First time self assessment - is it difficult? I'm very worried

[Whitevase]

For reference I'm menopausal and suffer with anxiety!

So I've had a little craft business for the last couple of years just to earn me some money while my little boy is at home. I can make a profit of anywhere between £600-£1000 a month.

So I know I'm under the tax bracket but I've been told I still need to do a self assessment which I'm getting very anxious about. I've been told I need to keep track of all my spending which I will do going forward but in past I've not kept any receipts! I'm always buying little bits here and there when I see things I could use. Few pounds here and there on bits and pieces. It's never occurred to me to save receipts or keep track of anything as it's been a little sideline. Now I'm told I have to do a self assessment I feel like it's suddenly got really stressful.

I've registered online and now waiting for my unique tax number before I can start but I'm full of worry that I'll do it wrong or not have enough I formation that they need.
Is it really scary? Or complicated?
If I get an accountant to do it for me won't it cost lots? Considering I don't make much money would it really be worth an accountant?

It's my only income I don't have any other jobs.

Use taxscouts, fixed fee of about £140, give you an incredibly simply form to fill in and then do all the hard work for you!

Check here; not sure you will need to:

https://www.gov.uk/check-if-you-need-tax-return

If you do then the main thing is to have all your expenses and income properly recorded. Then the form is dead easy and you can do it on HMRC's website at zero cost.

@HappyHolidai Anyone that earns over £1000 a year needs to do it now 😩

Sorry I misread monthly as annual. Have edited my post now.

@HappyHolidai you are wrong. Anyone who is earning more than £1000 per year from self-employment should be doing a tax return. OP says she is earning £600 to £1000 per MONTH.

I have been doing a tax return for years, in my case it's very simple as I am selling my skills/time rather than trading as in buying and selling. I do not use an accountant but in your case @Whitevase I would get advice from an accountant both on completing your tax return this time, and what sort of records you should be keeping. On a very basic level this could be a spreadsheet with two columns for what you buy and what you sell, and a cardboard box with receipts - it doesn't have to be fancy.

You really do need to start keeping records, I can't believe you didn't think you had to!

You don’t need to pay anyone. It’s easy. There are instructions on the self assessment pages. Estimate your expenses and keep receipts going forward.

It's pretty straightforward. Like an online form they just ask you questions you answer or fill in in each step and then move onto the next. You can go back and edit anything up to the point of submission. I do mine in bits and pieces. And you don't send off receipts or any paperwork anymore. The only time you'd need it is if you are investigated which with the amounts you are talking is highly unlikely.

You have plenty of time so give it a bash and there is lots of help online. If you really struggle then you could get an accountant involved.

Good luck

@Misthios

You really do need to start keeping records, I can't believe you didn't think you had to!

Thanks for making me feel stupid! Like I said it's under the tax bracket so didn't realise I had to until recently 🙈

I always remind myself that HMRC etc actually want me to do the self assessment correctly they aren't trying to trick me or make it difficult.
If you earn £600-£1000 a month what you have spent is largely irrelevant as you are under the limit to pay tax anyway.

@Zeeze Thank you that makes me feel a little less anxious

I’m pretty sure you can opt to just put a £1000 expenses figure without a breakdown but you might be doing yourself a disservice if you spend more than that on materials etc.

from now on either keep a shoe box where you put all your receipts for business expenses, or have a separate business bank account that you use to buy things for the business and receive your business income into. That would make doing your basic accounts much easier.

I don’t think you need an accountant but you will find there are lots of boxes on the self assessment form that don’t apply to you.

remember though that HMRC doesn’t generally penalise people who wanted to get things right and made an honest mistake. As long as you take reasonable care the worst that would ever happen is if you accidentally under paid you’d have to pay what you owed with interest.

also as it sounds like you won’t have any tax to pay at the end of the day as you’ll be under your personal allowance, there’s a miniscule chance anyone at HMRC will be interested in checking your return.

just keep records (for yourself too - to see how profitable you are!) and give it a go

But not National Insurance.

You can enter £1000 as a trading allowance without breaking down expenses. This works for me as I am not buying stock, adding value, selling stock. But if you are (for example) a baker who is buying ingredients, you might opt for entering your exact expenses as that'd be more than £1k.

If you paid expenses and got income through bank statements just use those and keep a spreadsheet going forward. Just keep them for a couple of years in the unlikely event that HMRC ask about it.

It sounds like you will be better off claiming expenses rather than the £1000 allowance the poster upthread mentioned.

You have plenty of time. The return for 2023/24 is not due until January 31st. But do it now if you can.

I’m doing it for the first time this year as well and am also at the point of waiting for my unique tax number. I’ve been a mix of PAYE and sole trader and thought it would be really complicated, but it doesn’t seem to be and I’ve got a clear idea of what I owe.

if you work from home you can offset a portion of your household bills and mortgage interest as expenses. If you pay any fees to third party websites or membership organisations, these can all be offset, although fairly academic in your case.

There are tutorials on YouTube that walk you through it step by step.

I'm self employed and do it myself. It's very straightforward. You really don't need to pay anyone.

For the first time don’t worry too much about receipts for expenses. The point is that they are tax deductible so if you’re claiming to offset them against tax, you need a robust claim. As you’re below the personal allowance, you are not trying to offset them against anything, so you are not over claiming.
HMRC are in general very gentle with people sincerely doing their best to disclose everything.
in future you can be more precise. Do your best the first time.

as it sounds like you won’t have any tax to pay at the end of the day as you’ll be under your personal allowance

But possibly not under the threshold for National Insurance contributions, which apply to the whole of your earnings once you reach a certain amount.

You may need to put aside the money to pay those.

Are you claiming any benefits? Because that’s the only thing that’s going to get you into trouble really.

You could have skipped this years tax return and just started it next year, no one would know. It’s going to be impossible for an accountant as you haven’t kept any receipts so you won’t be able to claim any expenses. You’ll have to go through your sales record and just put down your income, and then pay your national insurance contributions.

From now on, keep every single reciept and put it into a spreadsheet every time to spend anything or sell anything.

I found it fairly simple to do, I did the short one, not the full Tax Return, most of the questions didn’t apply, so it was just a case of entering total sales, then costs, so it works out your profit for the year.

@achipandachair thank you!! Sincerely from a born worrier 🙈

@Ivehearditbothways No I don't claim any benefits and never have

DH is self employed and does his online each month with HMRC. Love my DH but honestly if he can figure it out anyone can

It’s going to be impossible for an accountant as you haven’t kept any receipts so you won’t be able to claim any expenses

You could claim the £1000 trading allowance even without receipts, I believe.

And I've just checked the HMRC website, and the threshold for compulsory NI contributions is now £12570.

@PolaroidPrincess 😂 this makes me feel much better 😂