Taking part in flexible work has many benefits, but it does also have some aspects which are less glamorous like filing your taxes Here’s your cheat sheet guide for the key things you need to know!
Dates to remember:
Self-assessment deadline for 2018/2019 tax year – April 6th to April 5th
Paper income tax filing deadline – October 31st
Online income tax filing deadline – January 31st
Income tax rates for 2019 to 2020:
Earnings below £12,500 are tax free. This is called your personal allowance
Basic income tax rate is 20% for earnings between £12,501 to £50,000
This increases to 40% for earnings between £50,001 to £150,000
This increases to 45% for earnings over £150,000
For example, if you work flexible hours and your total income after deducting expenses is £20,000 a year:
£12,500 is tax-free
£7,500 taxable income at the basic rate
At the basic rate of 20%, you’d be taxed £1,500
What you need to fill in a self-assessment tax return:
Your 10 digit Unique Taxpayer Reference (UTR). You’ll get this when you register as self-employed. It is made up of 10 digits and given to you by HMRC
Your National Insurance number
Details of your untaxed income from the tax year. This can be from self-employment, dividends and interest from shares
Note: A basic rate taxpayer has a Personal Savings Allowance (PSA) of £1,000. So, the first £1,000 of savings interest earned in a year is tax-free. You would only have to pay tax on savings interest above this
Records of any expenses relating to self-employment
Any contributions to charity or pensions where deductions were made after tax
A P60: At the end of each financial year (April), you will receive this summary document from your employer, which shows how much Income Tax and National Insurance you and your employer have paid throughout the year
A P45 if you have left a job in the current tax year
1. Have a system
It’s important to develop a way to regularly track your income and expenses – on paper, software or by hiring an accountant.
You can use the Portify app to help you with this as it automatically tracks these with a bank connection.
If you need a little more support, you can always hire an accountant to help you out, and Portify even have a partnership with TaxScouts to offer you a 10% discount on their services. You can find more information find out about TaxScouts here.
2. Set aside some money
As someone working flexible hours, you may not have an employer deducting taxes from your income each time you’re paid.
To help with this, Portify provides you with a tax estimate. Have a look at this estimate from time to time to make sure you have enough money set aside to make that annual payment less demanding.