Tax Time Tips: How to Prepare for Self-Assessment as a UK Side Hustler
January can be a whirlwind for UK side hustlers, with one major date looming large: the self-assessment tax return deadline on 31 January.
Whether you’re filing for the first time or the fifth, understanding the process is essential for avoiding penalties and keeping your finances in shape.
Here’s a break down the essentials to help you prepare your self-assessment stress-free.
By the end, you’ll have the confidence to handle your taxes like a pro and avoid common mistakes. Let’s dive in!
1. Understand If You Need to File
Not everyone needs to file a self-assessment, so the first step is knowing if you’re required to. As a side hustler, you’ll need to file if:
You earned over £1,000 in untaxed income in the tax year (6 April to 5 April).
You’re self-employed or a sole trader.
You earned additional income from freelancing, consulting, or selling goods online.
Check HMRC’s eligibility page to confirm your obligations.
2. Register with HMRC
If this is your first time filing a self-assessment, you must register with HMRC as self-employed. This process involves:
Visiting the HMRC registration page.
Creating a Government Gateway account.
Receiving your Unique Taxpayer Reference (UTR) number.
Tip: Register early! HMRC sends your UTR via post, which can take up to 10 working days.
3. Gather Your Records
Keeping accurate records throughout the year makes filing your tax return much easier. You’ll need:
Details of your side hustle income (e.g., invoices, sales records).
Bank statements for tracking transactions.
Receipts for business expenses (e.g., equipment, software, supplies).
Use tools like accounting apps or spreadsheets to organise your finances.
If you’re just starting out, consider downloading a free budget template from our resources page.
4. Know Your Allowable Expenses
Did you know that you can reduce your taxable income by claiming business expenses? These might include:
Office costs: Stationery, software, and home office usage.
Travel expenses: Mileage, parking fees, or public transport costs for work.
Marketing: Website hosting, advertising, or social media tools.
Professional services: Accountants, training courses, or legal advice.
Pro Tip: Keep digital copies of receipts to simplify the process and prevent lost paperwork (photos or scans are perfect).
5. Use HMRC’s Online Tools
HMRC’s self-assessment portal makes filing straightforward. Here’s how to get started:
Log into your Government Gateway account.
Enter your income details, including your PAYE information if you have an employed job.
Input your expenses and ensure they’re accurate.
Double-check everything before submitting to avoid errors that could trigger penalties.
6. Plan for Payments
Self-assessment isn’t just about reporting—you’ll also need to pay any tax due. Here’s what to expect:
Income Tax: Based on your taxable profits.
National Insurance Contributions (NICs): Class 2 or Class 4 NICs if your profits exceed the threshold.
Payments on Account: Advance payments towards next year’s tax bill (if applicable).
Use HMRC’s tax calculator to estimate your bill.
7. Avoid Penalties
Missing the 31 January deadline can result in hefty penalties:
£100 fine for being up to 3 months late.
Additional daily penalties of £10 after 3 months.
Submit your return early to sidestep last-minute stress and potential fines.
8. Seek Professional Help if Needed
Taxes can feel overwhelming, especially when you’re juggling a side hustle and family responsibilities.
Accountants come in all shapes and sizes - but paying more doesn’t necessarily mean you’ll get a better service.
Don’t hesitate to drop me a message if you’re unsure.
Final Thoughts
Filing your self-assessment doesn’t have to be daunting.
By staying organised and understanding the process, you can meet the deadline with confidence.
If you found this guide helpful, be sure to check out our resources page for free tools to make managing your side hustle finances even easier.
