Money Matters

10 top tips for filing your self-assessment tax return

Here are top tips on filing your self-assessment tax return, including which expenses are tax deductible and advice on pension contributions.

The deadline for filing your self-assessment tax return will be here soon.

You might notice the lights staying on well into the night at many accountancy practices across the country now and during the coming months.

That’s because it’s a busy time for practice accountants as they beaver away filing self-assessment income tax returns on behalf of their clients.

You may not necessarily need an accountant to prepare your tax returns – it really depends on the complexity of your business and your financial nous.

But one way or the other, if you’re self-employed, you’re obliged to file a return.

Here are 10 practical tips to make the process as smooth as possible:

1. File your return online, not by post

2. Be organised

3. Don’t throw out or delete your documentation

4. Be clear on what expenses you can claim

5. Claim tax relief on your pension contributions

6. Beware of the time limitation on claiming tax relief

7. Use a good accounting software package

8. Also, a cloud-based accounting package can be very useful

9. Check your eligibility for claiming Start your own Business Relief

10. File on time

Final thoughts

Commonly known as ROS (Revenue Online Service), Revenue’s online system is user-friendly.

Based on the information you input, it calculates your tax liability rather than you having to calculate it yourself.

And, in general, it’s much easier to use the online system rather than filling out a hard copy form and posting it. Revenue very much discourages postal returns anyway.

However, there is one cohort who have no option but to send in a hard copy return.

“For spouses married pre-1990, where Revenue added a W [wife] to the end of their PPS [Personal Public Service] number, e-registration is not possible and they must fill out a paper form,” says Rory Coll, who owns a specialist tax practice in Galway, Coll & Co.

The deadline for filing your return online is 15 November 2023 (if you file it by post, that deadline is 31 October 2023).

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OK, it might seem really obvious, but as any accountant will attest, it needs to be said.

Be organised and don’t leave it to the last minute to gather all the relevant documents and records.

“Many people leave it until September/October to give relevant information for preparing their tax return to their tax adviser/accountant,” says Bríd Whelan, principal of Whelan Tax Solutions.

“If this was done earlier in the year, it would facilitate the preparation of tax returns sooner and taxpayers could plan for the payment of their tax liability and for making pension contributions to reduce their tax bill.”

Though you’re not obliged to send in any documents, you must retain them.

“Business owners [and their accountants] are required to keep all documentation pertaining to the business for at least six years, as Revenue may require the same if they carry out an audit,” adds Bríd.

Expenses relating specifically to the business may be claimed as a deduction in your tax bill.

Claimable expenses include:

  • Purchase of goods for resale
  • Wages
  • Rent, rates, repairs, lighting and heating
  • Accountancy fees
  • Interest paid on any money borrowed to finance business expenses/items
  • Lease payments on vehicles or machinery used in the business.

Also, as Bríd points out, the cost of capital expenditure on items such as fixtures and fittings, and computer equipment may be written off over eight years by way of capital allowances.

But be wary – expenses relating to personal items such as for your car or mobile phone may not necessarily be claimed in full.

Only the usage that relates to the business can be claimed.

One way to reduce your tax bill is to make pension contributions and the government is actually very generous in terms of the tax relief it offers on such contributions.

If you pay any income tax at the higher 40% band, then you can claim 40% back on your pension contributions, up to a certain limit.

“Pension contributions provide a means of paying less income tax,” explains Bríd.

“There are maximum amounts on which tax relief of up to 40% may be claimed depending on an individual’s age.”

Read more about self-assessment

It’s not just pension contributions that are eligible for tax relief. You can also, for example, claim tax relief on your medical expenses and on third-level tuition fees – both at 20%.

However, there is a time limitation.

Bríd says: “It is important to note that there is a general four-year time limit to submit a claim for tax relief or repayments of tax.

“Therefore, taxpayers should review prior years to ensure that they have claimed any tax reliefs to which they would have been entitled, such as for medical expenses and third-level college fees.”

Using a reputable accounting software package can help you to be prepared and organised.

“It is recommended that self-employed individuals should use a good software accounting package to record business transactions on a regular basis,” says Bríd.

“If transactions are recorded regularly and accurately, it should expedite the preparation of the business accounts required to complete the tax return.”

Business owner John Tyrrell is a techie and swears by using a cloud accounting software package.

He and a friend set up their tech company, MyWallSt, in 2013. It’s a trading app, which also teaches you how to invest.

While John loves running his own business, it comes with certain business admin responsibilities, particularly he feels in terms of tax and accounting compliance.

“In terms of time and cost, a cloud-based accountancy package is the only option I would consider for our business,” says John.

“The overhead in maintaining our financial compliance is potentially the biggest administration cost for us.

“A cloud-based accountancy package allows us to manage information across our multiple locations.

“It also ensures that our accounting information is always up to date and that any of the team can have access to and can manage our systems from anywhere.”

Another good tip from Brid is that if you have been unemployed for more than a year, you can avail of a generous tax break.

She says: “Start your own Business Relief may be availed of by qualifying individuals who had been continuously unemployed for 12 months prior to setting up their own new business, during the period 25 October 2013 to 31 December 2018.

“The first €40,000 of annual profits of the business is not subject to income tax for the first two years. However, PRSI [Pay Related Social Insurance] and USC [Universal Social Insurance] will apply to the profits.”

Lastly, but maybe most importantly, don’t miss the deadline date.

As mentioned at the top of this article, the D-day for filing and paying for online returns is 15 November 2023, while the deadline for hard copy returns is 31 October 2023.

Time is running out, so don’t draw attention to yourself by being late with your self-assessment tax return.

Not only will you be charged a financial penalty, it could trigger Revenue to carry out an audit on your financial affairs.

And when you’re trying to run a business, you don’t need to bring that added stress upon yourself.

Editor’s note: This article was first published in October 2019 and has been updated for relevance.

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