Have you seen the date? For months now, you’ve thought tax deadline day was ages away. Now it’s just a matter of days! Argh!!!!
Missing this deadline can result in hefty penalties, not just the immediate fine but also accumulating interest on unpaid tax. Yet, for creative freelancers juggling multiple projects and inconsistent incomes, the self-assessment process can feel overwhelming.
But don’t panic: there’s still time to get everything done in an orderly fashion. Just follow our step-by-step guide, and you’ll be able to meet the 2025 deadline without breaking a sweat.
1. Check if you need to self-assess
First of all, it’s worth checking if you need to file a self-assessment at all. That might sound dumb, but I once went through the whole rigmarole of completing a return, only to be told that I wasn’t considered freelance. That was back in the 1990s when HMRC decided that if you primarily freelanced for one company, you couldn’t be considered a freelancer. (Don’t think too badly of me: a similar thing happened to the Governor-General of the BBC.)
At the other end of the scale, there are people who think they don’t need to file a self-assessment because they “only earn a bit on the side”). Generally, you must self-assess if you earn more than £1,000 in revenue (not profit) from a side hustle, and even selling a few items on Etsy can add up to that.
Other triggers include earning over £150,000 annually, receiving untaxed income (such as dividends or rental income), generating significant interest outside tax-free accounts, or needing to repay child benefits due to high income.
If you’re unsure if you need to self-assess, use HMRC’s self-assessment eligibility checker to clarify your obligations.
2. Understand what you owe
One thing that surprises many freelancers is that the 31 January payment isn’t just about the previous year’s tax bill. It also includes the first ‘payment on account’ for the current tax year, typically 50% of your estimated annual liability.
The important thing is that payments on account apply unless your previous year’s tax bill was under £1,000 or if more than 80% of your tax is deducted at source. For detailed guidance, visit HMRC’s self-assessment page.
3. Gather your financial records
Effective record-keeping is the foundation of stress-free tax filing. So, before you get started filling in your self-assessment form, you’ll need to ensure all your invoices, receipts, and bank statements for the tax year are in order.
For the tech-savvy, digital tools like QuickBooks or FreeAgent can simplify the process, while for some, old-fashioned spreadsheets are easier to get your head around, even if it might take a little longer.
Either way, you need to do this work, even if you’re paying an accountant to complete your tax return. In general, accountants want to be paid for their expertise, not tedious legwork, especially this late in the day.