How To Complete The Self Assessment Tax Return For Self Employment 23/24

Welcome back to Tax to You, the Practical Tax Channel where we answer all of your tax-related questions. Today, I'm going to be showing you how to complete the 23/24 Self Assessment tax return if you are self-employed.

To do this, I'm going to cover a walk-through of how to tailor your tax return, that's getting it set up for your own situation. I'll give a demonstration of the entries that you'll need to make if you are self-employed, and then I'll give you an overview of the tax calculation so you understand exactly how your tax liability is being calculated.

Before we get into it today, don't forget to like the video and subscribe to the channel for more helpful tax content. Submit your questions in the comments below, and we will endeavor to get them answered either in the form of a reply or possibly a dedicated video, just like this one.

You can also find us at tax2you.co. Because although our aim is always to educate our clients as much as possible and share this information, we understand that tax can be confusing, stressful, and time-consuming, and that's where we can step in and help, saving you time and money. Check out the thousands of Trustpilot reviews from clients who trusted us to do just that. Our services include obtaining CIS tax refunds, completion of Self Assessment tax returns, and even closing down your self-employment when you finish trading. You'll find a full list of services offered on our website, along with a price guarantee, ensuring that we beat any professional quote by 20%.

So, let's start off with how to tailor the tax return for your own personal situation. So here I am, I'm logged into my Government Gateway account and I'm ready to complete my 23/24 tax return. I'm now on section three, "Tailor Your Return." On the right-hand side, to get to this point, all you'll need to do is log into your Government Gateway account with your user credentials. You'll just need to work through your basic information, so they tell us about you section. You'll confirm your address, you'll confirm if there are any student loans repayable, but all information that is specific to you, and then you will arrive at this page.

This is the "Tailor Your Return" section. This is three pages, we're on one of three here, and essentially, this is a list of yes/no answer questions which will set up the return for your own situation. If you don't have any rental properties, you don't want to be filling in the rental section of the return. If you don't have any foreign income, you don't want to be filling in that section either. So by doing this, it will just strip the return back to the pages that you actually need to complete.

You can see that we're asked about the tax period, the 6th of April 2023 to the 5th of April 2024. So all of these questions relate to that period. "Were you an employee or director or office holder or agency worker in the year to the 5th of April 2024?" The ones of these that normally apply are either employee, which everyone will know if you're an employee, you'll work for an employer, you'll be paid through PAYE, you'll get a P60 or a P45 at the end of the tax year. And it is quite common as well for people to be directors of limited companies. Again, if you're a director of a limited company and you're receiving a salary from that company, then you'll normally need to complete this section as well.

In my example, I'm only considering that I have self-employed income and no other examples. But obviously, if you do have employment income along with your self-employed income, you might need to tick "yes" to this section and complete the appropriate pages. Below that, we're then reminded that if you are self-employed, or you're in a partnership, which is a form of self-employment, you must register to pay Class 2 National Insurance. Now, that is normally done when you are logging into your Government Gateway and registering a new tax. It's normally done at the same time, but I will show you later on in the return where the Class 2 National Insurance deductions will apply.

Class 2 National Insurance, if you're aware, is the weekly payment that you make when you're self-employed, typically when your profits are over a certain threshold. It's normally £3.45 or so per week. It's being axed, I believe, from next year anyway, so don't get too familiar with it. But for this tax year, it would apply. The tax year that I'm looking at, 23/24.

The next question was, "Your turnover more than £1,000 in total from all self-employment?" So if your turnover from all self-employment is below £1,000, if you have small self-employment, maybe a little side hustle, technically you don't even need to tell HMRC about it. You would tick "no" here and you wouldn't enter any other information. They're not interested. You can have that one, and you won't be taxed on it at all. There's a small allowance known as a trading allowance of £1,000, and that would cover you essentially. Just note that it's turnover from all self-employment. So if you have multiple self-employments, you need to combine the turnovers of those and then consider if you've exceeded this £1,000 threshold.

And if you're wondering why you might have multiple self-employments, typically it's when you have different trades. So maybe if you're a plumber, that might be one trade, but then in the evening, you're selling furniture on eBay, that might be considered another trade. And when you do... Again, I'm going to say "yes" because I want to declare one self-employment. But where you do have multiple, you just need to detail each one separately. In my example, I'm just using one self-employment and then I'm going to name it "Example." And for your business name, if you're worried about what you're putting in here, maybe if it's your first year, don't worry too much about this. This is more like a reference for HMRC to know which self-employment you're talking about. You're not going to get in trouble if you copy someone's name here. You're perfectly fine to use your own name. If you just wanted to put your first and last name, that's perfectly acceptable as well, but don't overthink this one.

"Were you in a partnership?" I'm going to say "no." A partnership is typically two or more self-employed individuals who are working together, but it's a little bit more complex than that because you normally have something known as a partnership agreement, so an official document that details who gets what, essentially, and how they get it. You know, maybe if you own more than 50% of the partnership, it might be detailed in there.

"Did you receive income from UK land or property, including income from foreign property, over £1,000?" So if you own rental properties, possibly commercial properties, most common one will be residential rentals, your traditional let, I would call it, your six-month tenancy agreements. You may also have holiday lets in here, furnished holiday lets. All that type of income would get declared under the UK land and property section. Again, I'll say "no" because we're keeping it simple.

"If you received any foreign income, do you need to complete the foreign section?" So foreign income, you can click the links below, by the way, if you're looking for more information about what this section applies to. But usually, it's going to be income such as employment income if you're living overseas. You could have dividend income, you could have interest income. But where you do, I guess the two most common will be interest and dividend income. Interest from an overseas savings account, dividends from foreign companies. But you only need to complete the foreign section on dividends, for example, if those dividends exceed £1,000. If you just have a few dividends from Google or Microsoft and it totals less than £1,000, you can actually declare that under the dividend section rather than completing the foreign income section.

So I'm going to scroll down to the next question. We've then got, "If you disposed of any chargeable assets or had any chargeable gains, or you wish to claim an allowable loss or make any other claim or election, do you need to complete the capital gains section?" Capital gains apply when you sell or dispose of a chargeable asset. Not always sell, it can be that you've given it away, and they would, HMRC, would consider that you've disposed of it. Okay, so you might have a gain even if you give it away. But usually, it's going to be when you're selling an asset, in most occasions. So if you dispose of your asset and you make a profit on it, you make a gain, you may be taxed on that. There is a capital gains allowance of about £6,000 at the moment. So again, small gains will usually be covered by that. And not all assets are going to be chargeable. So certain things like your home, the house that you live in, your main residence, is normally going to be exempt. Your car is normally going to be exempt. Certain savings like ISAs are exempt. But certain other assets like holding shares, investments, stocks and shares, or second properties, investment properties, when you dispose of those, if you make a gain, then you may have to pay tax on that, and you would declare it under this capital gains section. If you make a loss in any of those situations, you may also want to declare that loss under the capital gains section, even though you haven't made any money, because you can roll that loss forward and offset it against any future gains, meaning that in the future, you're going to pay less tax. So that's what that section relates to.

Page two, much more of the same. "Did you receive any interest?" So interest used to be less common when interest rates were much lower, but now it's obviously becoming more common with people getting 5, maybe 6% interest. You still need to have substantial savings to generate enough interest to pay tax. Most people benefit from a savings allowance, which is either £500 or £1,000, usually depending on how much you earn. So you have to have some, you know, fairly large amounts of cash stashed away in order to exceed those thresholds. But if you do have interest income, you need to declare it under this section here.

"Did you receive any dividends, for example, from UK companies, authorised unit trusts, open-ended investment companies, or dividends from foreign companies up to £1,000?" So UK companies, if you hold shares in companies like Rolls-Royce, are listed here in the UK, then if they pay you a dividend, it's always going to get declared under this section here. If you receive dividends from foreign companies, that's anywhere outside of the UK, so for most people, it'll be US-listed companies because they tend to be the most popular and they pay you a dividend. You may still be able to declare them under the dividend section, providing your total foreign dividend doesn't exceed £1,000. If it does, then you have to go back to that foreign income section and declare it on there. So you just have to total those up.

"Did you receive any UK pensions, annuities, or state benefits, for example, State Pension, occupational pension, retirement annuity, or incapacity benefit?" That is right. Once you receive a pension, it's not tax-free, unfortunately. It's still taxable income. But for most people, their pensions will actually sit below the personal allowance, so they don't end up paying any UK tax. If you do have a larger pension, yes, unfortunately, you may still end up paying tax on it when you receive it, and you would declare it under this section.

"Did you or your partner, if you have one, get child benefit payments during the year 23/24?" This also applies if the child living with you is not your child. Child benefit just had quite a big shake-up, actually. But the high-income child benefit tax charge does still apply. So if you receive child benefit, child benefit, the amount isn't a huge amount, you know, under £100 a month or so. If you receive that amount, or your partner receives that amount there, and you earn, I think it's currently over £60,000 per year, either of you, then HMRC will start to claw that money back. Okay, so that's why they're asking about this. If you receive child benefit and neither of you earns over £60,000, then it wouldn't be a problem. You might still declare it on here, but HMRC aren't going to claw it back. It's only once you start earning over £60,000 that that happens.

"Did you receive any other UK income, for example, employment lump sum, share schemes, life insurance gains?" These are rarer, but if you did receive any of these items here, and again, feel free to use the drop-down below to get more examples, but it would be fairly rare that you'd have something under this section.

"Have you made any income tax tax losses?" I'm saying "no." People get a little bit confused by this one. They think if their self-employment has made a loss, that that's what this is referring to. It's not. That would still go under the self-employment section, which we've ticked "yes" to. This actually relates to the question above, usually income tax losses on these types of income above. Again, use the guidance where you need to.

"Are you liable to pension savings tax charges, or have you received payments from overseas pension schemes?" Overseas pension schemes, quite straightforward. But the pension savings tax charges, a lot of people don't really know about. So this is normally for high earners or high savers, really. If you're paying large amounts into your pension pot, you're actually restricted. So you could only pay in, I think it's £60,000 per tax year at the moment. You can normally carry forward any unused allowance from the last couple of tax years. So you might actually be able to pay in more than that. But if you exceed your allowance, then you get charged this pension savings tax charge. Okay, so that's where that one would apply. If you're making small contributions to a pension, like most people are, it's not going to apply to you.

Now we're on to page three of three. "In the tax year, did you make contributions towards a personal pension or retirement annuity?" This does not include payments you make to your employer's pension scheme. So when you make contributions through your employer, it's pretty straightforward because they deal with everything. They get all your tax relief, essentially. They make the contribution into your pension pot before you've suffered any tax, and they often top it up a little bit themselves as well. So it's really straightforward, you get your tax relief. But you can also make contributions from your post-tax income. So if I've got money in my bank account, I've earned that from my employment, I've already paid tax on it, and then I want to pay another £800 into my pension pot, I can do that. There are schemes where you can do that, and that would be a personal private pension plan. The problem with that is you've already paid tax on that money. So if I've got £800, what happens is I'll pay that money into my pension pot, but then I can actually go and get the tax relief back. So I would get the £200 or tax that I would have paid on that as a basic rate taxpayer back from HMRC. If you're a higher rate taxpayer, you'll get more tax relief, and by declaring it on here, they will essentially offset it against your liability for the year. Okay, so it's important if you do make contributions to a personal pension plan, you detail them here because you're going to get some tax relief on it.

Now, I would just caveat here that some personal pension plans that you pay into privately operate something called relief at source, which essentially means that instead of you claiming 20% tax back through your tax return, they will do it for you and pay it straight into your pension pot. Your £800 contribution will become £1,000 automatically, which is great where you're a basic rate taxpayer, as you won't need to claim tax relief through your Self Assessment. But just remember, if you're a higher rate or additional rate taxpayer, even where the provider does operate relief at source, you'll still need to declare contributions on your tax return to obtain relief on the additional tax suffered above 20%.

This may also be a good time to point out that where you do have questions about the Self Assessment tax return process, you can find lots of useful information for free on our FAQs page, which I'll link to below. Whether your question relates to the tax return itself, about CIS tax refunds, or about income tax, you'll find all the answers, as well as information about who we are and the services that we offer here. Check this out at tax2you.co.uk/faqs.

Now back to the tax return. Similar situation with charitable contributions. Again, I'm saying "no" to all of these. But if you do make contributions to a registered charity, most of the time the charity will ask, "Can we claim Gift Aid on this?" and you tick "yes" most of the time to that. So when you do that, the charity, if you can, if you give 80p to charity by ticking that box, the charity goes to HMRC and they get the 20p tax that you suffered on that income. So they actually get £1.00, which is great for them. If you're a basic rate taxpayer, that's kind of where it ends. You, they've got your tax relief. Okay, you gave it to them. If you're a higher rate or additional rate taxpayer, well, actually, the charity will still only be able to go and get 20p, but you would have paid 40%, 45%, 50% tax on that, whatever it works out as, and you can go and get the difference. So you don't get the original 20p, but you might get that top-up between the tax rate. So if you're a higher or additional rate taxpayer, this becomes more important, but it usually has to be a registered charity.

"If you or your spouse or civil partner were born before 6th of April 1935, do you want to claim married couple's allowance?" So you used to get an additional allowance for being married, and that would be detailed here. If you're a bit younger, born after this date, which most people will be that are watching this, then you won't be entitled to this anyway. But we have the one, the question below.

"Do you want to claim marriage allowance by transferring 10% of your personal allowance to your spouse or civil partner?" If you already have a transfer in place, select "no," as the allowance will automatically be included in your calculation. So you have to opt into this. But essentially, if one of you is earning less than the personal allowance, if you're not making use of it, and the other one is out working full-time, and maybe they're a basic, they need to be a basic rate taxpayer, you can transfer part of your allowance to the person that needs it and benefit from it. So it's £12,260 that could be sent across to your spouse or civil partner, and they'll benefit from the tax saving on that.

"Do you want to claim other tax reliefs and deductions?" This one will be again, less common. Community investment tax relief, venture capital trust shares, maintenance or alimony payments. Again, most people are going to be saying "no" to this one, but more information is provided below. But again, rare. I haven't seen many people using that.

"Have you had any 23/24 income tax refunded or offset by Job Centre Plus?" "No." Again, this is one that confuses, confuses people. A lot of people think that Universal Credit needs to go in here. Universal Credit is not taxable, so if you have received it in the tax year, it doesn't need declaring on the Self Assessment tax return.

"Did you have a tax advisor?" If you're doing your own tax return, very unlikely, otherwise they would be doing it for you. So I'm saying "no."

"Have you used one or more tax avoidance schemes?" I'm saying "no." That's the funny thing about tax avoidance schemes. HMRC know about most of them. Most of them have a reference assigned to them, and if you're using it, you normally use it and then tell HMRC, "By the way, I'm avoiding tax by doing this." They then take you to court at some point, and then they win the vast majority of cases. But people still use them, and I'm sure some people use them effectively, but a lot of those, those sort of loopholes get closed eventually.

"Are you acting in a capacity on behalf of someone else?" Again, if you're doing your own tax return, it's going to be a "no." But if you are submitting or preparing someone else's, and you would need to let HMRC know that that is the case.

Save and continue. Now, if this does seem like too much hassle, or maybe you need some assistance with your tax return, don't forget to check us out at tax2you.co.uk, where our accountants can take the stress out of preparing and submitting your return to HMRC, all while saving you time and money.

Now, let's look at completing the self-employment section. So once we've completed the "Tailoring Your Return" section, which was section three, we move on to section four to actually fill in your return, where you can complete the pages that you've indicated that apply to you. If I scroll down, you'll see the "Tell Us About You" section, the "Tailor Your Return" section are all complete. I've entered information and they're marked in blue. But below that, we've got the self-employment section and the Class 2 National Insurance section, because that applies to self-employed individuals. Everything below that, from sort of underpaid tax and other debts, all the way down to the bottom, these are standard sections that everybody is going to have to complete, no matter which yes/no answers they give. The beginning, so they apply to everyone. But these two here, self-employment and Class 2 National Insurance, these have been populated or generated because we told HMRC we have a self-employment.

So to complete these, I can click on "Enter self-employment details" and then again, I'll just work through the pages and the questions that I'm asked.

"Did you have an annual turnover of £85,000 or more?" So your turnover is all of your income lumped in together. So if you went through all of your invoices that you've raised to clients and customers, or added up all of your sales, then that would generate you a turnover figure. If it's over £85,000, the reason it's £85,000, by the way, is that's the VAT threshold. It's also the threshold that you can use the cash basis for your accounting, which we'll come on to in a minute. But if it is over £85,000, you would need to say "yes" here. If it's under, you can say "no," and we can use a more simplified process. We get slightly less questions if we select "no." So that's what I'm going to use for my example.

"If you are affected by basis period reform, do you have a transition profit or loss to declare?" So basis period reform is a process that's ongoing at the moment. Previously, you, and you still can, you can select any financial year end. So let's say that I set up a self-employment, I can choose my financial year end to be October if I want, the end of October. I could choose the end of December, I could choose the end of April. It doesn't really matter, that's completely up to you. And there are different reasons why you might choose different dates. If you choose October, then you prepare your accounts to the end of October each year. And then what was happening is when you did your tax return, HMRC would ask you, "Okay, well, what 12-month period fell within the tax year?" Okay, so I have a 12-month period that ends at the end of October, and then they will tax you, or they would tax you on that income from October to October, or November to October. That obviously didn't align with the tax year. So people were paying tax on accounting periods that weren't in line with the April tax year end. So what they're doing is they're saying that you can still do that, you can still prepare your accounts to October if you really want to, but what you'll have to do is do a calculation and an adjustment so that you're paying tax on April to April, you're paying tax in line with a tax year rather than in line with your financial year end. So if you happen to choose April the 5th or the 31st of March as your year end, which most people did anyway, then it doesn't affect you at all. But if you didn't, if you had some other year end, then a lot of people are either changing their year end and aligning it with the tax year, or they'll do this calculation and this sort of transition profit to allow for that. So just so you're aware, that's what that's asking about.

You're then presented with a number of tick box answers here. You need to work through these and see if any apply. They're just looking for additional reliefs etc. that might apply to your self-employed income. I'm going to scroll down to the bottom. The most likely ones are normally the two at the bottom: "My turnover is £1,000 or less from all self-employment, but I wish to claim tax back that was deducted under Construction Industry Scheme," or "My turnover is £1,000 or less and I've made a loss." So those may apply. The others again are less likely. If none of them apply, you can indicate that using the bottom box.

And then I'm moving on to providing details of my self-employment. So we've got a name in the description. Again, I'm just going to put any old narrative. You don't need to go overboard on this, you don't need to do paragraphs. If you're a plumber, put plumber. If you're an electrician, put electrician. If you're selling goods online, say that you're selling goods online. But it's just to again, give them some kind of narrative as to what you're doing. Providing a postcode, that's optional information. Most of the time, if I'm completing a return, I'll try to leave the optionals blank unless I feel that it's adding value. So in this case, I'm going to leave that one.

"Has your business name, description, or postcode changed in the last 12 months?" Mine hasn't, so you could say "no." Again, it's optional, but if it has, you would normally update it on the front page anyway.

"If your business started after the 5th of April, enter the start date." So they're asking this because Class 2 National Insurance, which is your £3.45 or so per week, which is actually being scrapped from the next tax year anyway, that one applies weekly. So if you start partway through the year, you're only going to get charged for part of the weeks that you were self-employed. If you start at the beginning of the tax year, you'll get charged for the whole year. So that's why they're asking you to give a date here, and you would see that get applied at the end to however many weeks you were self-employed for and exceeding the threshold of income.

"Did your business cease trading?" So if you have stopped trading and you tick "yes" here, then it might be that they don't, HMRC don't request a tax return from you next year. If not, if you say "no," then they're going to expect you to continue declaring self-employed income.

Now for the accounting detail. So my self-employment. So this is where your year end comes in, the date your accounts or your books are made up to. So again, if you've got a date of the 31st of October 2023, then you may have to go and look at basis period reform and how that affects you. If you've got a date of the 31st of March, you're in line with the year end. Or, and by the way, HMRC will consider 31st of March all the way through to the 5th of April as being in line with the tax year. So don't panic that, you know, the 31st of March is not quite in line with the actual tax year end of the 5th of April. That's perfectly acceptable. Basis period reform, in that case, wouldn't impact you.

"Did you use the cash basis?" So the cash basis is available in this situation because we've said that our turnover is less than £85,000. If it's more, you don't normally use the cash basis, you actually can't use the cash basis. But in this situation, I'm actually allowed to. So all the cash basis is, it's a simplified way of accounting. So usually, if you're using the cash basis, you're going to use the date you received funds and the date you paid invoices. Okay. So if I raise an invoice to a client and they pay me a month later, then I'm going to use that later date to signify that that income has been received. So if that happens to fall into the next tax year, I'm not going to declare that income until the next tax year. Same with expenses as well. If I receive an invoice just before the end of the tax year but I haven't paid it yet, under cash accounting, I don't get to include that expense in my accounts. The other option is to use traditional accounting, and under traditional accounts, you would normally use the invoice dates. So the date you actually raise an invoice to a client, that's when you would declare that income. The date you receive an invoice, or the date that the invoice is dated, that's where you would declare that expenditure. So again, it's a simplified method. I'm going to say "yes" to it and I'm going to save and continue.

My income from self-employment is then declared on the next page. So we'll keep it very simple. I'm going to go with an income figure. It's got to be below £85,000 because I've already told them that. If I tried to input more than that, then it's going to flag me up and send me back to that page. I'll go with £60,000 of turnover. Again, if you're trying to work out your turnover in this case, because I'm using cash accounting, I'm going to want to look at my actual bank receipts usually that are received within the period. If you're not using cash accounting, you'd want to go back to invoices, invoices that you've raised to your clients.

"Any other business income not included as turnover?" We'll leave that zero. And then the "Trading Income Allowance." So trading income allowance is £1,000 or up to £1,000. You can't use it to generate a loss. So if I only had £500 of income, I wouldn't be able to input £1,000 of trading income allowance, even though that's the maximum, because that's going to generate a loss. But if I had £60,000 of income and I had no expenses or less than £1,000 of expenses, then instead of claiming them, what I would do is I would use the allowance. And that would bring my profit down to £59,000. So you use it where it is beneficial for you. In this example, I have more than £1,000 of expenses, so it's not going to be beneficial for me to claim that allowance. I'm going to claim the actual expenses that went through.

And again, at the bottom, you have the option to give a detailed breakdown. If you say "yes" to a detailed breakdown, when you move on to the next page, you'll split out your expenditure by rent, by stationery, by utility, all these different things. Or you have the option to give it as a single figure. So I like to use a single figure, so I'm grouping all my allowable expenditure together and I'm lumping them in here. Just again, just to confirm, if you're claiming allowable expenses, you can't claim the trading income allowance. If you claim the trading income allowance, you can't use, you can't claim allowable expenses. So it's one or the other. I'm going to save and continue.

£50,000 net profit is exactly what I would expect. And then we're on to "Capital Allowances and Balancing Charges." So capital allowances and balancing charges apply when you're buying assets or buying, you know, equipment, machinery, vehicles, these types of things. Your bigger purchases. Usually, what happens is when you buy a computer, for example, in, let's say, you buy a computer for £3,000, instead of putting that full £3,000 through, what you do is you capitalize it and then you spread the cost of that over multiple years. You normally write it down. It's called a writing down allowance, and a percentage of it gets allowed each year. There are certain allowances, the annual investment allowance or AIA, which may mean that actually, even though it's a capital expenditure, you actually get 100% of the cost allowed, but it's still gets allowed through this page here, through capital allowances.

Now, when you're using the cash basis, the simplified method that I said "yes" to a few pages back, you don't use capital allowances, or it's very rare that you would use capital allowances. There are only a few situations where you might. So I'm going to leave this page completely blank because I've said "yes" to cash accounting.

"Other adjustments: Goods or services for your own use." If you are selling a product or a service, but you're taking that from the business, that's not going to be allowable expenditure. So you need to put an adjustment through for that, and it would add it back on, essentially.

"Loss brought forward from earlier years set off against your 23/24 profit." So if your self-employment has made a loss, you are able to carry that loss forward until your self-employment makes a profit, and you can offset it against that profit, meaning you pay less tax in a future tax year. So if I had done that, I could enter the loss I was carrying forward in here, and I would only then pay tax on £40,000. You can see the adjustment being made below. In this example, I don't have a loss being carried forward. But that's where it would be entered if you did.

"Any other business income not included above." So again, this would be quite rare. But if there was something that, again, you got your drop-down for examples of this, but it would all go into this box here. You can see I've got total taxable profits of £50,000, which is exactly in line with what I was expecting, and I'll save and continue.

"Losses for my example self-employment." So if you have made a loss in this tax year, then there is the option to offset that loss against other income. So let's say you had self-employment and then you had an employment where you're paying tax, then you can potentially take your loss from self-employment and go and get some of the tax back that you've paid on your employment, or whatever other tax you might have paid, and you would do that by entering your loss in here and utilizing it against other income. You can also carry a loss back to previous taxes and offset it against income or capital gains, and again, you would input the loss amount here, carry it back, and get some tax relief. So you get tax back that you have paid in previous years.

"Total loss to carry forward after all other setups, including unused losses brought forward." So if you're carrying forward a huge loss, you use some of it against this year's profits, but then you still have more to carry forward, then you would enter that figure in the bottom here to ensure that it keeps getting rolled forward, and it can roll forward indefinitely. There's no time limit on it, but you would carry it forward until your self-employment makes a profit that it can be utilized against.

"Tax deducted from your self-employment." So this one here is about the Construction Industry Scheme (CIS). So under the Construction Industry Scheme, CIS workers will normally have 20% or 30% tax deducted from every penny that they earn from their main contractors. The main contractors pay that across to HMRC, and then that kind of sits as a payment on account for the individual taxpayer. So when those CIS workers come to complete their tax return, what you would need to do, you need to get out your payment and deduction slips from your main contractors, and you would then total up the amount of tax suffered or deducted at source, and you would enter it in here. By entering it in here, you are then ensuring that it is deducted off your total liability, so you're not paying tax again. And in most cases, it actually ends up working out as a tax refund for CIS workers, as 20% or 30% taking off everything is usually too much. I'll leave that blank and continue.

"Class 4 National Insurance applies to profits over a certain threshold from your self-employment." I think it currently sits at 9%, and you'll see below there are a bunch of situations where you may be exempt from Class 4 National Insurance. It's quite rare, but usually it's when you are under 16, you're above state pension age, you stop paying National Insurance, and you can kind of tick the appropriate box to claim your exemption. Unfortunately, for most people, none of these will apply, so you'll have to indicate that at the bottom.

"Any other information?" So again, I tend to leave this blank unless it's going to help somebody reviewing your tax return. If you feel it adds value, then you can add additional information in here. If not, if nothing needs explaining, if it's very simple like this one that I've completed, you can leave it blank. And I'll save and continue.

"My summary for my self-employment: I had £60,000 of income, I had £10,000 of allowable expenses, and I have a £50,000 profit or loss. There's no capital allowances because I'm using the cash basis. There are no adjustments. That leaves me a £50,000 that I'm going to get taxed on."

We then have a quick note about Class 2 National Insurance. Remember, Class 2 National Insurance is being axed, but it does apply to this tax year that we're looking at. It's currently £3.45 per week, and it will apply to the weeks that you were self-employed. So remember, if you started halfway through the tax year, make sure you tell them that on the previous pages of the return so you're not charged for every single week. Because I've been self-employed for the full tax year, they'll charge me 52 weeks at £3.45 a week, and you can see they're expecting £179.40 from me. That's being added on to my total tax liability. I'm going to scroll down to the bottom.

"Do you want to pay Class 2 National Insurance voluntarily?" I'll say "no" to that one. If you earn below £6,725, then Class 2 National Insurance won't apply, but you might want to make voluntary contributions. Typically, if you're not making contributions elsewhere and you want to gain a qualifying year towards your state pension, it's Class 2 National Insurance that gets you your state pension. Then you can make voluntary contributions, and you'll get that year added to your record. So I'll save and continue.

We're now on to the general questions that everybody has to answer. So we're just confirming any underpaid tax for earlier tax years included in your tax code. If zero is correct, if you don't have any underpaid tax, then you're just confirming "yes" or "no." Is zero correct? I'm happy that that's correct. I don't have any underpaid tax. I would have coding notices etc. from HMRC if I did. So you would refer to those.

Similar question next. "Any amount of estimated underpaid tax for 23/24 to be included in your PAYE tax code?" Again, I'm happy that that doesn't apply to me. Zero is correct. It may also generate a different figure here if HMRC are already aware that you have one of these, and again, they would have been sending you coding notices if that was the case. Save and continue.

"Amount of outstanding debt included in your tax code for 23/24." I'm going to enter zero because I don't have any outstanding debt included in my tax code. And then we have the option for "Overpaid tax." So if we paid too much tax to HMRC, so in particular, if you're working under CIS, this will normally apply, then you can have that tax repaid to you. Now, it says here, "Please allow up to 4 weeks before contacting HMRC to chase up repayments." Repayments can take longer than that at busy times as well. But if you are due a repayment and you want to provide your bank details, then you can select yourself or nominate someone else to have that money paid to. I know that I'm not going to be due a repayment, so I'm going to leave that as not applicable.

And then, "If you have not paid enough tax." So where you are completing your tax return by the 30th of December, remember the deadline is the end of January, and your tax liability is below £3,000, then you can opt to have that tax liability collected via your tax code. If you have PAYE income or pension income, you can have it collected via there. They'll reduce your tax code and collect the tax automatically. I'll say "no" to that one, but it's useful, but you have to obviously make sure that you're submitting your tax return early if you want to apply that one.

And then a similar one below. "If you're likely to owe tax in the current tax year, as in the 24/25 tax year, the one that we're in, not the one that we're submitting for, on certain income." Again, you can have that collected through your tax code as well.

"Any adjustments to tax due?" What I would say is this is going to be very rare. These are optional, so I'm going to leave them all blank. But it would be rare that you then make adjustments to the amount of tax that you are due to pay. So I'll save and continue.

"Any other information?" "Does this return contain provisional figures?" I'm going to say "no." Provisional figures, you can use as a self-employed individual if you get to the end of the tax year and you don't have certain information, then you're about to get a penalty, essentially. So you can provide provisional figures, wait for that information to come in, and then update HMRC with the actual figures. But you would need to come back to the return to update those provisional figures if you say "yes" to this one, as HMRC will flag it and they'll be expecting you to come back.

"Any other information?" So this is just information, general information about the return. Doesn't have to be about the self-employment. Again, I'm leaving that blank.

"Do you have any attachments that you want to add?" Don't have any attachments. Save and continue.

And then I can check below that all of these have information entered. If they do, they'll all be marked as blue. And next, let's look at the tax calculation. Remember, what we've demonstrated here is how to enter income and expenditure figures for self-employment. To get to this point, of course, you would need to work through all of your receipts and all of your bank statements, all of your paperwork, and decide which expenses are allowable and which aren't. And of course, that in itself can be difficult. So if you want one of our agents to help determine which expenses you should include in your self-employment and which you shouldn't, you can book via the link below. Then simply scan or send photos of your receipts, and we will take care of the rest. We'll also be able to advise if there are any additional expenses or allowances that you should be claiming to further reduce your tax bill. Again, follow the link below for details.

Now, let's look at the tax calculation. You can see here under section six, "View Your Calculation." First of all, we have a summary page. So this page will only tell us how much we owe and by when. So the total amount due for the 23/24 tax return, that was the year that we just looked at, is £11,034.10. So I'd expect that to be tax and National Insurance on my £50,000 self-employed profit. But because our liability exceeds £1,000, and we haven't had much tax deducted at source, we will need to make payments on account. So our first payment on account for the following tax year is £5,427.35, meaning that the total amount due by the end of January 2025, that's this line here, is £16,461.45.

I scroll to the bottom, there will then be a second payment on account that will be due by the 31st of July, and again, that's £5,427.35, the same as my first one up here. One thing I would point out is that if this is your first year of Self Assessment, then this first payment on account may come as a bit of a surprise. You might have been expecting to pay tax on your income up here, but you might not have been expecting to make a contribution towards next year's liability as well. So that one can catch people out. If you've had your self-employment for multiple years, then one thing that this page doesn't do and doesn't take into account is the payments on account that you would have made from last year. So yes, you have got to pay £16,000 by the end of January, but if you've already paid £10,000 in payments on account from the previous year, then you need to deduct that off. And to see that, what you would normally do is submit your tax return, wait for two or three days for it to be processed, and then back on the home page of your Government Gateway when you log in, you can actually view your account and you can view each tax year. It would then show you the liability for the year, it would then show you the payments on account that have been allocated, and the actual amount that you owe. So just a bit of a tip for you there.

If I scroll to the bottom of this page and I click on "View and print your full calculation," what we'll then get is an actual breakdown of how the tax is calculated. So you can see I've got my £50,000 of profit from self-employment. That was my only income. So total taxable income is £50,000. I have my personal allowance of £12,570 that I'm entitled to, and then I have income that tax is actually going to be applied to of £37,430. So scrolling down, the tax breakdown of that is all being taxed at the basic rate of tax, which is 20%. So you can see my tax, actual income tax liability, is £7,486.

If I keep scrolling, we've then got National Insurance, which is being applied to the same amount, £37,430, and I'm being charged 9% Class 4 National Insurance, that's £3,368.70. Don't forget the Class 2, which will disappear from next year onwards, and that's my total National Insurance contributions there. Okay, and then we work back to our balancing payment and our payments on account that we have to make in January and July of the following year.

If you're not happy with these payments on account that you're making, if you feel that they're too high, maybe you're not going to earn as much next year, or you're expecting your tax liability to be less because you're going to have more tax deducted at source, you can amend them downwards. You cannot increase them. So even if you're expecting to earn more in the next tax year and pay more tax, you don't need to increase them. But if you're expecting to earn less and you know you're happy with that, then you can amend them downwards. So I'll save and continue.

If I'm completely happy, I just say "no," I'm not claiming to reduce my payments on account, and I continue on and I submit my tax return. If I want to amend them, I say "yes," and I'm just entering the reduced amount. So maybe I think, "Do you know what, my tax liability next year is only going to be about £5,000," so I'll make my payments on account £2,500 each. Remember, you make two of them, one in January, one in July. So I would just need to overwrite these figures here. You do need to provide a reason, so you'll need to explain that away to anyone that would look at your return. So you might say that, you know, you're expecting your self-employed income to be much lower next year, and I would estimate a payment on account of £2,500 would cover that liability. So make sure you give a justification and then save and continue. And after that, it won't let me continue because I haven't provided an explanation. But if you do, you'll just work through and then re-enter your login details to submit your tax return to HMRC.

Now, after viewing this video, you should be able to tailor your own tax return so that it is set up for your own personal circumstances, complete the self-employed pages of the tax return, and understand the tax calculation. Don't forget, if you are having any trouble, at Tax to You, we provide an easy-to-use Self Assessment service and would be happy to help, whatever your situation. Just follow the link below. That is all for today. Don't forget to check us out at tax2you.co.uk and subscribe to the channel for more helpful tax content. Thank you for watching. See you next time.