically categorising transactions to generating reports that make tax season stress-free, Coconut is here to help you work smarter, not harder.
Join our free Partner Programme as an AIA Member, you will receive an additional 10% discount on top of our direct offers, complemented by seamless client onboarding and a dedicated Account Manager.
So, you’ve finally decided to up sticks and go and live overseas. Maybe it’s the British weather, the cost of living or simply that you can no longer resist the appeal of living in another country (probably one with sunnier weather). Perhaps you’re already living the dream in another country. Moving overseas means you’ll be able to leave behind many things, but paying UK tax may not be one of them.
What UK tax do expats pay?
As a “non-resident” expat, UK Income Tax may still be payable on pension payments you receive, as well as land or property rental income, savings interest and wages from UK employment.
If you’re eligible for Personal Allowance, you won’t pay UK Income Tax until your annual taxable income is more than £12,570 (2024/25 tax year). If it’s above £100,000, the Personal Allowance decreases by £1 for every £2 increase in net income until it reaches £125,140, after which you won’t get any Personal Allowance.
Expats do not usually pay UK tax on gains made from selling an asset, unless it’s UK property or land. And non-residents don’t pay UK tax on State Pension payments they receive or interest from UK government securities (‘gilts’).
A word of warning. Income Tax is not automatically deducted from interest on savings and investments, you must report it via Self Assessment and pay any tax due. The amount of tax you pay on your taxable UK income will be determined by the Income Tax band into which your overall taxable income falls.
Need to know! The overseas country in which you live might tax you on your UK income, but you may be able to claim UK tax relief to avoid being taxed twice, if the country has a “double-taxation agreement” with the UK.
What about UK tax on income earned overseas?
If you are not resident in the UK and you have foreign income or gains during the tax year, you won’t pay UK tax on this income.
If you later become UK resident and you bring your foreign income or gains to the UK, you may be required to report this to HMRC via a Self Assessment tax return. You can either pay UK tax (which you may be able to claim back if you’ve already paid tax overseas on the same income or gain) or claim the “remittance basis”.
How to report your taxable UK income
Need to know! The deadline for filing your Self Assessment tax return online is midnight on 31 January following the end of the tax year during which you earned UK taxable income. The UK tax year runs from 6 April until the following 5 April. There is an automatic £100 fine if you miss the filing deadline.
Registering for Self Assessment
Before you can submit a Self Assessment tax return, of course, you’ll need to register for Self Assessment (the system HMRC uses to collect Income Tax). If you’re not already registered, you need to do it before 5 October following the end of tax year (5 April) during which you had taxable UK income. If you don’t register in time, HMRC could charge you a penalty.
If you’re not self-employed, but live overseas and have UK taxable income to report, to register for Self Assessment you complete form SA1 (online or offline).
Top tip! Before you start the Self Assessment online registration process, make sure you have all of the information you need to hand. You’ll need to tell HMRC your full name, postal address, date of birth, daytime telephone number and UK National Insurance number. You’ll also need to explain why you need to register for Self Assessment and give the date from which you started earning taxable UK income.
After you’ve registered, normally HMRC will contact you within 21 days (it can take longer during busy periods). Register online and you may be able to get your Unique Taxpayer Reference (UTR) number sooner using the HMRC app or your personal tax account. You’ll need your UTR to complete your Self Assessment tax return.
Need to know! If you’ve registered for Self Assessment previously, but did not send a tax return last year, you’ll need to register again to reactivate your UK tax account.
Letting HMRC know that you’re moving overseas
You must tell HMRC if you’re leaving to go and live overseas permanently or you’re going to work in another country full-time for at least one full UK tax year.
If you don’t usually complete a Self Assessment tax return and you’ve already left to go and live in another country, you need to fill in form P85 online. If you’re still in the UK, fill in form P85 offline and include Parts 2 and 3 of your P45 form (if you’re employed in the UK).
If you normally complete a Self Assessment tax return, because you’re self-employed, a landlord or need to report other taxable income, you must also complete the resident supplementary page (form SA109) to report your residence and domicile status, if you’re now living in another country. You must use commercial filing software to do it because you cannot sign in from overseas to do it online.
You could pay a UK accountant to take care of your UK tax returns, but using commercial filing software to do it yourself is simple enough and it could save you hundreds of pounds a year.
Coconut Free Accountants Portal.
At Coconut, we’ve designed our platform specifically to simplify bookkeeping and tax filing for accountants and their sole trader and landlord clients. From automatically categorising transactions to generating reports that make tax season stress-free, Coconut is here to help you work smarter, not harder.
Join our free Partner Programme as an AIA Member, you will receive an additional 10% discount on top of our direct offers, complemented by seamless client onboarding and a dedicated Account Manager.
According to the Centre for Ageing Better, life expectancy has tripled over the course of human history. In 1840, when infant and child mortality rates were still very high, the average life expectancy for a British man was just 40 years and it was 42 for a woman. By 1951, this had increased to 66 and 72 respectively.
Fast forward and according to official ONS figures, a man aged 65 in the UK in 2020-22 could expect to live until he was 83, while a woman could hope to live until she was 85. With people living longer, we all need to better prepare for our retirement – including the UK’s 2.8m landlords.
What are your pension options?
You may still be some way off retirement and want to know more about private pensions. There are no restrictions regarding how many private pension schemes you can pay into or how much you can pay, although both will be determined by how much you can afford. The good news is, your private pension contributions are tax-free if they’re not more than 100% of your annual earnings or more than £60,000 a year.
There are two main types of private pension scheme: workplace pension (arranged by your employer, which you and they pay into) and personal/stakeholder pension (which you pay into, while your employer may also pay into it as a workplace pension scheme).
Did you know? You can use the Pension Tracing Service to trace lost pensions that you’ve paid into.
Personal pension key facts
The new State Pension is the weekly payment you’ll receive from the government when you reach State Pension age (currently 66 for men and women, although this will increase). How much you receive depends on your National Insurance contributions and credits.
Need to know! Rather than putting money into a pension scheme, extending your property portfolio with more buy-to-let properties could provide greater returns for your retirement. Seeking professional advice is recommended, because the value of all investments can go up and down. If you don’t sell a buy-to-let property before you die, it could be subject to inheritance tax.
Taxable retirement income
Retirement income can come from many sources. In addition to the State Pension, this can include income from a private pension (workplace or personal). It can also include taxable income from employment or self-employment, should you decide against retiring completely, as well as returns from investments, savings interest, taxable benefits, selling assets and rental income.
You will only pay tax if your total taxable income for the year goes over your Personal Allowance (£12,570 for the 2024/25 tax year). The amount of tax that you pay will be determined by the Income Tax band into which your total taxable earnings fall.
Need to know! Usually you can take up to 25% of the amount in a pension (up to a maximum of £268,275 if you have a really good one!) as a tax-free lump sum.
Normally, your pension provider will deduct any tax you owe before they pay you, including any tax payable on your State Pension. It’s your responsibility to pay any tax you owe on other taxable income and that means having to complete an annual Self Assessment tax return. If any tax is payable on investment income, HMRC will work out how much tax you owe and tell how to pay it.
Did you know? If you decide to carry on working when you reach State Pension age, you won’t pay National Insurance contributions.
To sell or not to sell?
When you retire, you could decide to hang on to your rental properties. You’ll pay tax as before, if your total taxable income goes over your Personal Allowance (and Property Allowance if you don’t claim property-related tax expenses).
You really need to crunch the numbers to see whether rent and your other income will give you enough to live comfortably post retirement. Landlord costs are increasing all the time. There are many factors to consider before you sell off your rental property, including economic conditions, demand for rented property, interest rates, property prices, timing and your tax liabilities.
Need to know! It’s wise to seek guidance from experienced professionals so that your property, pension and tax decisions are guided by reliable information and tailored advice.
You don’t have to sell all of your rental properties, of course. You might decide to sell one or more to give you a nice lump sum, so you can buy a lovely retirement property and go on a few dream holidays or possibly invest in other assets (spreading risk can be a wise strategy).
Did you know? You can invest up to £20,000 tax-free each tax year in a Stocks and Shares ISA (2024/25 tax year). If you complete a tax return, there’s no need to declare any interest, income or capital gains on your ISA.
Capital Gains Tax
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Just how quickly has this year flown by, eh? It’s something that you may well have heard, if you haven’t said it yourself. Maybe it’s something that you notice more the older that you get.
The Olympics are a distant memory (great weren’t they?), the cooler weather has arrived (brrrr!), the kids are back at school (hurrah!) and the football season is well underway again (hurrah!). The final quarter of the business year will also start on 1 October, just a month before Halloween and Bonfire Night, then it will be less than eight weeks until Christmas. Gulp!
October’s arrival will also mean the Self Assessment tax return online-filing deadline is just 16 weeks away. And if the speed that the year has already flown by is anything to go by, the online-filing deadline will soon be upon us, especially with the demands of the run-up to Christmas to come.
Time to get organised
You can of course get your Self Assessment tax return off your plate now, which makes perfect sense. You don’t have to wait until December or January to do it, in fact, you could have filed it anytime after the start of the new UK tax year on 6 April.
Getting it done and out of the way now means you can get on with other things, without having the unwanted added headache of having to complete your tax return in December, with so many other things going on pre Christmas. Or worse still, you could leave it until January, when you’ll be battling the fast-approaching online-filing deadline (midnight on the 31). If you miss it, of course, you’ll have to pay an automatic £100 fine, which is hardly a great way to start the new year.
Tax returns made easier
If you use accounting software, which you regularly update with your business income and tax expenses, your Self Assessment tax return will be much easier to complete. The main summary sole trader figures that you’ll need will be easily accessible. If you don’t use accounting software, gathering together and totalling up your sole trader income and tax expenses will take much longer (especially if you have to wade through an unruly mountain of sales receipts and invoices).
Don’t opt to complete a paper tax return, because it takes much longer and it needs to be filed before midnight 31 October. It’s little wonder that fewer than 3% of taxpayers choose to file a paper Self Assessment tax return. Doing it online is a far better option, plus the deadline is three months later.
To speed things up when completing your Self Assessment tax return, you’ll need other information, such as your ten-digit UTR (ie Unique Taxpayer Reference), your National Insurance number, summaries of your other taxable income and expenses, which could include dividends, interest, pensions, rental income, capital gains, etc.
You’ll also need details of any contributions to charity or pensions for which you wish to claim tax relief, while if you also earn income from employment, you’ll also need your P60. Your P60 shows how much tax and National Insurance you’ve paid, which you’ll need to include in your Self Assessment tax return, if relevant.
Saving time with filing software
You can complete your Self Assessment tax return online by signing in via Government Gateway to access HMRC’s online services. However, using commercial Self Assessment tax return filing software really can make things quicker, easier and it’s much cheaper (£5 a month) than using an accountant.
Tax return-filing software can prevent simple mistakes, such as not completing necessary supplementary tax return pages or not filling in all relevant boxes in the return, because the software provides prompts and holds your hand throughout the process. Tax return-filing software can also ensure that you claim all of your tax allowances and reliefs, which will help to minimise your tax bill.
By using good tax return-filing software, you should be able to get the job done in a couple of hours or so. Then you can forget all about your tax return for another year and use your precious time to do something more enjoyable. How great would that be?
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Answers to frequently asked questions about completing and filing Self Assessment tax returns for previous tax years.
Why might I submit Self Assessment tax returns for previous years?
A common scenario is where HMRC has issued a notice to file a Self Assessment tax return, but someone hasn’t done so on time and they are late. Alternatively, HMRC may have become aware that someone has income from previous years that they haven’t reported, for example, income from trading on eBay or from renting out a house or land, when HMRC would issue tax returns for previous tax years.
How far can I go back with my Self Assessment tax returns?
Normally, you can only submit three years’ worth of late Self Assessment tax returns. So, for example, in the 2024/25 tax year (ie from 6 April 2024 to 5 April 2025) you may submit returns for 2023/24 and three late returns – 2020/21, 2021/22 and 2022/23.
Can I go back any further than three years?
In some cases, HMRC may indeed allow you to file older Self Assessment tax returns. It depends. You’ll need to contact HMRC and explain why you want to submit a Self Assessment tax return (or more than one) for earlier tax years. Then you’ll be told whether you can or cannot.
How can I get Self Assessment tax returns for previous years?
You’ll need to contact the Self Assessment helpline. HMRC should then be able to make sure that you have the Self Assessment tax returns you need for the earlier tax years. Self Assessment tax returns for previous years will not be accessible to you online via your online tax account until you have requested them from HMRC.
What if my Self Assessment tax record has been closed?
If your Self Assessment tax record has been closed, you’ll need to register again for Self Assessment to reopen the record if possible or arrange for a new UTR to be allocated. Your UTR (Unique Taxpayer Reference number) is a 10-digit code that HMRC uses to uniquely identify you or your business when dealing with your specific tax matters.
So, can I access and complete tax returns from previous tax years online?
You can if you’ve contacted HMRC to request them. Then when you log into your tax account there will be an option for “more Self Assessment details” or “tax return options”, which will allow you to select Self Assessment tax returns for previous tax years.
Will I have to pay a late filing penalty?
If HMRC has issued a notice to file a Self Assessment tax return and you have failed to do so, yes, you will need to pay a Self Assessment tax return late-filing penalty of £100. Where HMRC has issued a notice to file after finding out about taxable income that you should have reported, it may give you three months to file from the date of issuing the tax return(s) before any penalties are charged, but decisions are made on a case-by-case basis.
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What’s not to love about Australia? The seemingly continuous warm, sunny weather means people can enjoy their lives in the great outdoors for most of the year. Australia’s cities are ultra-modern and the natural environment is stunning, especially the beaches, which attract huge numbers (85% of Australia’s population live within 30 miles of the coast).
Brits love the land Down Under. There are no language issues, Aussies are a friendly, informal bunch, their culture is similar and many Brits have relatives and friends already in Australia. Reportedly, the number of UK citizens moving to Australia is at its highest level since 2012. Moving there allows Brits to leave behind the UK gloom, start a new life and enjoy better opportunities.
Moving to Australia can enable you to work fewer hours, earn more money and buy a nice house or flat, which isn’t possible for many young people in the UK. Australia is a great country to work, rest and play, which explains why more than 1.1m UK-born people now call Australia home. That’s 15% of Australia's overseas-born population and about 5% of its total population. If you’re thinking about moving to Australia, you’ll have many basic questions and want to know whether you’ll pay any UK tax.
Telling HMRC that you’re moving to Australia
You’ll need to tell UK tax authority HMRC if you’re leaving to go and live in Australia permanently or you’re going to work there full-time for at least one full tax year (ie 6 April to 5 April).
Top tip!
You must also tell your local council of your plans to leave the UK to live in Australia, so that you’re not charged Council Tax. Your UK citizenship will not be affected and you can usually vote in UK elections.
Paying tax if you’re non-resident
If you’re “non-resident” in the UK for tax purposes, no UK tax is payable on any income or gains that you earn or make in Australia.
Double taxation agreement
If you’re a non-resident in the UK for tax because you’ve moved to Australia, check out the double taxation agreement (DTA), because UK tax may still be payable on UK income. Look at the DTA between Australia and the UK:
Need to know! Seek professional guidance if you do not understand how to apply the DTA correctly. Articles, although they may seem simple, can be superseded by a later article, making your situation more complicated.
How much UK Income Tax will you pay?
If you’re eligible for the tax-free Personal Allowance (you don’t get it if your taxable income is more than £125,140 a year), you won’t pay tax on your total UK taxable income until it goes over £12,570 in a tax year (2024/25 figure).
Need to know! Non-resident British nationals are entitled to a personal allowance, when completing their tax return, by ticking Box 16 on form SA109.
You pay tax on your profit, which is the amount of UK income that remains once tax expenses or allowances have been deducted. If you rent out more than one UK property, the profits or losses from them all are added together and you will be taxed on the total.
The Income Tax band into which your total UK taxable income falls determines how much UK Income Tax you pay.
To help reduce your tax bill, you can claim tax reliefs and allowances. Income Tax is no longer automatically taken from interest on savings and investments, while non-residents do not usually pay UK tax on the UK State Pension or interest from UK government securities.
Australian income tax rates for 2024-25 (residents)
How to report your taxable UK income from Australia
If you live in Australia and have taxable UK income to report to HMRC, you must fill out and file a Self Assessment tax return (SA100), as well as the resident supplementary page (the SA109 form) to report your residence and domicile status.
Need to know! You cannot use HMRC’s online services to file your Self Assessment tax return and any supplementary pages if you’re in Australia. You can either fill out your forms by hand and send them by post, pay a UK-based accountant to do it online for you or use commercial Self Assessment filing software, which is cheaper and simple.
More on paying UK tax on UK rental income
If you earn more than £1,000 from renting out property in the UK, it can be subject to Income Tax, once your taxable income goes over the Personal Allowance (£12,570 a year in 2024/25). Capital Gains Tax can also be payable if you make a “chargeable gain” (ie you get more than the amount you paid for the property or land after selling it).
If you live outside of the UK for six months or more a year, HMRC classes you as a “non-resident landlord”. You can get the full amount of rent from your tenant(s) and pay tax on it via Self Assessment. If so, you must apply by filling out the NRL1i form and sending it to HMRC.
Alternatively, the tax you owe can be deducted by your letting agent or tenant, who must pay it to HMRC. They will deduct the basic rate of tax from the monthly rent (minus their expenses if an agency) and give you a certificate at the end of the tax year showing the tax that they’ve deducted.
You must keep accurate records of your rental income and tax expenses, because HMRC can ask for proof of the tax figures you report. You must keep your income and expense records for at least five years after the filing deadline for each tax year.
Need to know! As a landlord, you can claim “allowable expenses” to cover things you pay for to rent out your property. This can reduce your UK tax bill significantly. Visit GOV.UK for official guidance on paying UK tax on UK property rental income.
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MTD for ITSA or Making Tax Digital for Income Tax Self Assessment to give it its full title. You remember that? Perhaps you’d prefer not to.
MTD for ITSA was due to be phased in from April 2024 for those with total gross income over £10,000 from self-employment and property in a tax year, with partnerships due to follow in 2025. But then, suddenly, in December 2022, the government announced a two-year delay in the planned introduction schedule, as well as a significant threshold increase up to £50,000 in the first phase and £30,000-£50,000 in the second.
So, why the delay? At the time, HMRC said: “Understanding that self-employed individuals and landlords are currently facing a challenging economic environment, and the transition to Making Tax Digital for Income Tax Self Assessment represents a significant change to taxpayers and HMRC for how self-employment and property income is reported, the government is giving a longer period to prepare for MTD.”
Did you know? MTD for ITSA’s introduction timetable has been delayed four times since it was first announced in 2015 (source: National Audit Office). So far, HMRC has spent some £1.3bn on introducing MTD for VAT and MTD for ITSA, but it expects to raise £3.9bn in additional tax revenue as a result.
MTD for ITSA: how will it change reporting?
For taxpayers and their agents who need a quick reminder…
● Under MTD for ITSA, many sole traders, freelancers and landlords will need to keep digital records using MTD-compatible software (or bridging software that enables them to comply with MTD reporting requirements while using their existing accounting software).
● Each quarter (ie every three months), the compatible software will create summary totals for business/landlord income and categorised expenses. These summaries are known as quarterly updates.
● After submitting an update, you or your agent can see an estimated tax bill within the compatible software. Making any accounting or tax adjustments is not essential before sending an update, but doing so will make the estimated tax bill more accurate.
● After the fourth quarterly update has been submitted, the system will show income and expenses for the whole tax year. Adjustments may then be made, for
example, claiming reliefs and allowances, removing disallowable expenses, adjusting the value of individual transactions, etc. Business/rental income will be finalised in the MTD for ITSA-compatible software, with an updated tax bill estimate given.
● To finalise your Income Tax position, you may need to provide HMRC with information about other personal taxable income (eg savings or dividend income).
● Then, you or your agent must make a final declaration via the MTD for ITSA software, confirming that the information provided is correct and complete and that your Income Tax position for the tax year has been finalised. A final declaration must be made, even if there is no additional taxable personal income to report. If your software does not support submission of additional personal income, you’ll be able to use your HMRC online services account for this.
● You must make your final declaration by 31 January following the end of the relevant tax year (5 April), if you want to avoid a late-submission penalty.
● The information you provide will then be used to work out your final Self Assessment tax bill for that tax year.
MTD for ITSA: revised introduction dates
From 6 April 2026, sole traders, freelancers and landlords with a gross income of more than £50,000 will need to comply with MTD for ITSA requirements or risk a penalty from HMRC. Those with an income of £30,000-£50,000 will need to do so from 6 April 2027. Many others will be able to join voluntarily before those dates, with HMRC believing that MTD will help them to eliminate basic tax-reporting errors and save time on tax admin.
So, what about those earning below the £30,000 income threshold? In 2022, the government said it was planning a review into the needs of such businesses, to consider how MTD for ITSA can be shaped to meet their needs and help them to fulfil their tax obligations. This review is ongoing, but eventual introduction is highly likely. Moreover, according to a report published in November 2023, the government also remains “committed to future introduction of MTD for ITSA to partnerships”, although no date has yet been given, following delay of its scheduled 6 April 2025 introduction.
Accountants, representative organisations and others working with sole traders, freelancers and landlords are being advised to remind them of the need to start to prepare for the introduction of MTD for ITSA in April 2026. This includes getting familiar with the new MTD for ITSA reporting requirements and making sure they have the necessary software.
A formidable new end-to-end accounting and tax solution?
You’ve probably already heard of Coconut. Some of your clients may already use it. Coconut was in fact launched in 2018 by Sam O'Connor and Adam Goodall as a digital current bank account for small businesses, but the ex-PwC fintech entrepreneurs pivoted their brand and Coconut became a bookkeeping/accounting app created with the needs of sole traders and freelancers in mind.
The early summer brought the surprise announcement that Coconut had been bought by GoSimpleTax, the Self Assessment tax return filing software solution. Sam O'Connor said: “The combination of GoSimpleTax and Coconut will create a formidable player in the accounting software space, filling the gap left by the traditional cloud players for a simple solution for self-employed people, landlords and micro businesses.”
Simple and efficient
As Adam Goodhall explained: “Coconut accounting software is a simple and efficient solution for self-employed people, landlords and their accountants and bookkeepers. It helps prepare the figures needed for tax filing, but doesn’t do the submission to HMRC.
Since 2015, GoSimpleTax has been providing tax-filing software for self-employed, property and other types of income taxed under Self Assessment.
“The combination of Coconut’s accounting software and GoSimpleTax’s tax return filing software and expertise will provide Coconut users and accountant partners with an end-to-end bookkeeping to tax return-filing solution, one that’s potentially suited to the needs of millions of UK taxpayers.”
Obvious fit
James Cryne, co-owner of GoSimpleTax, says there is an obvious fit between Coconut and GoSimpleTax. “They’re both remarkably easy to use and they provide many time- and money-saving features. Both have been created with the practical needs of small businesses and their accountants and bookkeepers as a key driver.
“GoSimpleTax continues to grow by attracting large numbers of new users, with many of them sole traders or landlords who also need bookkeeping support. Buying Coconut made perfect sense for GoSimpleTax. The link up provides significant added value for both GoSimpleTax and Coconut users.”
GoSimpleTax is retiring its own invoicing and bookkeeping solutions and users are being encouraged to start using Coconut instead. Cryne adds: “By December 2023, initial integration between GoSimpleTax and Coconut should be achieved, so that the necessary figures will automatically transfer from Coconut into GoSimpleTax, making it even easier for self-employed people, landlords, accountants and bookkeepers to fill out and file Self Assessment tax returns, saving them lots of time and hassle in the process.”
Software for accountants
The team behind GoSimpleTax previously started Keytime, which they built into one of the biggest suppliers of practice software for accountants. They have a lot of experience of providing software to accountants; the Coconut acquisition is a continuation of that.
“Accountants and bookkeepers who use Coconut should check out GoSimpleTax,” Cryne adds. “They can take advantage of a free trial. Partner subscriptions cost less than £60 for the tax year, which offers excellent value. We’ll certainly be encouraging GoSimpleTax users to use Coconut. Using both together makes perfect sense, because it offers a complete end-to-end solution.”
In a nutshell