TTF Tackles the Money Monster under your bed: Help Me Organise Next Year’s Tax Return

"As a self-employed parent of two lively young kids, life is never dull, and it’s certainly never quiet. Between school runs, client deadlines, and just trying to grab a cup of tea while it’s still hot, staying on top of everything can feel like a heroic feat. But for someone like me, who prides themselves on being organised, there’s one thing that’s been a persistent thorn in my side—filing my tax return on time.

Over the past couple of years, I’ve been hit by late filing penalties from HMRC. Not only has this cost me money I’d rather have spent on my family (or let’s be honest, a much-needed night out), but it’s also been a blow to my ego. How did I let it happen? I’m not lazy, nor do I lack the intention to get things done. The problem? I’ve realised I wasn’t managing my records and tax prep as proactively as I thought.

This year, I’m determined to change that. So, I’m looking at finding ways to make sure I’m ready to hit that tax deadline with time to spare. I need some practical tips to keep the penalties—and the stress—at bay."

Balancing a business and young family, as well as all of the other million things that needs to be considered on a daily basis is hard work. It is admirable that you have identified your tax affairs as something to work on and the good news is that there are a few easy adjustments you can make to streamline the whole process. Hopefully these tips will help you get on top of your tax affairs for next year.

1. Set Up a System for Record-Keeping

One of the biggest downfalls we see for individuals filing their tax returns is the yearly scramble to find receipts and invoices when the deadline looms. Instead, why not try to use a simple, consistent system:

• Digital Filing: Set up folders on your computer and in the cloud (Google Drive works well) for each tax year. Invoices go in one folder, expenses in another, and any correspondence with HMRC in a third.

• Receipt Tracking Apps: Apps like Receipt Bank or QuickBooks let you snap a photo of your receipts and categorise them instantly. No more shoeboxes!

• Regular Updates: Block out one hour a month in your calendar to sit down and update records. Make it a non-negotiable.

2. Open a Dedicated Business Bank Account

Mixing business and personal expenses can get a little messy. Time spent untangling business expenses from personal spending may not be worth it. Opening a separate business account can be a game-changer as it makes transactions easy to identify, and you don’t miss out on claiming expenses that are business-related.

3. Track Income and Expenses in Real-Time

Waiting until the end of the year to work out how much you’ve earned (and spent) is a recipe for disaster. Start to track income and expenses as they happen:

• Use Accounting Software: Tools like Xero or FreeAgent sync with your bank account and automatically categorise your transactions. This can save you hours.

• Keep a Spreadsheet Backup: For peace of mind, consider maintaining a simple spreadsheet with key figures: income, expenses, and expected tax owed.

4. Know What You Can Claim as Expenses

One of the biggest fears many of our clients have is underclaiming (or overclaiming!) expenses. So try to make it a point to learn exactly what you're entitled to deduct, from travel costs to a portion of your home office expenses. There’s no harm in getting professional advice if you’re unsure—every pound saved counts and this advice could end up saving you thousands.

5. Plan for Tax Payments Throughout the Year

This is another area where it's easy to fall short. Waiting until January to pay your tax bill can leave you scrambling to pull together the money. To avoid that:

• Set Aside Money Monthly: treat your tax bill as a regular expense. Each month, consider transfering a percentage of your earnings into a savings account earmarked for taxes.

• Know Your Payment Deadlines: Remember, if you owe over £1,000, you might need to make payments on account in July and January. Plan for both!

6. Set Reminders and Use the HMRC Online Account

Set multiple reminders for important deadlines—on your phone, in your diary, and even a post-it note on your fridge. It’s also worth logging into your HMRC online account regularly to check for updates or messages. It’s surprisingly easy to forget about payment notices if you’re not checking in

7. Work With a Tax Professional

A tax advisor can help you stay compliant, maximise deductions, and file on time. It’s one less thing to worry about.

8. Don’t Leave It Until the Last Minute

This might sound obvious, but it’s advice we see ignored too many times. This year, commit to filing your tax return well before the January 31st deadline. Set a goal and get it done!

A New Mantra: Little and Often

If there’s one thing we've learned (both personally and professionally), it’s that leaving everything to the last minute doesn’t just cause stress—it also leads to mistakes. By tackling your tax prep in small, manageable chunks throughout the year, you can more confidently stay on top of things and avoid the dreaded HMRC penalties.

Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023

The Finance Monthly Taxation Awards recognises the achievements of tax professionals from around the globe.

Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.

Read more about Charles and the award here.

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