Self employed Tax Return Checklist – 12 point plan

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Self employed tax return checklist

What to check for before you file your Tax Return


Self employed tax return checklist

It's that time of year again where, if you're self employed, your attention turns to your self assessment Tax Return.  It can be quite a stressful time, particularly because you only have to complete the Return once a year and therefore can easily forget how to complete the form properly.  

If you're anything like me then one of the biggest fears comes as you're about to hit the "submit" button. Because from that moment you know there's no Return (pun intended).  As a result I thought I would share with you my own 12-point checklist that I go though before submitting a self employed Tax Return that helps minimise the risk of error and therefore enquiry (I've written before about how to minimise the risk of an investigation which you can read here).

Boxes 1 - 10 :- Business details

1.  Make sure the name and description of the business is the same as on last year’s return.

2.  Check the accounting date to make sure it follows on from last year’s return.

Boxes 15 - 31:- Business expenses (turnover over £79,000)

3.  The Taxman's form is very rigid in terms of how you record your expenses.  He has a set number of expenses headings each with their own box.  You have to determine which expense heading from your accounts fit into which his boxes.

Tax tip :- Use these notes to help you determine which of your expenses to put into each of the Taxman's boxes. 

4.  Keep a copy of your detailed profit and loss account and write the box numbers to which you have coded each expense. Keep this copy of this safe in case the Taxman asks you how you derived a certain figure in the the Tax Return.

Tax Tip :- If there has been a big increase in the gross profit percentage or one of your expenses year on year then use the additional information box (103) to explain it.

Boxes 15 - 31 :- Business expenses Turnover below £79,000

The Taxman gives you the option of reporting less information if your turnover is less than £79,000.  We don't recommend you use this facility because it just gives the Taxman an excuse to ask questions about your expenditure.  However, if you are determined to use this section here are a couple of suggestions to minimise the risk:-   

5.  If your turnover is significantly different from last year then give an explanation for the change in the additional information box (103).

6.  Check that your ratio of net profit to turnover is consistent with last year.
If it is higher check that you have not left any expenses out. If it is lower consider disclosing the reasons in the additional information box (103).

Tax Tip :- If your turnover has been just under £79,000 for the last two years, this could significantly increase the chance of an enquiry.  If your turnover has been at this level for the last 2 year we strongly recommend you use the full form instead to reduce your chances of the Taxman raising any questions.

Boxes 32 - 46 :- Disallowed expenses

7.  The Taxman will expect to see some disallowed expenses, so make sure you show adjustments for the following where relevant :-

  • Entertaining;
  • Private use of telephone costs and motor expenses, and
  • Depreciation and loss/profit on sale of assets.

Boxes 49 - 59 :- Capital allowances

8.  Make sure you don't miss out on claiming for capital allowances on any vehicles and equipment used in your business.

Tax Tip:- Don't forget to adjust for a private use element where an asset has been used privately (i.e. your car for private journeys or your computer for buying from eBay).

Boxes 81 - 82 :- Sub-contractors in the construction industry

9.  If you have tax taken off you as a subcontractor, remember to enter in Box 81 the total amount of tax deducted as shown on the CIS payment summaries that you have. 

Box 98 :- Drawings

10.  If you do decide to complete a Balance Sheet (not compulsory, but recommended), make sure that your drawings figure is consistent with the lifestyle you lead.

Boxes 100 - 102 :- Class 4 National Insurance

11.  Check that any Class 4 NI which is payable has also been entered in Box 4 of the Tax Calculation summary page.

Before you press the submit button

12.  Compare all your answers with a copy of last year’s Tax Return. Make sure you can explain any variances between the years.  Any substantial variations should be explained to the Taxman using the additional information box (103).

Tax Tip :- You'll notice that throughout this article I have stressed the use the additional information box (Box 103).  This box will only be read by the Taxman if your Tax is being considered for enquiry. That's why the space is so important.  It can be the difference between being selected for an enquiry or having a peaceful life!

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