Each year, you have to submit your self-assessment by 31 January following the end of the tax year.
Coconut helps you prepare for this by making sure that you have everything organised ready for submission.
1. Ensure your business income is correct
Firstly, you need to ensure that your income transactions are categorised correctly.
Any incoming payment is automatically categorised as Income, unless you have categorised it as something else.
It’s important to make sure that you check the categories on payments that aren’t income, and change them to something more accurate.
For example, if you transfer money across from your personal account, then you should categorise this as “Personal” or “Paying In”.
2. Don’t include employment income
If you have any employment income, you should categorise this as “PAYE Income” - this will remove it from your self-employed income.
You should declare your employment income through your tax return separately - HMRC will suggest you take the figures from your latest P60 or P45, rather than looking at the actual payments you receive.
3. Check your allowable expenses
Next, check that your expenses are categorised correctly. Some things to watch out for:
1. Make sure your wages aren’t expensed
Check that any payments to yourself are categorised as “Personal” or “Your Wages” - you can’t claim for these on your tax return, and so you should make sure that these payments are not included in any of the allowable expense categories such as “Other costs”.
2. And the same for your tax savings
If you transferred any money to a separate account to save for your tax bill, make sure you categorise this as “Personal”, “Your Wages” or even “Taxes”, all of which won’t be included in your allowable expenses total. Make sure you don’t use “Accountancy” for this - that should only be used for paying for accountancy services related to your business.
3. Check that you haven’t claimed for personal expenses
If you have any expenses that are actually personal expenses, make sure you update the category on these to “Personal” to make sure they aren’t included in your total allowable expenses for your tax return.
4. Check that you’ve not claimed for anything you shouldn’t have
Coconut includes guidance against each category about what you can and can’t claim for tax. Make sure that you haven’t claimed for anything that isn’t an allowable business expense.
4. Consider whether there’s anything extra you can claim for
There are a few things that you might want to claim for additionally at the end of the tax year. These include:
Mileage allowance - you can also claim for mileage of trips you take relating to work. Note that if you claim for mileage, then you can’t claim for fuel expenses. There is a fuel category in Coconut, and so if you are claiming for mileage, make sure you don’t include any fuel expenses.
Trading allowance - if your total expenses for the year are less than £1000, then consider using the trading allowance instead.
5. Invite your Accountant
You can invite your accountant to use the Accountant Portal and have read-only access to your account. From here, they can view your income and expenses and export all your data. They will have the option to export the data into a spreadsheet by selecting CSV format.
6. Submit your tax return early
Submitting your tax return early is recommended so that you get the final figure you owe HMRC as early as possible. You don’t owe it until 31 January following the end of the tax year.
Remember, the Coconut tax estimate is a guide that can be used throughout the year to know roughly how much to set aside for your tax bill.
The amount may vary from the HMRC figure based on the figures you enter into your Coconut app compared to the data HMRC holds on you, particularly if you have had things like employment income during the year.
Submitting your tax return early gives you plenty of time to make sure that you can pay your bill.
7. Our guide to submitting your tax return
We've prepared a step by step guide to help you submit your tax return. If you're a sole trader with a relatively straightforward setup then it's quite possible to have a go at doing your tax return yourself.